column http://www.proactiveinvestors.com Proactiveinvestors column RSS feed en Sun, 25 Sep 2016 21:51:45 -0400 http://blogs.law.harvard.edu/tech/rss Genera CMS action@proactiveinvestors.com (Proactiveinvestors) action@proactiveinvestors.com (Proactiveinvestors) The Titanic Trend http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/21782/the-titanic-trend-5206.html The Titanic Trend

April Fools’ drop dead date for the Volcker Rule – what it might mean for gold
Michael J. Kosares - March 26th, 2014

"It could get to be interesting as we move into the end of the month. The Volcker Rule which limits banks’ speculative investments (including gold) goes into effect April 1, 2014. There has probably already been quite a bit of adjustment to bank portfolios, but those who have held out will need to make their moves before the deadline.

In conjunction with the implementation of the Rule, there has been an exodus of talent from the banks. The latest heavyweight departure came yesterday when Jamie Dimon’s closest aide, James Cavanaugh, left JP Morgan for theCarlyleGroup, a private equity firm. Cavanaugh was considered Dimon’s heir apparent. Says this morning’s NYTimes, “Mr. Cavanagh’s decision to give up a chance at eventually running JPMorgan signals how running a large bank has become less attractive, considering the regulatory hurdles and heightened scrutiny that have dogged Wall Street since the aftermath of the financial crisis.”

Financial Times reports this morning that the big banks have been hit with nearly $100 billion in costs and settlements related to the lending scandals.Those costs come before the banks face the even bigger potential problems associated with various market manipulations, including the forex markets, interest rates and gold...

...  The big trading banks traditionally have occupied the short side of the paper gold market. Some feel those positions will be handed off to the hedge fund business so things won’t change much. On the other hand, hedge funds are not considered too big to fail, thus their bets could be placed more evenly on either side of the market.

Presumably, hedging activities offered by the banks as brokers are still allowable under the Volcker Rule, and it will be up to regulators to determine whether or not a trade is speculative or a hedge placed in behalf of a client. That might be easier to do than some think in that regulators might look closely at the net position of banks by the end of any given trading day. The position of the bank should be flat — and provably so.

All of this makes the upcoming April Fools’ Day 2014 something of a watershed for Wall Street and trading business. Whether or not the banks truly give up the speculative activity remains to be seen, but the wholesale exit of traders to the hedge funds and private equity firms might provide a clue as to what is going on behind the scenes and what the big guns are thinking. (Cavanaugh is just one example.) Once again, the important factor is that the hedge funds will pay their losses out of pocket without the benefit of the government and Federal Reserve’s safety net — at least that’s the intent of the Rule. We will see how that aspect of the plan works out the next time the financial sector toes the cliff, but between now and then we could see a slow evolution of a more balanced approach to the gold market than many expect."




JPMorgan to cut up to 17,000 jobs by end of 2014
David Henry – Reuters February 27th, 2014

(Reuters) - "JPMorgan Chase & Co (JPM.N) said on Tuesday that it plans to cut 17,000 jobs by the end of 2014, representing about 6.6 percent of the company's overall workforce, as the bank sheds staff that helped it deal with bad home loans...

... That hiring will be more than offset by job cuts in areas like mortgage servicing and retail banking, where the bank is positioning for a recovering housing market and new forms of branch banking. The net impact of the additions and cuts will be 17,000 fewer employees on the bank's payrolls...

...  The profit scenario also depends on the bank not being hit by another trading debacle like the $6.2 billion loss last year on derivatives trades placed by the London Whale, the nickname given a London-based JPMorgan trader for the size of the positions.

Chief Executive Jamie Dimon acknowledged that many of his top lieutenants who spoke to investors on Tuesday were in new jobs after changes he made last year in his management team and the bank's divisions..."



What Really Happened to Bear Stearns?

“  Six years ago the well-known investment bank Bear Stearns imploded. In February 2008, Bear Stearns stock traded as high as $93; by mid-March the insolvent company agreed to be taken over by JPMorgan for $2 a share(later raised to $10 after class-action lawsuits). In the annals of Wall Street, there was hardly a more sudden demise than the fall of Bear Stearns. The cause was said to be a run on the bank as nervous investors pulled assets from the firm. Bear Stearns was said to be levered by 35 times, meaning it had equity of $11 billion and total assets of $395 billion. This is a very small cushion if something negative suddenly appears.

Something negative did hit Bear Stearns in the first quarter of 2008; although there are remarkably few details of what went wrong. Since Bear had a significant presence in sub-prime mortgages and that market was in distress, it is assumed the fall of the firm was mortgage related. That may be true, but there was no general stress in the stock market through mid-March 2008 reflecting a credit crisis. Was there instead some specific trigger behind the company’s sudden collapse?

I believe that sudden and massive losses and margin calls of more than $2.5 billion on tens of thousands of short COMEX gold and silver contracts were the specific triggers that killed Bear Stearns. Let’s face it – Bear was so leveraged that a sudden demand of more than $2.5 billion in immediate payment for any reason could have put them under. Bear Stearns’ excessive gold and silver shorts on the COMEX are the most plausible reason for the sudden demise. Bear Stearns did fail and due to a sudden cash crunch was acquired by JPMorgan for a fraction of what it was worth two months earlier. Bear Stearns was the largest short in COMEX gold and silver at the time. The day of Bear Stearns’ demise coincides precisely with the day of the historic high price points in gold and silver. That is also the same day the biggest COMEX gold and silver short would experience maximum loss and a cumulative demand for upwards of $2.5 billion in cash deposits for margin. It was no coincidence the music stopped for Bear Stearns that same day.

Gold prices rose from under $800 in mid-December 2007 to $1,000 in mid-March 2008, a gain of more than $200. Silver prices rose from under $14 in mid-December to $21 when Bear Stearns failed on March 17, 2008. That was a gain of $7. This was the highest price for silver and close to the highest price of gold since 1980. Obviously, a $200 rise in the price of gold and a $7 rise in the price of silver is not good if you are the biggest gold and silver short.

The concentrated short position of the 4 largest short traders in silver was at an extreme level of more than 300 million ounces. In contrast, the concentrated long position of the 4 largest long silver traders was a bit above 100 million ounces. In COMEX gold, the big shorts held two and half times what the biggest longs held. Since we know that Bear Stearns was the largest short in COMEX silver and we also know how much gold and silver prices rose in that time period, all that has to be established is how many short contracts Bear Stearns held. That would tell us how much money they had to come up with in margin money. All market participants on the COMEX, including the leading clearing member (which Bear Stearns was), must deposit additional funds daily to cover adverse price movements.

Thanks to historical Commitments of Traders report (COT) data from the CFTC, in the relevant time period (December 31, 2007 to March 17, 2008) the net short position of the 4 largest gold and silver shorts on the COMEX averaged 165,000 contracts and 60,000 contracts respectively. My analysis indicates Bear held 75,000 net gold contracts short and 35,000 net silver contracts short. Those are minimum numbers, as I think Bear’s position could have been higher.

A $200 adverse price move on 75,000 COMEX gold contracts would result in a mark to market loss and margin call of $1.5 billion. A $7 adverse price move on 35,000 COMEX silver contracts would result in a mark to market loss and margin call of $1.2 billion. Bear Stearns had to come up with $2.7 billion because gold and silver prices rose sharply in the first quarter of 2008 and the company bet the wrong way. That it couldn’t come up with all the margin money for the losses in gold and silver, is the most visible reason it went under.




What happened to Bear Stearns was exactly what I had warned the Commodity Futures Trading Commission (CFTC) about continuously for the twenty years before the event. Aside from the manipulative impact that a concentrated market corner would have on price, the biggest risk was what would happen if the largest short ran into trouble. The facts in the case of Bear Stearns indicate that the worst did occur. The biggest short did go under. During the relevant time period, I was in private email contact with CFTC Commissioner Bart Chilton who indicated that the Commission was considering silver matters closely and that there would be a finding published soon. The subsequent CFTC finding was released on May 13, 2008 and completely denied anything was wrong on the short side in COMEX silver due to large traders.

Here’s the problem – the report lied. It conveniently ignored the failure of the largest COMEX gold and silver short seller, by only considering events through Dec 31, 2007 and not through the March 17, 2008 date of Bear Stearns’ failure, a clear lie of omission. How could the CFTC issue a report on large traders on the short side of silver and overlook that the largest short trader of all went under because of that short position? It has taken me some time to see all this in the proper perspective. What I now see is deeply disturbing, but it answers many questions. Even though I petitioned the CFTC about the illegality of the concentrated short position in COMEX silver for decades, they disregarded those warnings. Then Bear Stearns went under for precisely the reasons I warned about. Subsequently, the CFTC kept it quiet and denied all allegations.


Any regulator worthy of the name should have known that a lopsided, large trader mismatch was dangerous on the short side. Having misjudged just how dangerous the situation was, the CFTC and the CME Group put in motion a scheme to save the shorts and punish gold and silver investors. By arranging, with the Federal Reserve Chairman and Treasury Secretary, to have JPMorgan take over Bear Stearns’ silver and gold short positions, the US Government embarked (or continued) on a journey of allowing price manipulation, in stark violation of commodity law.

Since Bear Stearns was a failure that threatened the financial system, it necessarily invited the involvement of the nation’s highest regulators, the Treasury Secretary and the chairman of the Federal Reserve, as the historical record indicates. Both had to be aware of the gold and silver margin problem at Bear Stearns. Additionally, since Bear Stearns was the leading clearing member of the exchange, you can be certain that the CME Group was more than aware. The CME was the one issuing the margin calls to Bear. Also, there is no way that JPMorgan wasn’t aware of Bear Stearns’ gold and silver predicament. Yet none of this was made public.

These facts indicate that everyone at the top had to be aware that excessive gold and silver shorting was at the center of the Bear Stearns fiasco. Since the Feds requested JPMorgan’s assistance, there can be no question that JPMorgan demanded (and received) permanent immunity from future gold and silver allegations. This explains how they have been able to establish market corners in gold and silver today that commodity law prohibits. Had not the U.S. Treasury Secretary, the Fed chairman, the CFTC, and the CME agreed to JPMorgan’s takeover of Bear Stearns’ gold and silver positions, the excessive market concentration and manipulation in these markets could not have continued.

The interference of the U.S. Government in the Bear Stearns affair explains what was previously inexplicable: why the CFTC couldn’t find anything after investigating a silver manipulation for five years, and why the CFTC and CME were deathly quiet in reaction to the giant price smashes in gold and silver, particularly the two 30% price smashes within days in silver in May and September of 2011.

What baffles me today is that no well-known journalist from outside the gold and silver world has yet picked up on what is an easy-to-document story of epic historical proportions. It’s the story of why Bear Stearns went under, and how the gold and silver price manipulation continued since the day JPMorgan took over Bear. I think the story has Pulitzer Prize written all over it.”


JPMorgan Agrees to Sell Commodities Unit for $3.5 Billion
By Andy Hoffman and Hugh Son March 19, 2014

JPMorgan Chase & Co. (JPM) will sell its physical commodities unit to Mercuria Energy Group Ltd. for $3.5 billion, ending a five-year foray into owning and storing raw materials amid pressure from regulators to leave the business.

The deal, disclosed in a statement from New York-based JPMorgan today, takes the bank out of industries such as petroleum products and power while cementing Mercuria’s standing among the world’s biggest commodity traders. JPMorgan will continue to provide services and products tied to commodities including financing, market-making and the vaulting and trading of precious metals, the bank said.

“Our goal from the outset was to find a buyer that was interested in preserving the value of JPMorgan’s physical business,” Blythe Masters, head of the company’s global commodities operations, said in the statement. “Mercuria is a global leader in the commodities markets and an excellent long-term home.”

JPMorgan is selling amid concern among regulators that banks could control prices if they own commodities as well as trade them, or suffer catastrophic losses that would endanger the financial system. The Federal Reserve said in July it might force insured lenders to get out, and JPMorgan agreed later that month to pay $410 million to settle claims that it manipulated power markets, without admitting wrongdoing...

Warehouse Operator

Mercuria also gets Henry Bath & Sons Ltd., a 220-year-old metal-warehouse operator based in Liverpool, England. The firm was a founding member of the London Metal Exchange, with products today that include aluminum, steel and copper as well as cocoa and coffee, according to its website...

Trading Surge

...JPMorgan’s commodities trading surged with the 2008 acquisition of Bear Stearns Cos., which included an energy-trading platform. To compete with Goldman Sachs and Morgan Stanley (MS), JPMorgan bought UBS AG (UBSN)’s global agriculture and Canadian commodities units in 2009, and part of commodities trader RBS Sempra in 2010. That deal brought JPMorgan the Henry Bath unit...

Scaring Competition

... A day earlier, the Fed said it was reviewing a decade-old decision that allowed lenders including JPMorgan and Citigroup Inc. into the business because physical commodities were “complementary” to banking.





Johnston-Sequoia Commentary:


“The first step toward success is taken when you refuse to be a captive of the environment in which you first find yourself.”
--- Mark Caine
We truly live in interesting times - Never before in human history have we had such incredible technological advancements, ease of sharing information and the ability to collectively arrive at a global compromise.  However, simultaneously we're facing the biggest financial hurdle since the fall of the Roman Empire.  As most of our readers know I believe in cyclicality, innovation, social justice & graduating to a higher level of consciousness - as such, the probability of repeating the past from a cyclical perspective is extraordinarily high; but due to the advancement and innovation of communication we have the capability of making different decisions than those that have plagued our society over the past 2,500 years.  The key of course is information.  
The purpose of this piece is not to point fingers at those that have caused the situation we find ourselves in but rather to prepare those potentially effected by a possible breakdown in our financial system.  For the record, I do not believe that the system is currently collapsing; however we must begin to understand the implications of the system that we have grown accustomed to eventually breaking down.  Please use the information to create your own thoughts and opinions and take steps to protect yourself and your family accordingly.    
American Proverb - where there's smoke there's fire:

  • In February 2008, Bear Stearns stock traded as high as $93; by mid-March the insolvent company agreed to be taken over by JPMorgan for $2 a share
  • Bear Stearns was said to be levered by 35 times, meaning it had equity of $11 billion and total assets of $395 billion
  • Massive losses and margin calls of more than $2.5 billion on tens of thousands of short COMEX gold and silver contracts were the specific triggers that killed Bear Stearns
  • March 2014 - Jamie Dimon’s heir apparent James Cavanaugh, left JPMorgan for the Carlyle Group, a private equity firm
  • Banks face the even bigger potential problems associated with various market manipulations, including the forex markets, interest rates and gold
  • The Volcker Rule which limits banks’ speculative investments (including gold) goes into effect April 1, 2014
  • All of this makes the upcoming April Fools’ Day 2014 something of a watershed for Wall Street and trading business
  • JPMorgan is selling its commodity business amid concern among regulators that banks could control prices if they own commodities as well as trade them, or suffer catastrophic losses that would endanger the financial system.
  • JPMorgan profit scenario depends on the bank not being hit by another trading debacle like the $6.2 billion loss last year on derivatives trades placed by the London Whale
  • Fed said it was reviewing a decade-old decision that allowed lenders including JPMorgan and Citigroup Inc. into the business because physical commodities were “complementary” to banking
  • Where does this leave Western financial Institutions? & more importantly its unsecured lenders (i.e you & I)?


“ We warned that the banks have turned the corner when their cycle finished last year. The NY Post has come out stating that being a banker is not so great anymore... They are hated perhaps even more than politicians. Their proprietary trading has destroyed the industry and been the worst public image that any sector can have.”


Former Bank of Canada Govenor Mark Carney (Current Bank of England Govenor) says "policy-makers are working diligently to devise an international "bail-in" regime to prevent big bank failures, but he offered no guarantee global depositors would be protected under all circumstances."

The March budget announced that Canada intended to implement a "bail-in" regime for systemically important banks to ensure that in case of failure, there would be no need for governments to bail them out. In Canada, those banks are the Royal Bank, Scotiabank, the Bank of Montreal, the Canadian Imperial Bank of Commerce, Toronto-Dominion and the National Bank."

--- The Canadian Press - Source CBC.ca April 18, 2013

At the end of the day where does this leave us?  Please consider using April 1, 2014 as the beginning of an observational model for a change in trend.

As always please do your own due diligence

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Wed, 02 Apr 2014 04:44:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/21782/the-titanic-trend-5206.html
Klondex Acquires Newmont's Ken Snyder "Midas" Mine and Mill Complex http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/21769/klondex-acquires-newmonts-ken-snyder-midas-mine-and-mill-complex-5193.html "Vancouver, British Columbia - December 4, 2013 - Klondex Mines Ltd. (TSX: KDX | US: KLNDF("Klondex" or the "Company") is pleased toannounce that it has entered into a definitive agreement to acquire the Midas mine and related ore milling facility located in the State of Nevada (collectively, "Midas") for approximately US$83 million (the "Acquisition") from a subsidiary of Newmont Mining Corporation ("Newmont").

The purchase price, which is subject to customary adjustments, is comprised of (i) approximately US$55 million in cash, and (ii) the replacement of Newmont surety arrangements with Nevada and federal regulatory authorities in the amount of approximately US$28 million. In addition, Klondex will issue to Newmont 5 million common share purchase warrants of the Company with a 15-year term, subject to acceleration in certain circumstances, and an exercise price to be specified on the closing date of the Acquisition.

Paul Huet, President and CEO of Klondex, commented, "This acquisition is transformational for Klondex, during a pivotal point in our company's development.  I am confident that Klondex's management team can leverage past experience, with some of the core leadership team having previously worked at Midas, to vastly benefit from the synergies and to unlock continued value in Klondex for shareholders going forward.  Our team is extremely pleased to be working alongside Newmont to bring together two excellent epithermal deposits with a high-quality central mill."

Please click on Image to view corporate video

The Acquisition is anticipated to close in early 2014, subject to the fulfillment of various closing conditions, including the receipt of requisite regulatory approval and other third party consents, and entry into certain ancillary arrangements with Newmont for the provision of transition services. 

In addition to acting as exclusive financial advisor with respect to the Acquisition, GMP Securities L.P. has also been engaged by the Company to coordinate the financing of the Acquisition, which is expected to consist of a combination of equity, secured notes and a secured gold loan. Further details on the financing of the Acquisition will be provided once determined..."

A replay of the conference call will be available until January 4, 2014.

Conference Call Replay Numbers:        1-800-319-6413
Canada & USA Toll Free:                     1-604-638-9010
Code:                                                3599#

--- December 4th, 2013 Klondex Mines Ltd. Press Release



Johnston-Sequoia Commentary:

I first met President & CEO Paul Huet at the 2013 Las Vegas Money Show while assisting the only other gold company at the show (Terraco Gold Corp.).  After spending time with Paul, learning of his (and equally as important his teams) past experience and success I quickly became intrigued.  Paul was the Mine Manager, Mine Superintendent & Chief Engineer at The Ken Snyder "Midas" Mine dating back to the early 2000's.  He was also the General Manager of the Hollister Mine for Great Basin Gold and Chief Operating Officer for Premier Gold Mines.  

As some will suggest it was the Ken Snyder "Midas" Mine that kept Newmont profitable in the early 2000's even at $250-$350 per ounce gold.  This, as many of our readers know is because of the freakishly high grades of these low-sulfidation, epithermal, hot spring type systems.  

In the humble (33 year old) opinion of this writer - Paul and his team are simply put the best operators of these types of systems anywhere on the planet and I would encourage our readers to keep an eye on this emerging small cap company.  

As an aside - these types of grades become more and more important the longer this current market environment exists.

I own shares in Klondex Mines Ltd. - however, I am not an advisor of the company.

I own shares in Terraco Gold Corp. and am an advisor of the company - Johnston-Sequoia owns shares in Terraco Gold Corp. 

As always, please do your own due diligence.


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Mon, 23 Dec 2013 05:29:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/21769/klondex-acquires-newmonts-ken-snyder-midas-mine-and-mill-complex-5193.html
The Economic Renaissance of Côte d’Ivoire, West Africa http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/21671/the-economic-renaissance-of-cte-divoire-west-africa-5095.html  

Le Plateau District - Abidjan, Côte d’Ivoire
The Economic Renaissance of Côte d’Ivoire, West Africa
The revolution in the economy of Côte d’Ivoire

Rafael Araujo, from Abidjan September 11th, 2013
brazilafrica.com

"For the second year, growth reaches 9% and the country recovers with the improvement in the economic environment and new investments in oil production, infrastructure and agriculture.

With a high forecast of 9% this year, the economy of Côte d’Ivoire is among the fastest growing in Africa. This growth projection ranks it in fourth place among its African peers, behind Libya, Sierra Leone and Chad, according to a survey conducted by the Organization for Economic Cooperation and Development (OECD). Côte d’Ivoire leads the West African economic bloc, ahead of neighboring Ghana that should advance 8.4% this year. The significant growth, comes, however, from a small base. The nominal value of $24.6 billion GDP (Gross Domestic Product) puts Côte d’Ivoire in 101 in the world ranking.

In 2012, the Ivorian GDP has already shown a performance above expectations, with 9.8 % high in the previous year, marked by a serious political crisis in which the economy shrank 4.6%.


The resumption of mining contributed to the acceleration of economic activity
Photo: Kambou Sia / AFP (Click on Image to Enlarge)

It is clear that the end of the civil war and the return to normality had a mechanical effect on the chart, but other factors have contributed to accelerate the economic activity in a sustainable way: the resumption of mining (gold, oil and gas), the investment in infrastructure and the improvement of the business environment.

In June this year, the government signed four new sharing contracts for exploration of oil and gas along the coastline. Only one of the blocs has an estimated investment of $120 million. Although oil production has decreased, the extraction of mineral gas is expanding, rose 9% in 2012 and, by June of this year, surpassed last year’s production on the same period by 30%. This increase is partly due to investments in the sector, but mainly to the increasing demand for electric power generation. The energy generated in power plants is around 60% of total national consumption and the surplus is exported to neighboring countries.

The investment increase also helped boost the economy. The investment rate increased from 2.8% of GDP in 2011 to 4.9% in 2012, and can close the year at 7.8% of the total wealth produced in the country. Even highly indebted, is the state investment that has led the growth of Côte d’Ivoire after the political crisis, benefited by the plan of expanded access to credit from the International Monetary Fund (IMF) and the debt relief mechanism for poor countries.

The minister of economy Nialé Kaba believes that, with the program of debt reduction, investments may reach 23.5% of GDP in 2015, close to the level of the first 20 years of Côte d’Ivoire as an independent nation. At that time, known as ‘ Ivorian miracle ‘, the average rate of GDP growth was 8%.


Investments can reach 23.5% of GDP and mostly goes to infrastructure works
Photo: Rafael Araujo 
(Click on Image to Enlarge)

Most of these investments go to construction of urban infrastructure. The construction industry recorded an increase in the activity of 52% last year in the wake of the recovery process and public buildings vandalized during the conflict, as was the case at the University Félix Houphouet – Boigny , which took the name of the first Côte d’Ivoire president. The cost of the university rehabilitation was estimated at $220 million.

In the service sector, the effects of the economic recovery are already being noted. The occupancy rate of the hotel came to 57% last year and generated revenues of $110 million. The transit of passengers on commercial flights increased by 46% in the same period and urban transport and road also recovered, a phenomenon observed in the increase in fuel consumption of 55.4% in the year.

More jobs



Mason Mamadou Doumbia receives equivalent of $ 70 per week
Photo: Rafael Araujo 
(Click on Image to Enlarge)

Since 2010 a temporary worker, the confectioner Laurent Kouakou-Diby, 35, has just been hired by one of the four star hotels in the Plateau – the central district of Abidjan, where businessmen and international missions usually stay. Kouakou-Diby is one of 35 thousand hiring made by the private sector since the end of the crisis, in April 2012. Including the public sector, the National Fund for Social Security reported 49 thousand new jobs in this period and now has 742 thousand subscribers.

This number of formal jobs seems negligible compared to the total population, estimated at 20 million people. It turns out that most of the occupation and income comes from informal work, unregistered, including in the government’s great infrastructure projects construction work.

The mason Mamadou Doumbia, 28, receives 36 thousand CFA francs ($ 70) per week to work , without a contract, in the construction of the third bridge overpass intersection. With an estimated cost of $300 million, the bridge is an alternative to the choked traffic to central Abidjan, who grew up around a pond. Satisfied with your new job possibilities, Doumbia and his colleagues face the delay in wages. The subcontractor of the Iranian construction company responsible for the construction is not paying the workers in the right time.

Strength of the agricultural sector

Despite the good results, economic analysts have shown skepticism about the direct impact of investments in construction work in people’s lives. In the economist Souleymane Ouattara view; the agricultural sector has greater ability to translate the increase in wealth in real improvement in people’s everyday lives. In a recent reform of the coffee and cocoa sector, the government reinstated a presale program that guarantees a minimum sale price for the farmer. In the 2012-2013 harvest, reserve price stabilization secured $160 million more in income to the farmer.


With harvest quarterly Côte d’Ivoire is the largest cocoa producer in the world
Photo: Issouf Sanogo / AFP 
(Click on Image to Enlarge)

Ousseni Sawadogo , 32, grows coffee , cocoa , rice and yams with the help of three brothers on five acres of land 35 km from Daloa in the center – west of the country . The house is masonry, but has no electricity, refrigerator, or stove. The light comes from a fire lamp, television transmits the channel state in a connected car battery and the meat is cooked preserved in water and salt in a wood burning stove. In Côte d’Ivoire, the cocoa harvest is quarterly, with a great one in December. Summing up the production of the year, Sawadogo estimates a 500 thousand CFA francs ($1000) earning from the cocoa sale. The income is to buy fish, cooking oil and salt. Everything else needed to ensure the sustenance of the nine adults living in the property, besides children, is the land provides. At the time of Ramadan, the neighbors gather to buy an ox and split the meat.


Christine Lagarde believes in new Ivorian miracle
Photo: Issouf Sanogo / AFP 
(Click on Image to Enlarge)

Even though quite urbanized, half Côte d’Ivoire population is established in the countryside. The country remains the largest producer of cocoa in the world, but also produces coffee, vegetable oil (palm), cashew nuts, rubber, cotton, sugar cane and banana. Almost all cultures have increased production since the end of the crisis, driven by exports, but mainly by demand from the food industry represents around 5 % of GDP and gathers multinationals such as Nestle, ADM and Cargill.

The excitement surrounding the growth infected even the director of the IMF,Christine Lagarde, who announced the arrival of a second ivoirien miracle, referring to the 70′s and 80’s great prosperity in the country ‘s cocoa. The risk is that this ‘miracle’ is being linked exclusively to the exploitation of natural resources and foreign debt, leaving most of the population out of the calculation of GDP, warn the experts.”


Côte d'Ivoire: Glencore-Xstrata Nickel will be able to develop the deposits and Sipilou Biankouma


“Swiss mining companyXstrata and Glencore Ivorian government will join forces to create a joint venture in charge of exploration and exploitation of nickel deposits and Sipilou Biankouma in the west.

The exploitation of nickel deposits and Sipilou Biankouma in western Côte d'Ivoire, will finally begin. "In the cabinet of the day, the state and Xstrata Nickel, a subsidiary of mining giant Glencore Xstrata, agreed to create a joint venture in which the state has a 10% shareholding, the national society Sodemi 5% Xstrata and Glencore 85%, "said Bruno Kone, the spokesman for the government at the end of the traditional weekly meeting of the Council of Ministers. In a first phase, investments are estimated at 35 million.

Long legal battle

The agreement ends a long legal battle between the two partners. Canadian Falconbridge bought by Xstrata in 2006, continued the Government of Côte d'Ivoire since 2010 to the unilateral withdrawal of its license and exploration of nickel in the region Sipilou of Founguesso and Samapleu in the west of the country. The Anglo-Swiss company had reached March 30, 2012 to condemn the Ivorian government to pay as damages, about 200 million euros before the tribunal of Paris. According to the spokesman of the government, this agreement ends the dispute definitively.

The reserves in the deposits of nickel laterite Sipilou and Biankouma are estimated at 259 million tonnes grading 1.4% nickel.”


Glencore Xstrata (GLEN.LN) 3yr Stock Chart - Moving above 200 day MA & upper Bollinger Band 
(Click on Image to Enlarge)
Johnston-Sequoia Commentary:

As many of our readers know - I've been following the development of Côte d'Ivoire, West Africa since March of 2010.  Last week I had the privilege to visit this evolving economy that has been "reset" since the dark days of 2008-2009.  It's truly remarkable to see the developments and "incubator economies" of the villages directly tied to the growth of the mineral exploration & energy expansion of Côte d'Ivoire.

The First & Perhaps a Second Ivoirian Miracle:

The Ivorian Miracle was the name given to a period of economic prosperity occurred in Côte d'Ivoire in the years 1960 - 1970.
The country benefited from several concurrent factors:
  • The rising price of commodities , including coffee and cocoa whose country was the world's largest producer.
  • The fact that France needed a showcase of its Africa policy.
  • The lack of stability of surrounding countries (slump in Guinea of Sekou Toure, instability in Ghana, etc..) which refer to the Ivory Coast economic activity.
  • Strong growth overall in industrialized countries.
  • The dismantling of the French West Africa .

Basilique Notre-Dame de la Paix de Yamoussoukro - 9th largest basilica in the world completed in 1989

(Click on Image to Enlarge)

Managing Director, International Monetary Fund
National Assembly, Abidjan, 2013
 



"...This brings me to my third topic this morning—how Côte d’Ivoire can fulfill its destiny.
The government already has an ambitious plan to turn Côte d’Ivoire into a full-fledged emerging market by 2020. This is not just wishful thinking—it is based on concrete policies laid out in the National Development Plan and generous financial support promised by Côte d’Ivoire’s partners and friends at the Consultative Group meeting in Paris in December 2012. Your goal is to generate enough growth to double national income by 2020.
In reality, you are seeking a second Ivoirien miracle. It can be done—of that I have no doubt...
...First, investment. This is the first building block of growth and prosperity. It is fitting that capital investment and upgrading infrastructure feature heavily in the National Development Plan...
...This country has already seen the rise and fall of its first Ivoirien miracle. Now is the time to lift the pickaxes and trowels and rebuild your nation once again, to create that second Ivoirien miracle, to do again what your forefathers have done before—with patience and perseverance, with courage and confidence, with faith and fortitude.
Let me assure you that the IMF will continue to stand with you along the way..."
--- Christine LagardeToward a Second Ivoirien Miracle
Managing Director, International Monetary Fund
National Assembly, Abidjan, 2013
 



As the the world's largest cocoa producer and simultaneously in the midst of a mining, energy and infrastructure renaissance - Côte d’Ivoire is on pace to be one of the fastest growing economies in the world and perhaps be considered an "emerging market" as early as 2020 according to the Managing Director of the IMF. The trajectory and velocity of the rise will of course be heavily dependent commodity prices (in particular agricultural commodities) and overall global growth.


Cocoa 5 year (weekly) Chart

It's anticipated that strong growth will occur in cities like Yamoussukro (the capital of Côte d’Ivoire since 1983), Bouake' and the port city of San Pedro not just the financial capital of Abidjan.

Photo taken in between the Presidential Hotel, the future two lane divided highway and Basilique Notre-Dame de la Paix - the site of Sama Resources future Ivorian Headquarters in Yamoussoukro, Côte d'Ivoire (Matt Johnston - Corporate Advisor, Koffi Michel Marc Kouadio - Exploration Geologist, Dr. Marc-Antoine Audet - President & CEO, Bakayoko Bouake - Exploration Manager, Bryan McKenzie - CFO) 
(Click on Image to Enlarge)

Integration to the Local Community:

It is the opinion of this author that Sama Resources (TSX.V:SME | US: LNZCF) has done more for the local people of Yorodougou than any other nano-cap company operating in Africa today.  Even at pre-production/advanced exploration Sama is one of the largest employers in the Western most portion of Côte d’Ivoire.  Sama employs no expatriates and has integrated Falconbridge/Xstrata's exploration and development team dating back to the mid 1990's.  This effort has been led (as many of our readers know) by Sama's President & CEO Dr. Marc-Antoine Audet who spent 22 years with the mining giants (a large portion of which was spent developing the now Glencore project summarized above as head of exploration).  Needless to say this area in Côte d’Ivoire is very dear to Dr. Audet's heart and anyone who visits the project easily can understand why.

 

Sama Resources Chief Financial Officer Bryan McKenzie taking a moment with children from Yorodougou Village (Click on Image to Enlarge)

The work ethic, drive, ingenuity and warmth of the Ivorian's of the Western most portion of Côte d’Ivoire is obvious and apparent to anyone fortunate enough to visit.  What Dr. Audet's team has been able to build in just 3 years is truly remarkable.


Kate Hannan, CA greets local village children in the new Yepleu Discovery Camp

Even at the current pre-production stage of development the village of Yorodougou in Côte d’Ivoire has benefited greatly from Sama's presence in the area.  Building schools, clean water pumps, infrastructure and a waste management program.  It's fascinating to witness the incubator economy that is being developed in this remote village.


Local market in the village of Yorodougou: Côte d’Ivoire, West Africa

 As a visitor you begin to sense a community and society that’s becoming the beneficiary of the resurgence in exploration and development activity taking place in this area.

 

Local villagers playing soccer just outside the Sama Resources compound: Côte d’Ivoire, West Africa

Potential World-class Discovery in Côte d’Ivoire, West Africa:

Samapleu nickel-copper-palladium Project - Côte d’Ivoire, West Africa

Project Highlights:
  • Potential for multiple world class nickel-copper-palladium deposits
  • Near-surface massive sulphide mineralization
  • Low-cost core drilling using company’s 100% owned Coretech CSD 1300G drill rigs
Samapleu drilling intersections have returned assays up to:
  • 3.71% nickel, 2.84% copper and 2.47 gpt palladium over 6.65 metres (massive sulphide)
  • 3.65% nickel, 2.60% copper and 2.89 gpt palladium over 7.70 metres (massive sulphide)
  • 1.95% nickel, 1.95% copper and 1.50 gpt palladium over 17.60 metres (massive sulphide)

Current NI 43-101 Resource: 
  • Indicated: 14,159,000 tonnes grading 0.24% nickel (74,500,000 lbs), 0.20% copper (61,200,000 lbs), 0.29 gpt palladium (128,316 ounces)
  • Inferred: 26,480,000 tonnes grading 0.24% nickel (134,000,000 lbs), 0.18% copper (107,200,000 lbs), and 0.31 gpt palladium (256,525 ounces)

Sama Resources Compound in the village of Yorodougou Côte d’Ivoire, West Africa

Dr. Audet's team has built (from scratch) a development operation that could easily be confused with that of a major (though it currently sits with a market cap of just $21,000,000).  Using the companies 100% owned Coretech CSD 1300G drill rigs (both of which can touch depths of up to 750 metres) Sama with it's current no debt treasury can do a tremendous amount of discovery and development drilling at an estimated $30 per metre ($9.15 per foot).

Sama Resources 20,000 litre fuel tank : Côte d’Ivoire, West Africa

Thanks to the work of Dr. Audet and his team from my perspective Sama now has everything it needs to establish itself as an elite nano-cap development company. As the company is about to commence drilling at the newly discovered Yepleu Prospect (please see video below), Sama's future could prove to be very bright indeed.


Sama Resources 100% owned Coretech CSD 1300G drill rig testing one a multitude of HTEM targets: Côte d’Ivoire, West Africa

Sama has utilized innovative exploration techniques including 3D Mag, Radiometric, HTEM and InfiniTEM survey's to identify potential ultramafic targets and will begin to test these new targets this fall.

 

Large Anomoly HTEM targets: Côte d’Ivoire, West Africa

We've put together a short (3:45 sec) HD video to highlight the potential of the new Yepleu Prospect - hope you enjoy!:

 


The Yepleu Discovery Côte d’Ivoire, West AfricaHD Video (Click on image to play)

Finally, Sama's largest institutional shareholders are impressive as well - MMG Limited at 17.74% and IFC (World Bank Group) at 12.09%.  It's worth noting this is the first time the IFC has ever invested in Côte d’Ivoire is in this little $21,000,000 market cap company.

Sama Resources 3 year chart
We will watch the economic renaissance of Côte d’Ivoire, West Africa with keen interest and have front row seats for perhaps the "Second Ivoiren Miracle".  I am a paid advisor of Sama Resources Inc. and own shares in the company.  Johnston-Sequoia owns shares in Sama Resources as well.

Your editor standing near one of Sama Resources new discovery zones: Côte d’Ivoire, West Africa

 

Safe Harbor Statement

 

***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which ]]> Thu, 26 Sep 2013 07:12:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/21671/the-economic-renaissance-of-cte-divoire-west-africa-5095.html Barrick Hits 361 Meters of 1.47 gpt Gold at Spring Valley, Nevada http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/20794/barrick-hits-361-meters-of-147-gpt-gold-at-spring-valley-nevada-4197.html Barrick Hits 361 Meters of 1.47 gpt Gold at Spring Valley, Nevada

The Humboldt Range West-Central Nevada
Barrick Hits 361 Meters of 1.47 gpt Gold at Spring Valley, Nevada


Midway Reports 361 Meters of 1.47 gpt Gold by Barrick at Spring Valley, Nevada

"Denver, Colorado – Midway Gold Corp. ("Midway" or the "Company") (MDW:TSX-V; MDW:NYSE-MKT) provides an update on progress at the Spring Valley Project, Pershing County, Nevada. Development drilling, designed to upgrade the quality of the resource, continues to produce excellent intercepts.  Barrick Gold Exploration Inc. ("Barrick") is earning into the project and their 2013 budget for Spring Valley includes $10 million for exploration and development.

Ken Brunk, Midway’s President and CEO said, “Barrick continues an accelerated pace to earn-in at our Spring Valley project. Based on their 2013 budget, we expect Barrick to earn a 70% interest in the fall of this year. We were very pleased to receive yet another set of positive results from their current exploration work and we anticipate this year will bring additional good news as the project advances through scoping and into pre-feasibility.”

Development Drilling

Development drilling in the resource area is designed to expand the resource within the estimated pit perimeter and to upgrade the quality of those resources for future engineered reserve calculations. Additional expansion potential remains at depth and to the north of the deposit.

Recent drilling highlights include:

  • SV13-621: 361 meters of 1.47 grams per tonne (gpt) gold starting at 35 meters depth. The interval included 21 meters of 7.54 gpt gold and 23 meters of 3.02 gpt gold
  • SV13-620: 120 meters of 0.75 gpt gold including 18 meters of 2.43 gpt gold 35 meters of 0.79 gpt gold including 1.5 meters of 4.08 gpt gold and 21 meters of 1.20 gpt gold including 1.5 meters of 5.59 gpt gold

During the first quarter, Barrick completed 4,552 meters of reverse circulation (RC) and 3,148 meters of core drilling. This drilling included nine core holes and six reverse circulation holes. An additional five holes were in progress at the end of the first quarter. Assays remain pending for most of the 2013 drill holes....Barrick has reported the internal scoping study is still in progress by the project’s evaluation group. This will advance into a prefeasibility study if approved by management after a peer review. Work underway includes:

  • Resource modeling
  • Metallurgical testing
  • Hydrologic data for dewatering studies
  • Core drilling for waste rock and ore geochemical characterization
  • Design and evaluation of initial mine layout alternatives
  • Initial pit slope stability studies
  • Initial base line surveys

Earn-In Update

In April, Barrick reported that they had exceeded the cumulative expenditure requirement of $30M to earn a 60% interest in the property. They also exercised their option to spend an additional $8 million to earn a 70% interest.

The Barrick budget for Spring Valley in 2013 includes $8.0 million for exploration, primarily drilling, and $2 million for development work. Development work includes completing the scoping study and initiating a prefeasibility study if supported by the scoping study results. Midway anticipates by the end of 2013 Barrick will complete cumulative expenditures of $38 million to earn a 70% interest in the project, which would be a full year ahead of the contractual requirements."



Significant Drill Results at Midway Gold’s Spring Valley JV with Barrick Gold Confirm Potential for Terraco’s Royalty Interest
--- Chris Berry – Morning Notes 2013-07-05

Terraco Gold Update (TEN :TSXV, TCEGF :OTCBB)

"Last week, Midway Gold (MDW :NYSE.MKT, MDW :TSX) updated their investor base with news highly significant to Terraco Gold, their neighbor to the south of the JV’s Spring Valley project. MDW reported several results from development drilling underway at Spring Valley. Two intercepts were of note:

- Hole SV13-621 returned 361 meters of 1.47 grams per tonne (gpt) goldstarting at 35 meters depth. The interval included 21 meters of 7.54 gpt gold and 23 meters of 3.02 gpt gold

- Hole SV13-620 returned 120 meters of .75 gpt gold including 18 meters of 2.43 gpt gold; 35 meters of .79 gpt gold including 1.5 meters of 4.08 gpt gold and; 21 meters of 1.20 gpt gold including 1.5 meters of 5.59 gpt gold.

Furthermore, MDW’s joint venture partner on the project, Barrick Gold (ABX :NYSE), has completed its requirement for a 60% earn-in on the project (by having spent $30 million on the property) and will be spending at least an additional $8 million in 2013 to attain a 70% share of the project.  It appears to us that these drill results indicate a major structure at Spring Valley.

We offer our congratulations to the team at ABX / MDW for their many successes, particularly Ken Brunk. We want to draw your attention to the potential benefits this news has for TEN and their royalty interest in Spring Valley. As a brief refresher, TEN has up to a 3% NSR on the Spring Valley property, so as the resource grows, so, too, does the value of the royalty. This is a crucial point of potential wealth creation to remember.  Make no mistake, we believe these new intercepts may significantly increase the potential for wealth creation Below we include a map of the Spring Valley deposit (outlined in black) showing TEN’s royalty interests. The drill results mentioned above are located in the red shaded area.
Terraco Gold's Royalty on the Barrick-Midway Spring Valley Gold Project (Click on image to enlarge)

What is important here is that the two holes we mentioned above, SV13-620 and SV13-621 are located right in the middle of the claim block where TEN holds the net smelter returns royalty interest. The implications of this are straightforward – as Spring Valley continues its development and ostensibly becomes a larger more valuable deposit, the royalty interest TEN has on the property also increases in value.

In an era where junior mining finance is more than challenging, to say the least, a royalty such as this provides TEN CEO Todd Hilditch flexibility (we have called this “optionality” in the past) in terms of how he and his team choose to push forward with their two properties – Moonlight in Nevada and Nutmeg Mountain in Idaho.

Based on our conservative “back of the envelope” math, the royalty interest could be worth as much as $80 million to TEN today. We want to stress that we are using data provided from MDW’s NI 43-101 on Spring Valley and adding our own assumptions to arrive at this number.



The Disconnect

What is notable is the value of the royalty interest ($80 million) versus the current market capitalization of TEN: ($19.22 million fully diluted). We believe there is a very clear disconnect between the intrinsic value of the company and its market value.

The Rationale for Considering TEN as an Investment

We view the rationale for owning TEN as straightforward. As the global economy struggles to get back on its feet, Central Bankers are adamant in fomenting economic growth and inflation through expansion of their balance sheets. As we have demonstrated in recent editions of Morning Notes, this policy has not had its intended effect.

Recent discussions of “tapering” quantitative easing programs in the US are likely just Chairman Bernanke “jawboning” the markets and do not appear to be realistic. As a result, additional balance sheet expansion and printing of money seems likely which means a weaker dollar in the long run. This bolsters the case for gold in a portfolio as a hedge against eventual inflation and as a store of value.

This would include ownership of gold junior mining shares where the possibility exists to profit from share price leverage. Those juniors that can demonstrate financial sustainability and profit from production in a non-dilutive manner should be given consideration by you in your own due diligence processes. We continue to believe Terraco Gold is one such opportunity and have valued it thus on the DiscoveryScoreboardIt is a true contrarian play at this point because we think it is sustainable.”

Chris Berry, MBA – Morning Notes 2013-07-05

Chris Berry Bio:

With a life-long interest in geopolitics and the financial issues that emerge from these relationships, Chris founded House Mountain Partners LLC in 2010. House Mountain firmly believes that the emerging Quality of Life Cycle emanating from Asia is a "game changer" which will affect every one of us throughout the world for decades. With that in mind, the firm focuses on the intersection of three topics: the evolving geopolitical relationship between emerging and developed economies, the commodity space, and junior mining and resource stocks positioned to benefit from this phenomenon. Chris spent 13 years working across various roles in sales and brokerage on Wall Street before founding House Mountain Partners. He also co-authors a newsletter with his father Dr. Michael Berry, "Morning Notes by Dr. Michael Berry". He holds an MBA in Finance with an international focus from Fordham University, and a BA in International Studies from The Virginia Military Institute.



Thursday June 6, 2013, 4:30pm PDT
By Andrew Topf - Exclusive to Gold Investing News

"A gold junior with a net smelter returns royalty on a property in Nevada joint-ventured between Barrick Gold (NYSE:ABX, TSX:ABX) and Midway Gold (TSXV:MDW) has been getting traction in the market and is on the radar of at least one influential commodities analyst/ newsletter writer.
In a note to shareholders published on May 30th, Terraco Gold (TSXV:TEN) said that Barrick (NYSE:ABX, TSX:ABX), the world’s second largest gold company by market cap, now holds a 60 percent interest in the Spring Valley project located in Pershing County, Nevada — which it earned by investing over $30 million in exploration expenditures.
That is significant for Terraco because the Vancouver-based junior has a net smelter returns (NSR) royalty at Spring Valley whereby Terraco has the option to acquire up to a 3 percent NSR on claims covering the ore body.
The latest drill results published by Midway Gold on May 29th showed high-grade gold at Spring Valley, including intercepts of 1.47 grams per tonne including 21 meters of 7.54 g/t and 23 meters of 3.02 g/t.
“The Barrick path to production and therefore potential future cash flow from the project should create sizeable value with Terraco’s (up to) 3% NSR royalty and royalty option on claims covering the known ore body at Spring Valley,” Terraco said, noting that Barrick plans to spend another $8 million to further drill the property, which would hike Barrick’s interest to 70 percent.
“Barrick’s continued great work at Spring Valley is a definite highlight for the mining space and the project is one of the fastest advancing path to production gold stories in Nevada.”
The deposit contains an NI 43-101 compliant 4.1 million ounces of gold, with Barrick’s 2009 and 2010 drilling confirming gold mineralization open to the north and at depth.


Terraco drilling approximately 3,400 ft north of the Barrick discovery along the Blackridge Fault (Click on Image to Enlarge)
The market has rewarded both Midway Gold and Terraco for their recent progress at Spring Valley. Midway’s stock has risen 6 percent over the past three months and 20 percent over the past month, while Terraco’s has done even better, with an 11 percent and 25 percent gain over the same time frames.
Terraco has not escaped the notice of House Mountain Partners founder Chris Berry, who wrote in a recent edition of Morning Notes that the growth of the resource at Spring Valley also means significant upside potential for Terraco:
“It appears to us that these drill results indicate a major structure at Spring Valley,” wrote Berry. “Make no mistake, we believe these new intercepts may significantly increase the potential for wealth creation.”
How much wealth? Berry estimates in the note that the royalty interest could be worth as much as $80 million, which is roughly four times the market cap of Terraco, making the company significantly undervalued: “We believe there is a very clear disconnect between the intrinsic value of the company and its market value.”
Berry also observes that the NSR provides Terraco with options to move forward on its other main projects, Moonlight in Nevada and Almaden-Nutmeg Mountain in Idaho. Of those two properties, Almaden is the more advanced, with 864,000 ounces of gold in the measured and indicated categories. Moonlight is about 8 kilometers north of the producing Coeur d’Alene Rochester silver-gold mine and has been minimally explored.
Securities Disclosure: I, Andrew Topf, hold no direct investment interest in any company mentioned in this article."

TEN Chart June 2010 - Present (Click on image to Enlarge)

Johnston-Sequoia Commentary:


As many of our readers know - I've tracked the development of this Humboldt Range in West-central Nevada since May 27th of 2008.  I've never believed more in the potential and significance of the this evolving precious metals district as I do today.  Midway and Terraco will both benefit (from my perspective) greatly from this discovery as Barrick continues to refocus on the area that has buttered their bread for so many years (Nevada).  As the premium paid for physical gold continues to decouple from the paper market (which is seemingly happening at an alarming pace) - new discovery's will be the only place left to capture a position if (or more realistically - when) paper markets and precious metals ETF's become exposed.

A picture as they say is worth 1,000 words (and perhaps $2,200 per ounce of physical gold in the short to medium term):

10,000 people line up to buy gold in China - submitted by Zerohedge (Click on Image to Enlarge)

Finally, as you see in the chart above - TEN's share price has declined by - 48.28% (since December 22nd 2011) in the same time period that the company acquired approximately $80,000,000 in assets and $6,000,000 in cash without issuing a share. If that is not deep value investing - I don't know what is...

Johnston-Sequoia Capital Corp. owns shares in Terraco Gold - I own shares in Terraco Gold and am an advisor of the company.

To all of our readers both young & "distinguished" - Happy Fathers day and hope you're all enjoying the weekend. 

Your editor standing on the Blackridge Fault approximately 3,200 ft north the Barrick discovery (Click on Image to Enlarge)
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Mon, 17 Jun 2013 08:17:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/20794/barrick-hits-361-meters-of-147-gpt-gold-at-spring-valley-nevada-4197.html
Special Edition: Is Cash no Longer King? http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/20322/special-edition-is-cash-no-longer-king-3720.html  

Is Cash No Longer King?
Stopping the Clock on Currency Debasement

“Since 1971 (when Nixon closed the gold window) the Dow Jones increased 15-fold and the dollar gold price increased 45-fold. What does this really mean?

The stock markets, the economies, the GDPs, the increasing debt loads, and the financial industries are all corrupted and falsified. The Western economy has increasingly become a debt addict. Debt grows ever faster than the real economy.

The blatant falsifications of the financial industry served to hide the ongoing drama (debt/GDP). The entire financial industry doesn't represent the economy and its over productive debt load any more. That's why the Fed has to falsify financial industry paper gold to hide the evolving drama.

The entire world is now increasingly aware of the gigantic catch-22 we're in.The economy and financial industry is rapidly losing appeal. The affinity for gold metal therefore grows intuitively.

Gold value (anti-debt) will rise faster than the economy and the financial industry. Those in the know will leave the existing system and will move closer and closer to gold - the wealth preserve metal. A very natural process (transition) that grows from intuition (animal spirits).

This transition is irreversible. The Fed knows this as no other (corrupt) governing body. The money system and regime will try to keep this drama hidden from public awareness. This will backfire later on, sooner rather than later.”

CIGA Patrick FG

--- JS Mineset April 18th, 2013

Spot Gold ($USD) 1978-2013 (Click on Image to Enlarge)

Fed and Bank of Japan caused gold crash

--- Ambrose Evans-Pritchard – The Telegraph April 17th, 2013


“Commodity prices have been falling since September, culminating in a rout over the past two weeks. That is a classic warning for the global economy.

It is becoming ever clearer that the roaring boom in global equities since last summer has priced in an economic recovery that does not in fact exist. The International Monetary Fund has had to nurse down its global growth forecasts yet again. We are still stuck in an old-fashioned trade depression, with pervasive over-capacity in manufacturing plant and a record global savings rate of 25% of GDP.

German car sales fell 17% in March. That should puncture the last illusions that Germany is about to pull Europe out of a self-inflicted slump.

As you can see from the chart below, the divergence between stock markets and the Deutsche Bank index of raw materials is astonishing to behold, so like the pattern in early 1929.

Click on Image to Enlarge

Steel has fallen 31% this year. Brent crude is off 17% since early February, and copper 15%.

You have to be careful reading too much into commodities, distorted by China. The time-honored cycle is a surge of investment that comes on stream at once with a lag. America's shale drive has turned the gas market upside down, diverting liquefied natural gas to Europe and Asia. Copper output in Chile rose 7% last year. The crash in the Baltic Dry Index for shipping rates is partly a tale of too many ships.

Yet excess supply does not explain the collapse in gold over the past week. Cyprus may have been an incidental trigger. If the EU-IMF Troika is determined to strong-arm the Cypriots into selling most of their pint-sized holding of 14 tonnes, it may do the same to Portugal when the time comes, and then you are talking about the world's 14th biggest holding of 382 tonnes.


Jim Rickards: Official Gold Holdings in Metric Tonnes (Click on image to Enlarge)

Bank of America says the gold crash since Friday has already discounted sales of the entire Cypriot, Portuguese and Greek gold reserves combined. "As we believe additional gold selling in the European periphery is highly unlikely, we find it hard to fully justify the sell-off," it said.

The central banks of China and the emerging powers bought 535 tonnes last year to escape dollars and euros, the biggest wave of state purchases since 1964. Their strategy is to buy the dips, and they are no fools. The head of China's reserve manager "SAFE" used to run a US hedge fund.

They won't try to catch a "falling knife", preferring to wait until the dust settles. The upward trend of the great bull market has been broken. The technical damage is brutal. Bank of America expects a further drop to $1,200. Be patient.

My view is that the US Federal Reserve and the Bank of Japan "caused" the gold crash. The rest is noise. The Fed assault began in February when it published a paper warning that the longer quantitative easing continues, the harder it will be for the bank to extricate itself.

The report was co-written by former Fed governor Frederic Mishkin, often deemed Ben Bernanke's "alter ego". It said the Fed's capital base could be wiped out "several times" once borrowing costs climb. The window will start shutting by 2014, with trouble then compounding at a "dramatic" pace.

This was a shock. It suggested that the Fed has lost its nerve, and will think long and hard before launching a fresh blitz of money if growth falters.

Then came last week's Fed Minutes, with hints of tapering off QE earlier that expected. That was the next shock. What they seemed to be saying is that the US economy is groping it way back to normality, that the era of silly money is over, that the dollar will stand tall again.

If that were the case, gold should fall. But it is not the case. The US economy is growing below the Fed's own "stall speed" indicator. Half a million people fell out of the workforce in March. Retail sales fell in March. So did manufacturing.

The US faces fiscal tightening of 2.5% of GDP this year, the most since 1946. Ex-labour secretary Robert Reich said the effects have been disguised so far, but a "stealth sequester" is just starting: $51m of grant cuts to Brandeis university; $1m for schools in Syracuse; and so on, the reverse of the stealth stimulus before.

My guess is that the Fed will be forced to row back smartly from its exit talk, but first we must look deflation in the eyes.

As for the Bank of Japan, it had been assumed that the colossal monetary stimulus of Haruhiko Kuroda would revive the yen-carry trade, leaking $1 trillion into world asset markets. But the early evidence is the opposite. Japanese investors brought money home last week.

"Mrs Watanabe" is selling her Kiwi and Aussie bonds to bet on stocks and property at home. And she is selling gold like never before. That too is a shock.

Japan's "Abenomics" may prove a net drag on the world over coming months. It is exporting deflation through trade effects. This already visible in Korea and China, where soaring wages have eroded competitiveness. "Investors may have forgotten that yen weakness was one of the immediate causes of the 1997 Asian currency crisis and Asia’s sUBSequent economic collapse," said Albert Edwards from Societe Generale.

China's growth rate fell to 7.7% in the first quarter. It will fall further, though the catch-up boom in the hinterland cities of Chengdu, Chonquing, Changsa and Xi'an may have further to run.

Fitch Ratings says credit has surged from €9 trillion to €23 trillion over the past four years, a rise equal to the entire US banking system. Beijing pumped up loans yet again after its recession scare in the summer, but is gaining less traction. The GDP growth effect of credit has halved. It is the classic sign of an economy sated on debt. China too will have to deleverage.

The world is still in a contained depression. Sliding commodities tell us global money is if anything too tight. "There is a threat of deflation almost everywhere. A lot of central banks will have to follow the Bank of Japan, whatever they say now," said Lars Christensen form Danske Bank

The era of money printing is young yet. Gold will have its day again.
--- Ambrose Evans-Pritchard– The Telegraph April 17th, 2013

Gold crushed by 400 tonnes or $20 billion of selling on COMEX
--- Ross Norman | Ross Norman: Sharps Pixley April 15th, 2013

“The gold futures markets opened in New York on Friday 12th April to a monumental 3.4 million ounces (100 tonnes) of gold selling of the June futures contract (see below) in what proved to be only an opening shot. The selling took gold to the technically very important level of $1540 which was not only the low of 2012, it was also seen by many as the level which confirmed the ongoing bull run which dates back to 2000. In many traders minds it stood as a formidable support level... the line in the sand. 

Two hours later the initial selling, rumoured to have been routed through Merrill Lynch's floor team, by a rather more significant blast when the floor was hit by a further 10 million ounces of selling (300 tonnes) over the following 30 minutes of trading. This was clearly not a case of disappointed longs leaving the market - it had the hallmarks of a concerted 'short sale', which by driving prices sharply lower in a display of 'shock & awe' - would seek to gain further momentum by prompting others to also sell as their positions as they hit their maximum acceptable losses or so-called 'stopped-out' in market parlance - probably hidden the unimpeachable $1540 level.

The selling was timed for optimal impact with New York at its most liquid, while key overseas gold markets including London were open and able feel the impact.The estimated 400 tonne of gold futures selling in total equates to 15% of annual gold mine production - too much for the market to readily absorb, especially with sentiment weak following gold's non performance in the wake of Japanese QE, a nuclear threat from North Korea and weakening US economic data. The assault to the short side was essentially saying "you are long... and wrong".

June Gold Futures: Note Volume, Price, Velocity & Time - 6 minute Chart (Click on Image to Enlarge)
Futures trading is performed on a margined basis - that is to say you have to stump up about 5% of the actual cost of the gold itself making futures trades a highly geared 'opportunity' of about 20:1 - easy profit and also loss ! Futures trading is not a product for widows and orphans. The CME's 10% reduction in the required gold margins in November 2012 from $9133/contract to just $7425/contract made the market more accessible to those wishing both to go long or as it transpired, to go short. Soon after we saw the first serious assault to the downside in Dec 2012, followed by further bouts in January 2013 - modest in size compared to the recent shorting but effective - it laid the ground for what was to follow. One fund in particular, based in Stanford Connecticut, was identified as the previous shorter of gold and has a history of being caught on the wrong side of the law on a few occasions. As badies go - they fit the bill nicely.

The value of the 400 tonnes of gold sold is approximately $20 billion but because it is margined, this short bet would require them to stump up just $1b. The rationale for the trade was clear - excessively bullish forecasts by many banks in Q4 seemed unsupported by follow through buying. The modest short selling in Jan 2013 had prompted little response from the longs - raising questions about their real commitment. By forcing the market lower the Fund sought to prompt a cascade or avalanche of additional selling, proving the lie ; predictably some newswires were premature in announcing the death of the gold bull run doing, in effect, the dirty work of the shorters in driving the market lower still. 

This now leaves the gold market in an interesting conundrum - the shorter is now nursing a large gold position and, like the longs also exposed - that is to say the market is polarised between longs and shorts and they cannot both be right. Either the gold bulls - like in a game of tug-of-war - pull back and prompt the shorters to panic and buy back - or they do nothing, in which case the endless stories about the "end of gold" will see a steady further erosion in prices. At the end of the day it is a question of who has got the biggest guns - the shorts have made their play - let's see if there is any response from the longs to defend their position.”  
---  Ross Norman: Sharps Pixley April 15th, 2013

Assault On Gold Update — Dr. Paul Craig Roberts

"Gold weights are based on metric tons and Troy ounces. 500 metric tons of gold would be 16,075,000 troy ounces. This changes the arithmetic slightly but not the point

I was the first to point out that the Federal Reserve was rigging all markets, not merely bond prices and interest rates, and that the Fed is rigging the bullion market in order to protect the US dollar’s exchange value, which is threatened by the Fed’s quantitative easing. With the Fed adding to the supply of dollars faster than the demand for dollars is increasing, the price or exchange value of the dollar is set up to fall.

A fall in the dollar’s exchange rate would push up import prices and, thereby, domestic inflation, and the Fed would lose control over interest rates. The bond market would collapse and with it the values of debt-related derivatives on the “banks too big too fail” balance sheets. The financial system would be in turmoil, and panic would reign.
Rapidly rising bullion prices were an indication of loss of confidence in the dollar and were signaling a drop in the dollar’s exchange rate. The Fed used naked shorts in the paper gold market to offset the price effect of a rising demand for bullion possession. Short sales that drive down the price trigger stop-loss orders that automatically lead to individual sales of bullion holdings once their loss limits are reached.
According to Andrew Maguire, on Friday, April 12, the Fed’s agents hit the market with 500 tons of naked shorts. Normally, a short is when an investor thinks the price of a stock or commodity is going to fall. He wants to sell the item in advance of the fall, pocket the money, and then buy the item back after it falls in price, thus making money on the short sale. If he doesn’t have the item, he borrows it from someone who does, putting up cash collateral equal to the current market price. Then he sells the item, waits for it to fall in price, buys it back at the lower price and returns it to the owner who returns his collateral. If enough shorts are sold, the result can be to drive down the market price.
A naked short is when the short seller does not have or borrow the item that he shorts, but sells shorts regardless. In the paper gold market, the participants are betting on gold prices and are content with the monetary payment. Therefore, generally, as participants are not interested in taking delivery of the gold, naked shorts do not need to be covered with the physical metal.
In other words, with naked shorts, no physical metal is actually sold.
People ask me how I know that the Fed is rigging the bullion price and seem surprised that anyone would think the Fed and its bullion bank agents would do such a thing, despite the public knowledge that the Fed is rigging the bond market and the banks with the Fed’s knowledge rigged the Libor rate. The answer is that the circumstantial evidence is powerful.
Consider the 500 tons of paper gold sold on Friday. Begin with the question, how many ounces is 500 tons? There are 2,000 pounds to one ton. 500 tons equal 1,000,000 pounds. There are 16 ounces to one pound, which comes to 16 million ounces of short sales on Friday.
Who has 16 million ounces of gold? At the beginning gold price that day of about $1,550, that comes to $24,800,000,000. Who has that kind of money?
What happens when 500 tons of gold sales are dumped on the market at one time or on one day? Correct, it drives the price down. Investors who want to get out of large positions would spread sales out over time so as not to lower their sales proceeds. The sale took gold down by about $73 per ounce. That means the seller or sellers lost up to $73 dollars 16 million times, or $1,168,000,000.
Who can afford to lose that kind of money? Only a central bank that can print it.
I believe that the authorities would like to drive the gold price down further and will, if they can, hit the gold market twice more next week and put gold at $1,400 per ounce or lower. The successive declines could perhaps spook individual holders of physical gold and result in actual net sales of physical gold as people reduced their holdings of the metal.
However, bullion dealer Bill Haynes told kingworldnews.com that last Friday bullion purchasers among the public outpaced sellers by 50 to 1, and that the premiums over the spot price on gold and silver coins are the highest in decades. I myself checked with Gainesville Coins and was told that far more buyers than sellers had responded to the price drop.
Unless the authorities have the actual metal with which to back up the short selling, they could be met with demands for deliveries. Unable to cover the shorts with real metal, the scheme would be exposed.
Do the authorities have the metal with which to cover shorts? I do not know. However, knowledgeable dealers are suspicious. Some think that US physical stocks of gold were used up in sales in efforts to disrupt the rise in the gold price from $272 in December 2000 to $1,900 in 2011. They point to Germany’s recent request that the US return the German gold stored in the US, and to the US government’s reply that it would return the gold piecemeal over seven years. If the US has the gold, why not return it to Germany?
The clear implication is that the US cannot deliver the gold.
Andrew Maguire also reports that foreign central banks, especially China, are loading up on physical gold at the low prices made possible by the short selling. If central banks are using their dollar holdings to purchase bullion at bargain prices, the likely results will be pressure on the dollar’s exchange value and a declining market supply of physical bullion. In other words, by trying to protect the dollar from its quantitative easing policy, the Fed might be hastening the dollar’s demise.
Possibly the Fed fears a dollar crisis or derivative blowup is nearing and is trying to reset the gold/dollar price prior to the outbreak of trouble. If ill winds are forecast, the Fed might feel it is better positioned to deal with crisis if the price of bullion is lower and confidence in bullion as a refuge has been shaken.
In addition to short selling that is clearly intended to drive down the gold price, orchestration is also indicated by the advance announcements this month first from brokerage houses and then from Goldman Sachs that hedge funds and institutional investors would be selling their gold positions. The purpose of these announcements was to encourage individual investors to get out of gold before the big boys did. Does anyone believe that hedge funds and Wall Street would announce their sales in advance so the small fry can get out of gold at a higher price than they do?
If these advanced announcements are not orchestration, what are they?
I see the orchestrated effort to suppress the price of gold and silver as a sign that the authorities are frightened that trouble is brewing that they cannot control unless there is strong confidence in the dollar. Otherwise, what is the point of the heavy short selling and orchestrated announcements of gold sales in advance of the sales?"

Johnston-Sequoia Commentary:

"If you can keep your head when all about you are losing theirs and blaming it on you, If you can trust yourself when all men doubt you, But make allowance for their doubting too..."
--- Rupert KiplingIf

Is Cash No longer King?

Since the news broke of the Cyprus bail-ins it has appeared that the entire world is up in smoke.  Taking into consideration all that has happened in the past four weeks allow us to take a step back and ask a philosophical question along the lines of "If a tree falls in the forest..." - The question is; If you're standing in the forest and all trees fall down around you at the same time - do you notice if someone steals the wallet out of your back pocket?

The Great Divergence:

This from my perspective is the real story for the next 19 months (and arguably is the only metric one needs to assess). The chart below illustrates the great divergence between the US Dollar and Spot Gold which began in November of 2008.  Beginning Monday April 15th, 2013 we may begin to witness the greatest divergence in history between paper currencies and the price of gold.  The demand and real consumption of the physical metal over the past week has unprecedented.  Consider each of the charts below and what they ultimately mean.  As my friend in cow country suggests "we cannot keep measuring things with a broken measuring stick..."

Please click on the image below and note the volume, price velocity and time of the sell off in gold (The RSI and MACD on Gold are at oversold levels not seen since 1983).  I see normal people walking into the Vancouver Buillion Exchangeevery day and buying physical gold and silver (myself and those closest to me included).  Please consider protecting yourself and consider taking notes in theDoug Casey interview below.


A Picture is worth 1000 words: Spot Gold vs $USD - 10 year Chart (Click on image to enlarge)
Purchasing Power of the $US 1971-2009 vs Currency in Circulation (this visual has gotten dramatically worse since 2009 as well): Click on Image to Enlarge

Consumer Price Index for All Urban Consumers: Purchasing Power of the Consumer Dollar 1910-2013: Click on Image to Enlarge

In the Meantime:

Gold Buying Frenzy Continues: China, Japan, And Australia Scramble For Physical

 Tyler Durden: Zero Hedge April 17th, 2013

"We noted here that the plunge in the paper price of gold (and silver) had prompted considerable renewed demand for physical and now it seems the scramble among the "more stable investor base" is increasing. The shake out of ETFs and futures has left the Australian mint short of deliverables and Japanese and Chinese gold retailers seeing a "frenzied" surge in demand. The customers are not just the 'rich' or 'elderly'; in China "they tend to wear water shoes and come directly from the market...;" in Australia, "the volume of business... is way in excess of double what we did last week,... there’s been people running through the gate," and Japanese individual investors doubled gold purchases yesterday at Tokuriki Honten, the country’s second-largest retailer of the precious metal. The panic selling by a weaker 'imminent inflation-based' investor base has sparked physical shortages - "there’s been significant sales made as people see this as great value." It seems our previous discussions of a rotation from paper to physical were correct and this physical demand will eventually leak back into the paper markets. 
Australia (via The Age):
Liezel HillCommodities Industry Reporter at Bloomberg

"Barrick Gold Corp. is betting growth will come from Nevada, where the world’s largest producer scored its first big success three decades ago, after more than $9 billion in writedowns and cost overruns in the past two years on projects from Zambia to the Andes.

Chief Executive Officer Jamie Sokalsky said yesterday the Toronto-based company doubled the estimated resources at the Goldrush deposit in Nevada last year, even as it sells assets and cuts spending elsewhere to revive shares that slumped 24 percent. Barrick is also pushing ahead with Pascua-Lama, a gold and silver mine on the Chile-Argentina border it expects to open next year.

“The priorities for the company, once we finish Pascua-Lama  really are focused on Nevada,” Sokalsky said yesterday on the company’s earnings call. “We have one of the most exciting exploration finds in recent memory, the Goldrush discovery, to ultimately add to this Nevada production in the future.”

Sokalsky’s mantra yesterday was steady and safe. The CEO, who took the job June 6, said the company has no plans to build more new mines and is looking to sell lower-return assets including its energy unit and the 50 percent it owns in a nickel project in Tanzania.

Shareholders reacted positively to Sokalsky’s moves to do “anything that will increase shareholder value” yesterday, lifting the stock 2.3 percent in Toronto.

‘Looking for Safety’

“Investors are definitely looking for safety,” Adam Graf, a New York-based analyst at Dahlman Rose & Co., said yesterday in a telephone interview. Nevada is “the only place that they’ve been able to execute successfully if you think back to the last several years.”

Fifteen analysts recommend buying Barrick’s shares, while Graf is among 13 analysts that have a hold rating, according to data compiled by Bloomberg.

Barrick has declined 6.8 percent this year, compared with the 10 percent decline in the 30-company Philadelphia Stock Exchange Gold and Silver Index. The S&P/Toronto Stock Exchange Composite Index is up 2.3 percent.

The shares rose yesterday after the company reported adjusted fourth-quarter earnings that beat analysts’ estimates and Sokalsky said the company has received interest from “serious buyers” for its assets.

Flagship Asset

Barrick is optimistic the sales process for its energy unit will be successful and the company has held talks with potential buyers for its 50 percent stake in the Kabanga nickel project, Sokalsky said in an interview. Xstrata Plc owns the rest of Kabanga.

Barrick’s two biggest mines in Nevada are Goldstrike, which became the company’s flagship asset after it was acquired in 1986, and the Cortez operations. Nevada accounted for more than 40 percent of Barrick’s production last year and represents about a third of its total 2012 reserves, the company said yesterday.

Barrick mentioned the state 17 times yesterday on the earnings call, compared with just once a year ago.

“In an environment where you see so much concern about geopolitical risk around the world and resource nationalism, I think sometimes people lose sight of the fact that we have these huge core assets in Nevada,” Sokalsky said in the interview. “That’s a real competitive advantage for us.”

Barrick Gold (TSX: ABX | NYSE: ABX) Weekly: 2008 - Present with Fibonacci Technical's

Focused Abroad

Analysts and investors have been more focused abroad in recent years, as the company spent C$7.3 billion ($7.29 billion) to acquire Equinox Minerals Ltd., owner of a Zambian copper mine, and Barrick poured billions of dollars into two Latin American projects.

While Pueblo Viejo, Barrick’s joint venture with Goldcorp Inc. in the Dominican Republic, started production in August last year, the company delayed the expected start date for Pascua-Lama by about a year and raised the cost forecast for the mine twice in 2012. Barrick yesterday maintained its latest cost range of $8 billion to $8.5 billion for the mine.

It makes sense that the company would look to Nevada for its future growth, after operational and political difficulties elsewhere, said George Topping, an analyst at Stifel Nicolaus & Co. in Toronto.

“That’s a focus that investors want,” Topping said in a phone interview. “If you compare the difference: let’s go and build Pascua-Lama on the very top of the Andes straddling two countries that don’t really like each other, or let’s build it in Nevada where it hardly ever snows.”

Impairment Charges

Barrick reported a surprise fourth-quarter net loss after taking a $3 billion writedown on its Lumwana copper mine, which was acquired in the Equinox deal. Barrick is the latest mining company to take a multibillion-dollar impairment charge as producers grapple with rising costs and reassess expensive deals.

Kinross Gold Corp., the third-largest Canadian gold producer, said Feb. 13 it took a $3.09 billion writedown on its Tasiast mine in Mauritania. The company took a $2.49 million writedown on the same project a year earlier.

Kinross, which acquired Tasiast when it bought Red Back Mining Inc. for about C$8 billion in 2010, also rose yesterday after it reported earnings excluding one-time items that beat analysts’ estimates. The shares gained 5.4 percent in Toronto, the most since Nov. 8.

“The market is perceiving that Barrick and Kinross have taken their medicine,”David West, a Vancouver-based analyst at Salman Partners Inc., said yesterday by phone. “They are trying to move in the right direction, they are trying to increase their margins, they are trying to look in-house and grow organically.”

By focusing on Nevada, West said, Barrick is “getting back to the basics.”"

--- Liezel HillCommodities Industry Reporter at Bloomberg lhill30@bloomberg.net
Editors:  Simon Casey: scasey4@bloomberg.net | David Scanlan: dscanlan@bloomberg.net


Johnston-Sequoia Commentary:

Nobody said it was easy - No one ever said it would be this hard - I'm going back to the start."
--- Chris Martin:  Coldplay - The Scientist

The market certainly has not been kind to the world's largest gold producer over the past two years - cost overruns, nine billion dollars in write-downs & project delays have resulted in a 43% decline in share price for the industry giant since April 20th, 2011.  It would appear for the moment that Barrick  has chosen to push the reset button and refocus on the area of the world that brought them to where they are today - Nevada.

“In an environment where you see so much concern about geopolitical risk around the world and resource nationalism, I think sometimes people lose sight of the fact that we have these huge core assets in Nevada - That’s a real competitive advantage for us.

--- Jamie Sokalsky, Chief Executive Officer - Barrick Gold

Factors to consider:

1) What are Barrick's most interesting assets in Nevada?

Legacy Discovery:

Goldstrike: Carlin Trend, Nevada:  

"The Goldstrike property, located in the Carlin trend in Nevada, contains a diverse group of Carlin-type deposits, including some of the largest and highest grade examples known. The largest deposit, Betze-Post, has a gold endowment of approximately 40 million ounces (1,244 metric tons [t]) of gold, and the Meikle deposit, which contains 7 million ounces (198t) of gold, has an average grade of 0.72 troy ounces per short ton (opt) or 24.7 g/t of gold. Goldstrike is part of the larger Blue Star-Goldstrike subdistrict, which has an areal extent of 5.3 by 1.2 miles (8.5 by 2 km) and a total gold endowment of 63 million ounces (1,960 t). The first discovery of gold at Goldstrike was in 1962. Subsequent exploration culminated in the discovery in 1986 of large high-grade orebodies beneath smaller, lower grade orebodies. Exploration over a 40-year period has relied on the evolution in understanding of geology and ore controls, supported by the application of geochemical and geophysical exploration techniques...


... In January 1987, American Barrick Resources acquired the Goldstrike property from the Western States - Pancana joint venture for a total cost of $62 million. Reserves at the Post deposit at this time were 11,366 million short tons (10.314 Mt) of oxide ore at a grade of 0.055 opt (1.9 g/t) gold,totaling 0.63 million ounces (19.6 t) of gold. An aggressive deep drilling program outlined the large, high-grade Deep Post orebody, which was subsequently found to continue onto the adjacent property owned by Newmont Mining. Exploration drilling in 1987 to 1988 led to the discovery of a number of other deposits similar to Deep Post hosted in the Popovich Formation. These included Betze and Screamer, which together with Deep Post, comprise the Betze-Post orebody."


--- Keith Bettles: Exploration and Geology, 1962 to 2002, at The Goldstrike Property, Carlin Trend, Nevada

Barrick's Betze-Post Open Pit mine at Goldstrike

In one of the more ironic tales in mining history - the market had actually criticized Barrick for the Western States-Pancana transaction, claiming that at $62,000,000 Barrick had "over paid" for the 630,000 ounces at Goldstrike.  As it turns out Goldstrike itself had a total endowment of well over 60,000,000 ounces of gold - making it the most well endowed project in the Western Hemisphere. 

Mature Discovery:

Cortez: Lander County, Nevada

" The Cortez mine is located 100 kilometers southwest of Elko, Nevada in Lander County. The Cortez property covers approximately 2,800 square kilometers on one of the world’s most highly prospective mineral trends...

... With 2011 production of 1.42 million ounces at total cash costs of $245 per ounce, Cortez is one of the world’s largest and lowest cost gold mines, and the property also has excellent upside exploration potential. Production in 2012 is anticipated to be 1.20-1.25 million ounces at total cash costs of $300-$350 per ounce, reflecting a higher proportion of underground ounces and lower open pit grades as part of planned mine sequencing. Proven and probable mineral reserves at Cortez as of December 31, 2011 are 14.5 million ounces of gold."

--- Barrick Gold Operations: Cortez
Evolving Trend: Incubator Discovery:

Spring Valley: Pershing County, Nevada

"The Spring Valley Gold Project located in Pershing County, Nevada. Spring Valley is a joint venture between Barrick Gold Corp. and Midway Gold Corp., where Barrick has the right to earn 60% interest in the project by completing work expenditures totaling US $30 million before December 31, 2013.

Spring Valley hosts a NI 43-101 resource of 2,160,000 ounces of in the Measured + Indicated catagories and 1,971,000 ounces inferred.  This resource estimate was announced May 2nd, 2011 and was a 225% increase over the previous resource estimate completed just before the joint venture was finalized.

Spring Valley (Photo taken from "the saddle" at Terraco Gold's Moonlight Project)

Midway has done a phenomenal job of growing this resource from 434,000 ounces in April of 2006 to 993,000 ounces in January 2008 to 1,835,000 ounces in March of 2009 to the current (combined MI & I) resource of 4,100,000 ounces in of gold at Spring Valley (announced May 2011).  Midway CEO's Brian McAlister, Alan Branham and now Ken Brunk have done what so many nano-cap resource company executives are unable to do - grow a resource to a size where a major producer will seek to acquire the asset to replenish their reserves.

Midway Gold (TSX: MDW | NYSE.A: MDW ) Weekly: 2008 - Present with Fibonacci Technical's

Spring Valley Royalties:

Terraco Gold Royalty Option on the Spring Valley Project***

Terraco's net smelter returns ("NSR") royalty coverage includes the option to acquire a 2.5% NSR royalty (by December 2016) on claims covering the majority of the Spring Valley deposit and an additional direct ownership and option for a 1% NSR royalty covering the remaining portion of the Spring Valley deposit."


--- Terraco Gold Royalty Option

Terraco Gold NSR Royalty options on Spring Valley (Click to enlarge)

Terraco Gold Corp. (TSX.V: TEN | US: TCEGF) has positioned itself tremendously well in this evolving district with a 2.5% & 1.0% NSR royalty options on the Barrick Gold - Midway Gold Spring Valley Project and 100% ownership of the 35 sq km (Terraco's Moonlight Project) that adjoins the north side of this evolving Nevada discovery.



Terraco Gold (TSX: TEN | US.P: TCEGF) Weekly: 2008 - Present with Fibonacci Technical's


2) Where will New Discoveries come from in Nevada?

Innovative exploration techniques in gold exploration have resulted in the discoveries of Goldstrike, the Ken Snyder "Midas" Mine etc.  May I suggest that contemporary techniques will lead to the next major discovery in Nevada as well.  Please take the time to watch the 8 minute video below when you have a moment.






3) What is really happening with gold?

While attempting to finish this piece over the past couple of evenings I've had an unprecedented number of e-mails and phone calls, all asking the same question - "What's happening with gold"? My intention is not to take away from the importance of Barrick refocusing on Nevada - it's merely to quickly comment on what I perceive to be transpiring at the moment.

Spot Gold (Weekly): 2008 - Present with Fibonacci Technical's

Please note specifically from the chart above the Relative Strength Index (RSI - is a momentum oscillator that measures the speed and change of price movements) - The last time we had Spot Gold oversold to this level was August 8th, 2008 (which hit a weekly low of $777).  Please now note the price action immediately following that oversold signal in gold (August 8th, 2008 to October 22nd, 2008) gold "coiled" and hit an interim low of $683.00, then proceeded to touch $777 once again (on October 22nd) - before ultimately taking a staggering run up into September 2nd, 2011 topping out at $1,919.50.

I would suggest (from my perspective) at this moment in history we're witnessing the very beginnings of a concentration of capital wave in gold - Meaning that Large Institutions, Hedge Funds, Family Office, Private Equity, Corporations,  Pension Funds, Governments, Central Banks - then of course retail investors will move to accumulate gold in one way shape or form.  This would take the gold price to levels that (by today's interpretation and standards) most individuals in the investment community would never subscribe to.  That is the characteristics of a concentration of capital though - they're an anomaly and they do not conform to reason.

I am an advisor of Terraco Gold Corp. & own shares in the company.  As always, please do your own due diligence.


***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.

 

]]> Fri, 22 Feb 2013 09:45:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/19898/barrick-targets-nevada-3291.html Kevin Campbell: The Big Picture For Gold & The World Going Forward http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/19844/kevin-campbell-the-big-picture-for-gold-the-world-going-forward-3236.html  

Managing Director, Investment Banking – Haywood Securities
Interview with Eric King: King World News


“Today King World News spoke with the Managing Director of Investment Banking atHaywood Securities to get his take on what is happening around the globe, as well as key markets.  Campbell is a veteran of the global markets, and has earned respect from the likes of such people as Rick Rule and the Lundin family; a true mining dynasty.  Here is what Kevin Campbell had to say when asked about the global macro picture: 

“I’m feeling more confident in general, at least as far as it effects the mining industry. Broadly, I think of the world in four economic segments: The US; Europe; China; and Emerging Markets (apologies to Japan for the omission, but I assume zero-growth status quo there for now). I’m a believer that, despite unresolved long-term fiscal issues, the US is turning and will begin to consume more raw materials as the housing sector recovers.

I don’t count on growth in Europe just yet, but I do believe that Draghi has made it clear that money will be printed in very large sums to keep yields manageable and thus maintain some modicum of stability. I think China is in a transition phase, but I do not believe it will seriously falter. 

A lot is made of Chinese data and its perceived flaws, but it comes down to the raw consumption levels of everything – that is the true measure of expansion and scale in my view.... 

“Last but very far from least, the world’s emerging economies in many cases have continued their growth track nearly unabated through this ‘crisis of the week’ paradigm. A lot has been made of Brazil’s slowdown, but I think about places like Indonesia, Nigeria, Turkey and even India again in 2013…just that sample set equals 1.7B people tracking for +6% GDP growth this year. 

The commodity supercycle, driven by insatiable progress in the developing world and a very anemic producer supply response across the board, is intact in my opinion. For me it all comes down to the unrelenting demographic march of time and the desire of people everywhere to improve their lot.



It seems to me that we are no where near the end of the great monetary easing movement of the last four years. Technical watchers, India consumption watchers, supply watchers and others may all take different views, but fundamentally it seems to me that the decay of fiat currency will keep gold strong if nothing else…and that’s without meaningful inflation.


We’re churning through this massive deleveraging cycle in the Western World, but the opposite of deleveraging is going on among governments, especially in the US. However in the absence of inflation, no one seems to mind all that much. This cannot go on forever. If strong steps are taken in Congress, both on the revenue and spending side, I don’t think it is too late. But if not…look out below. Reserve currency status (read: liquidity) may not save the US from itself if there is no action taken. 



It all sounds self-evident, but too many observers shrug their shoulders at the prospect of a mass US bond sell-off and resultant interest rate adjustment, which could quickly wash away any progress that has been made since the financial crisis. But, for this to happen, investors would need an alternative in which to put their money. Gold would reap some of that, but it is simply not a large enough asset class to absorb the shift.” 

“Monetary policy is one driver; demographics and economic emergence is a driver; supply shortfall is another. I feel positive about commodities on all fronts. The more baffling question that we ask ourselves in my business is: when will mining equities return to favor? We’re watching in real time a very large reallocation of capital from nil-yielding fixed income securities to equities, but I have yet to see evidence of this shift reaching mining equities. 

TSX Venture Exchange (weekly) 2008-Present: Includes Fibonacci technical's (click to enlarge)
Copper at $3.75, gold at $1675 and the equities languish, as they have for almost two years now. If one accepts the premise that copper will stay above $3.00 and gold above $1500, then I find it wholly irrational to see whole peer groups of base and precious metal developers and producers trading at such dire discounts to their net asset values. 

There are still a lot of less than ideal projects/companies out there and these years of weakness have allowed for much healthy culling in the sector, but it makes no sense to me at all that a good copper developer in a decent jurisdiction should trade at an implied price to net asset value multiple of 0.3x using a $2.75 long term copper price and an 8% discount rate. 

Sure, the scarcity of project finance for some of these projects should cause concern for investors as to when their underlying value may in fact be realized, but the divergence between metal supply/demand reality and the project values received in the equity markets is nearing absurdity. 

Further, physical ETF’s have surely stolen some of the thunder from gold equities in particular, but to me that’s simply a question of balancing risk and leverage. Many mining companies have been fraught with operational issues in this cycle to be sure, but the reality is that a 10% move in the gold price is just that for an ETF holder, while for a gold company, a corresponding 10% move in the gold price can easily translate into a project value increase of many times that. 

I believe people will eventually return to equities on this basis. It is just a question of when risk tolerance returns to our sector and when people once again become willing, simplistically, to bet $1.00 on the hopes of making $3.00, but accept a downside risk of $0.50. In summary, something is going to have to give out of this disequilibrium, and my bet is on a rotation back into mining equities.”

Managing Director, Investment Banking – Haywood Securities
Interview with Eric King: King World News

Spot Gold (weekly) 2008-Present: Includes Fibonacci technical's (click to enlarge)

Johnston-Sequoia Commentary:

"History never looks like history when you are living through it"
--- John W. Gardner

As Managing Director of Investment Banking with Canada's (and perhaps the world's) leading independent brokerage house in the mining space - Kevin Campbell provides a  rare window into the pulse of the current commodities market:

"...We’re churning through this massive deleveraging cycle in the Western World, but the opposite of deleveraging is going on among governments, especially in the US..." 

This, from my perspective is the most important factor to consider in the current market environment where we're witnessing a monumental shift from public confidence (government/gov't bonds) to the private sector (select corporate dividends and/or debt in the short term and equities in the medium term).  This shift in capital deployment I believe may take the market to historical highs in the medium term and in all likelihood an inflationary environment.

"...It seems to me that we are no where near the end of the great monetary easing movement of the last four years. Technical watchers, India consumption watchers, supply watchers and others may all take different views, but fundamentally it seems to me that the decay of fiat currency will keep gold strong if nothing else…and that’s without meaningful inflation..."

--- Kevin Campbell interview with King World News

Factors to consider:

1) Inflationary vs. Deflationary Environment 

"...I have stated numerous times that the purchasing power of the Roman denarius collapsed to the point it purchased 1/50th of its previous worth. The German HYPERINFLATION was 170 marks to the dollar at the beginning to 87 trillion at the end. To compare this with the fall of Rome with money dropping to 1/50th of its former value, that is only 170 to 8500. Rome did not go the way of HYPERINFLATION. It was the CORE economy and it collapsed at 170 to the 8500 level not 170 to 87,000,000,000.

Sorry, but you can die in a desert from extreme heat or freeze to death in Antarctica from extreme cold. To survive, we need a temperate climate to live within. DEFLATION or INFLATION can kill an economy.   Empires do not die by  HYPERINFLATION – that is reserved for the fringe. When an empire dies, it historically has  ALWAYS been by  DEFLATION. How? Real wealth is driven from the  ABOVEGROUND economy into the UNDERGROUND economy where it is hoarded and tucked away. This is why we find hoards of Roman coins. This reduces the VELOCITY of money and commerce is reduced. This is ALWAYS AND WITHOUT EXCEPTION how empires die. This is why there was scrip issued in the United States during the Great Depression. The VELOCITY of money came to a halt..."

--- Martin Armstrong: How do Empires die?

At this stage in the cycle I would find it difficult to believe that deflation is a realistic possibility before the shift from public to private confidence.  There's obviously still strong belief in the $USD and to a certain extent the € EU.  What we're witnessing (see chart below) is perhaps the precursor to a liquidity flood from banks to the market.  Before this happens count this authors vote for inflation over the mid term.

"The adoption of fiat currency by many countries, from the 18th century onwards, made much larger variations in the supply of money possible. Since then, huge increases in the supply of paper money have taken place in a number of countries, producing hyperinflations – episodes of extreme inflation rates much higher than those observed in earlier periods of commodity money.The hyperinflation in the Weimar Republic of Germany is a notable example."


Muted Inflation or real deflation? - 2013 Velocity of M2 Money: Source St. Louis Fed (Click to Enlarge)
"...No government or central bank can electronically create $85 billion a month to support paper markets.  In other words, you cannot support paper debts by printing paper.  Interest rates must increase at some point in the future, perhaps the near future.  At that time the Federal Reserve and the Treasury will no longer be able to manipulate interest rates to zero. 

This scenario will unfold unless deflation, a central banker’s real fear, is notwithstanding.  No one yet knows that outcome.  Gary Shilling believes that deflation is inevitable and must last for years as it has in Japan.  Others, such as Mr. James Sinclair, believe we must see hyperinflation in our economy as soon as this year.  There is no reason we cannot see both in succession.  History tells us it is happened in the past.  In any case the American citizen, perhaps the citizen of the world, must realize a declining lifestyle..."

--- Dr. Michael Berry: Morning Notes February 13th, 2013

2) You've spent this much time and energy paddling out past the breaker - so, which wave should you choose?

***  As I write Spot gold sits exactly at Alf Feild's critical $1,636.00 level just ten minutes before market close on Valentine's day, 2013.

Gold Council Sees Central Bank Bullion Buying at 48-Year High

"Central banks added the most gold to reserves in almost a half century last year as prices averaged a record, the World Gold Council said.  The banks bought 145 metric tons in the fourth quarter, an eighth successive quarter of net buying, the London-based industry group said today in a report. They added 534.6 tons to reserves last year, 17 percent more than in 2011 and the most since 1964, it estimates.  Nations from Brazil to Russia are adding the metal to reserves at a time when investors are holding a near-record amount through gold-backed exchange-traded products. Bullion gained for a 12th straight year in 2012, the best run in at least nine decades, averaging $1,669 an ounce through the 12 months.  “We think that the current rate of net central bank purchasing, driven by emerging countries, is likely to continue to be very strong,” Marcus Grubb, managing director of investment research at the council, said yesterday by phone from London. “This is very much due to a desire to diversify away from over-reliance from the dollar and the euro.”

--- Canaccord Morning Coffee February 14th, 2013

"...My advice is to hold all gold positions and wait patiently for the correction to end.  Just before the huge 1979-80 surge, we saw a big 'clean out' correction in gold.  I believe history is about to repeat..."

-- Richard Russell interview with King World News

Now, I could claim that the sky is falling and you would be well advised to hide under a rock for the next seven years.  However I'm an optimist, (please always keep that in mind) I believe there is opportunity in every market environment (ex: John D. Rockefeller, Cornelius Vanderbilt, Andrew Carnegie, John Jacob Astor & J.P Morgan all solidified there place in history during some of the most challenging times in economic history).  

At present, from my perspective - there is perhaps the largest variance between mining equities and the commodities that they're associated to of anytime in recent history.  A well researched value investor may begin to realize this has the potential to be one of the greatest opportunities of our lifetime & it's sitting right at our finger tips.  Be cautious and prudent of course, but remember - Fortune favors the brave...  

Hope you all have a wonderful Valentine's day As always, please do your own due diligence.


***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.

 

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Fri, 15 Feb 2013 11:14:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/19844/kevin-campbell-the-big-picture-for-gold-the-world-going-forward-3236.html
Barrick Hits 118.9 meters of 2.33 gpt gold at Spring Valley, Nevada http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/19507/barrick-hits-1189-meters-of-233-gpt-gold-at-spring-valley-nevada-2880.html  

Barrick Hits 118.9 meters of 2.33 gpt gold at Spring Valley, Nevada






Midway Gold Corp. (TSX.V: MDW | AMEX: MDWreported on the development at Spring Valley, where Barrick Gold Exploration Inc. ("Barrick") (TSX: ABX | NYSE: ABX) is earning into Midway's multi-million ounce gold project in Nevada.

Drilling Highlights

"...An infill drill program within the existing deposit boundaries has continued to increase the certainty of the current resource, including several intercepts well in excess of the current resource grade. Highlights included:

  • SV12-561c 18.6 meters of 6.79 gpt gold
  • and 118.9 meters of 2.33 gpt gold, including 17.1 meters of 8.06 gpt gold

  • SV12-583c 58.8 meters of 1.06 gpt gold, including 1.5 meters of 12.00 gpt gold
  • SV12-584c 36.3 meters of 1.92 gpt gold, including 3.2 meters of 14.67 gpt gold
  • SV12-594 27.4 meters of 1.68 gpt gold, including 1.5 meters of 12.79 gpt gold

Additionally, drilling at the northerly extent of the resource area indicates the potential for expansion of the resource to the north and at depth.

Earn-In Update

Barrick has accelerated their rate of expenditures to earn-in to Midway's Spring Valley project, where Barrick can earn a 60% interest in the project by completing expenditures totaling US$30 million before December 31, 2013. Projected expenditures by Barrick in 2012 amount to $10.2M, which combined with spending through 2011 of $17.7M at Spring Valley (see April 11, 2012 press release), would bring total cumulative expenditures by Barrick to approximately $27.9M by the end of 2012. Based on the rate of expenditures through the third quarter of 2012, it is expected that Barrick will complete their earn-in of 60% of the Spring Valley project by early 2013. Barrick may further elect to spend an additional $8 million on or before December 31, 2014 for a total expenditure of $38 million to increase their ownership interest in Spring Valley to 70%.

Please see Barrick Gold Corporate video below:




Development Activity

Within the quarter, additional development drilling has gathered metallurgical, hydrological and geotechnical data to be used in a scoping-level economic evaluation. Metallurgical samples were collected for a second round of metallurgical testwork that is currently in progress. Hydrological work is underway to better characterize groundwater conditions for a potential open pit. Further development activities included potential pit slope stability studies, mine facility design, seismic hazard analysis, and humidity cell tests..."

December 6th, 2011 Spring Valley advanced from Barrick's Exploration team to their Mine Development Group:


Barrick Gold Weekly Chart 2012-12-27
Q3 Drill Results

"...During the third quarter, Barrick completed 3,072 meters of reverse circulation (RC) and 2,387 meters of core drilling. This drilling included four core holes used for metallurgical sampling, four holes for geotechnical testing (SV12-611c to 614c), and eight water-monitoring wells (SV12-600w to 608w). Total drilling for the year through the third quarter is 11,834 meters of RC and 6,240 meters of core..."


The link below shows the locations of drill holes in relation to the current Spring Valley resource estimate:

Please see May 24th, 2011 Midway Gold Corp. NI 43-101 Technical Report for Spring Valley below:

Please see Midway Gold Presentation from the Denver Gold Forum contained in the video link below:

Midway Gold Weekly Chart 2012-12-27

Johnston-Sequoia Commentary:

"What you see depends on what you thought before you looked."
--- Eugene Taurman

I was recently sent a copy of a Bob Bishop interview with a very famous Nevada Geologist the late Dr. Ralph Roberts (who is credited with the discovery of the Carlin and Battle Mountain Gold Belts, the richest gold-mining region in United States) from September 1988.  (Dr. Roberts published a very famous report titled "Alignment of mining districts in north-central Nevada" which posed a theory that when tested by then Newmont Geologist John Livermore led to the discovery of the Carlin mine in 1961).  Dr. Roberts discusses with Bob Bishop his vision of the evolving nature of the Carlin trend (in 1988) & when cross referenced with what we now know today of the Carlin trend - his accuracy truly incredible.

Interestingly Dr. Roberts discussed the implementation of deeper drilling which ultimately led to the discovery of both the Betze-Post (now Barrick's Goldstrike mine);

Barrick's Goldstrike mine, Nevada

and Newmont's lowest cost producing mine - the Ken Snyder "Midas" mine:

Newmont's Ken Snyder "Midas" mine, Nevada
Gathering each piece of the puzzle is what makes the Discovery process so fascinating.  When I was first introduced to this evolving Humboldt district in May 2008 Midway Gold still controlled 100% of the project and Barrick was simply an equity investor in Midway with approximately 10% ownership in MDW.  At that time the NI 43-101 resource was  "just" 993,000 ounces of gold in the measured, indicated and inferred ("MI & I") categories.  Today Spring Valley sits at 4,100,000 ounces in the MI & I categories (which is based on a May 2nd, 2011resource estimate).  The evolution of this district has been truly remarkable and we have now seen the single best intercept to date at Spring Valley {which lends itself to Dr. Roberts deeper drilling discussion as hole SV12-561c mineralized zone starts at 1,061 feet (323.4 m) and ends at 1,451 ft (442.3 m)}:

  • SV12-561c 18.6 meters of 6.79 gpt gold and 118.9 meters of 2.33 gpt gold, including 17.1 meters of 8.06 gpt gold


*** "Drilling at the northerly extent of the resource area indicates the potential for expansion of the resource to the north and at depth."

Terraco Gold Royalty Option on the Spring Valley Project***

"Terraco has royalty coverage on claims covering the Spring Valley Gold Project located in Pershing County, Nevada. Spring Valley is a joint venture between Barrick Gold Corp. and Midway Gold Corp., where Barrick has the right to earn 60% interest in the project by completing work expenditures totalling US $30 million before December 31, 2013.


Terraco's net smelter returns ("NSR") royalty coverage includes the option to acquire a 2.5% NSR royalty (by December 2016) on claims covering the majority of the Spring Valley deposit and an additional direct ownership and option for a 1% NSR royalty covering the remaining portion of the Spring Valley deposit."




Terraco Gold Royalty Option on Spring Valley, Nevada (Click to Enlarge)

Nano-cap Terraco Gold Corp. (TSX.V: TEN | US: TCEGF) has positioned itself very well in this evolving district with a 2.5% & 1.0% NSR royalty options on the Barrick Gold - Midway Gold Spring Valley Project and 100% ownership of the 35 sq km (Terraco's Moonlight Project) which adjoins the north side of this evolving Nevada discovery.



The History of the Evolving Humboldt District - Pershing County, Nevada

The Evolving Humboldt District looking south over Terraco`s Moonlight Project (Click to enlarge)




History of the Barrick Gold/Midway Gold Spring Valley Project:

"Placer gold was discovered in Spring Valley Canyon in the 1880’s and has been mined intermittently since that time. A gold dredge operated in the eastern portion of the project area in the 1910’s and 1920’s. The current Spring Valley resource lies in an alluvial-filled valley immediately west and upslope from the placer workings. Modern exploration at Spring Valley began with 4 holes drilled by Kennecott in 1996. Echo Bay acquired the property in 2000 and drilled the discovery hole in 2001. MGC gained control of the property in 2003, and immediately began a drill program that continued through 2008. MGC signed the Exploration Agreement with Barrick in 2009. During the earn-in period Barrick is conducting exploration pursuant to the terms of the agreement while MGC maintains 100% control of the property. Barrick has drilled 72 drill holes through the end of 2010 to better define the known mineralized area while continuing to test mineralized controls along strike to the north..."


Terraco Gold's Moonlight Project History & Production

"John Livermore (discoverer of the original Carlin Deposit) of Cordilleran Exploration (CORDEX) became interested in the Moonlight Mine and visited the area several times during the period between 1981 and 2003.... The samples range in value from (one sample) below detection limits up to 415 opt silver (non-NI 43-101 compliant). All samples returned only trace amounts of gold. John Livermore and CORDEX returned to the Moonlight in 1999, staking an unknown number of claims around the original Grant Patent and leasing the patented claim from John Heizer. A series of thirty samples were collected from the Moonlight Mine (the original Grant Patent) by geologists for CORDEX. Of those samples, the assay certificate from Legend, Inc., of Reno, Nevada,indicates that several samples were anomalous in silver and gold, with values up to 1,329 ppm (gpT) or 38.76 opt silver and 4.801 ppm (gpT) or 0.140 opt gold (non-NI 43-101 compliant)....

Recent History of Nearby Properties or Projects in the Humboldt District

...Nearby in the Humboldt Range, recent history includes developments at Coeur d’Alene Mining’s Coeur Rochester Mine and the Midway-Barrick Spring Valley Joint Venture. Coeur's 100% owned Rochester mine has produced more than 127 million ounces of silver and 1.5 million ounces of gold since production began in 1986 (Coeur website, Nov 2010)...  Proven and Probable reserves at Rochester, according to the Coeur website at year-end 2009, totaled 42.4 million tons containing 25.9 million ounces silver and 233,000 ounces gold..."


Please see Terraco Gold Corporate video below:


Will the evolving Humboldt District one day be recognized as a major Nevada Gold Trend? - only time will tell. What we do know is that Midway Gold and now Barrick have done (and are currently doing) a tremendous job of defining this new Nevada discovery.  

I am an advisor of Terraco Gold Corp. & own shares in the company. As always, please do your own due diligence.  To all of our readers - I hope you and your families have a safe and wonderful holiday season.

Your Editor standing along the Blackridge Fault on Terraco Gold's 100% owned Moonlight Project, Nevada

 

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Fri, 28 Dec 2012 09:31:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/19507/barrick-hits-1189-meters-of-233-gpt-gold-at-spring-valley-nevada-2880.html
Talison Lithium backs $848,000,000 Chinese Takeover Bid http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/19414/talison-lithium-backs-848000000-chinese-takeover-bid-2784.html  

Talison Lithium Limited ("Talison" or the "Company") (TSX:TLH) announced that it has today concluded its discussions with Windfield Holdings Pty Ltd, an Australian incorporated wholly-owned subsidiary of Chengdu Tianqi Industry (Group) Co., Ltd (together "Tianqi") and reached agreement under which it is proposed that Tianqi will acquire the balance of the ordinary shares that it does not already own and options in Talison by way of schemes of arrangement for a cash consideration of C$7.50(1) ("Tianqi Schemes").

Highlights

The Tianqi Schemes constitute a superior proposal(2);
  • C$7.50 cash offer for each Share
  • US$25 million cash deposit paid by Tianqi in an Australian bank as a reverse break fee
  • Minimal conditions
  • Talison Directors unanimously recommend Tianqi Schemes, in the absence of a superior proposal
  • Talison and Tianqi have entered into a Scheme Implementation Agreement ("Tianqi SIA") with minimal conditions, subject to Rockwood's 5 business day matching right
  • Rockwood has a 5 business day right to match, although Talison notes that on November 20, 2012, Rockwood made a "best and final offer" statement which, under Australian policy, is expected to limit Rockwood's ability to increase its offer
  • If the Rockwood SIA terminates, Talison expects to pay Rockwood a C$7 million break fee

Tianqi Proposal

Background

On November 19, 2012, Talison received a non-binding, conditional proposal from Tianqi to acquire all of the Shares of Talison which it did not already own for C$7.15 per Share via a scheme of arrangement.

On November 21, 2012, the Talison Directors determined that to meet their fiduciary duties Talison would engage with Tianqi and its advisers to determine if the Tianqi proposal represented a superior proposal (as defined in the Rockwood Proposal).

On November 23, 2012, Tianqi received notification from the Australian Foreign Investment Board (FIRB) that it has no objections to Tianqi's proposed acquisition of Talison. Following receipt of this notification Tianqi would own 19.99% of Talison's issued share capital.

At the conclusion of negotiations between Talison and Tianqi an offer price of C$7.50 per Share was agreed. This values the equity of Talison at approximately C$848 million on a fully diluted basis.

Recommendation

The Talison Directors have now considered the Tianqi Scheme and determined that it represents a superior proposal (as defined in the Rockwood Proposal).The Talison Directors therefore unanimously recommend that Securityholders vote in favour of the Tianqi Schemes, in the absence of a Superior Proposal (as defined in the Tianqi SIA) and subject to an Independent Expert concluding that the Tianqi Schemes are in the best interests of Securityholders. Each of the Talison Directors intends to vote the Shares and Options held or controlled by them as at the registered holder record date in favour of the Tianqi Schemes.

The cash consideration of C$7.50 per Share offered under the Tianqi Scheme represents:
  • A 15% premium to the consideration under the Rockwood Proposal of C$6.50; and
  • A 77% premium to Talison's last closing price of C$4.24 on August 22, 2012, the day prior to the announcement of the Rockwood Proposal.
Resource Capital Fund IV L.P. and Resource Capital Fund V L.P. (collectively, the "RCF Funds") have each confirmed to Talison that, in the absence of an offer which the RCF Funds determine is superior, each of the RCF Funds intend to vote in favour of the Tianqi Share Scheme in respect of the Talison Shares held by them at the relevant time."

--- December 6th, 2012 Talison Lithium Ltd. Press Release



Talison Lithium Ltd. (TLH - TSX, $7.15)
Target Price: $7.50 ↑
Higher Bid from the Chinese Is Deemed "Superior"

Jonathan Lee, MBA
Battery Technologies and Materials Analyst: Byron Capital Markets
1.347.763.1497
LinkedIn: Jonathan Lee

  • "Higher and Binding Bid from $7.15 to $7.50: Winfield Holdings Ptd Ltd (Winfield), which previously had a non-binding $7.15/sh all-cash bid for Talison Lithium Ltd. (Talison) increased the bid to a "superior proposal" of $7.50/sh in cash. Talison's board of directors and the largest shareholder, Resource Capital Funds, recommended the bid and stated they would vote in favour of the new offer in the absence of a higher bid. We find this as positive news, and it gives comfort in the acquisition being completed. Additionally, as previously stated, Winfield received all Chinese approvals for the acquisition and also received Australian Foreign Investment Review Board (FIRB) approval. The expected timeline to finalize the deal is the end of February 2013, or three months from now. We maintain our TENDER rating and raise our target price to $7.50 as the new binding offer price is released. 
  • Bidder Showing Commitment: As a sign of Winfield's commitment to completing the deal, the company will put US$25 million in a trust fund in an Australian bank. The capital is paid to Talison if Winfield is unable to reach an agreement. We believe this additional US$25 million added to the already 19.99% ownership stake in Talison shows a significant commitment of over $150 million in the company. This gives us comfort that Winfield is serious about the strategic asset to build its existing lithium processing business. We believe that the company may vertically integrate Talison's operation with its downstream lithium processing company, Tianqi Lithium Industries (SZE:002466, Tianqi).
  • A Higher Bid Is Doubtful: Strategically, this acquisition for Winfield makes sense. Its related company, Tianqi, is currently dependent on Talison for its raw material and is also a marketer of Talison's material in China. With a market cap of US$575 million, $30 million in cash and US$7 million in income, the acquisition will be significantly accretive to Tianqi's Chinese lithium operations. This is why we believe Winfield is willing to bid $7.50/sh. Additionally, with Rockwood's final and best offer of $6.50/sh, we believe there is limited room to submit a higher bid.”
---Jonathan Lee, MBA
Battery Technologies and Materials Analyst: Byron Capital Markets
1.347.763.1497

Johnston-Sequoia Commentary:

"Patience and perseverance have a magical effect by which difficulties disappear & obstacles vanish"
--- John Quincey Adams

As a student of the market I have to say that I am extremely impressed with the chess game that Sichuan Tianqi Lithium Industries Inc. (CH: 002466) ("Tianqi") has played in its pursuit of Talison Lithium Ltd (TSX: TLH).  Going head to head with NYSE specialty chemical giant Rockwood Holdings Inc. (NYSE: ROC) (which announced its own unsolicited $724,000,000 all cash bid for TLH back in August) -  Tianqi (Talison's largest buyer of Lithium concentrate) quietly acquired 15% of TLH for approximately $6.50 per share.  Following this announcement Talison received a non-binding, conditional proposal from Tianqi to acquire all of the Shares of Talison for $7.15 per share on November 19, 2012.  Negotiations between Talison and Tianqi resulted in an offer price of C$7.50 per Share. This values TLH at approximately C$848 million on a fully diluted basis.

Tianqi's bid of C$7.50 per Share represents:
  • A 15% premium to the Rockwood bid of C$6.50; and
  • A 77% premium to Talison's last closing price of C$4.24 on August 22, 2012, the day prior to the announcement of the Rockwood bid.
To all of our Salares Lithium Inc. (TSX.V: LIT) and Talsion Lithium Ltd. (TSX: TLH) readers and shareholders who stuck with this story - congratulations.  This is again, Discovery Investing 101.  The Tianqi bid represents approximately a1,671% ROI (557% per year ROI) in the past three years for Salares Lithium Inc. shareholders who held there shares since December 9th, 2009.

I am an advisor of Talison Lithium Ltd. (and formerly of Salares Lithium Inc.) and own shares in the company.  As always please do your own due diligence.

 

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Mon, 10 Dec 2012 11:42:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/19414/talison-lithium-backs-848000000-chinese-takeover-bid-2784.html
Northern Vertex Mining: Strength in Numbers http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/18818/northern-vertex-mining-strength-in-numbers-2166.html  

Northern Vertex Announces NI 43-101 Resource of 942,000 ounces gold Measured and Indicated and Inferred at the Moss Gold-Silver Project, Arizona
Northern Vertex Mining Corp. (TSX.V: NEE | (US:NHVCFannounced an updated NI 43-101 Measured, Indicated & inferred resource estimate of 942,000 ounces of gold at the companies Moss Gold-Silver Project in Mohave County, Northwestern Arizona.


Resource CategoryAuEq* (oz)Au (oz)Ag (oz)TonnesGrade
AuEq (gpt)Au 
(gpt)
Ag 
(gpt)
Measured 427,820 348,000 3,991,000 12,465,000 1.07 0.87 9.96
Indicated 528,980 432,000 4,849,000 18,414,000 0.89 0.73 8.19
M+I 956,800 780,000 8,840,000 30,879,000 0.96 0.79 8.90
Inferred 199,100 162,000 1,855,000 7,096,000 0.87 0.71 8.13


--- September 10th, 2012 Northern Vertex Mining Press Release

 
Please click on image to view President & CEO Ken Berry
  
""The outstanding results achieved from the resource study is a tribute to the quality work of our entire exploration team in Arizona led by Chief Geologist Dr. Bob Thompson and Project Manager Joe Bardswich. Supported by a substantial near surface, open-pittable resource, our objective of fast-tracking Moss into a near-term, low-cost gold-silver producer is clearly coming into focus. Concurrent with our drilling and exploration activities, we continue to advance the project forward through strategic development that includes ongoing environmental baseline studies, metallurgy work, preliminary pit-design, economic evaluation and permitting."
--- Ken Berry - President & CEO 

"We are delighted with the conclusions returned from the updated independent resource study on Moss. Not only have we dramatically increased the size of our current gold-silver resource, the deposit remains open for even further resource expansion. With close to one million gold equivalent ounces now established on the project, our immediate goal will be to continue to expand the Moss gold-silver resource to the west and east of the main deposit and to advance the current 199,100 ounce inferred gold-silver resource to the measured and indicated category."
--- Dr. Bob Thompson
Please click on image to view the Moss Property 3D Property Tour
...The following material changes contributed to the (significant) increase in the mineral resource estimate:



  • Substantial additional drilling (Phase 2) consisting of 42 RC and core drill holes totaling 5105 m (ref. Northern Vertex News Releases);
  • Comprehensive underground channel sampling consisting of 148 five-foot (1.52 m) intervals oriented across and along the strike of the deposit;
  • Reliance on post 2004 drill results (161 RC and core holes) and underground sampling to calculate measured and indicated resources.



Current Exploration and Development Initiatives:The current ongoing phase II exploration and development program on Moss, designed to expedite the path to a production decision, consists of the following components:


  • Infill drilling to render 'inferred resources' into the 'indicated' category;
  • Continued scoping and baseline studies to advance the permitting process;
  • Comprehensive metallurgical testing to determine precious metal recoveries;
  • Preliminary pit design for open-pit, heap-leach mining and;
  • The initiation of environmental impact and feasibility studies in a timely fashion..."


 


Please click on NEE.V weekly chart image to enlarge 

 Johnston-Sequoia Commentary:

"When you do what you love, everyday is a vacation" 

--- Ron MacLean 

Led by President & CEO Ken Berry Northern Vertex Mining had exceeded all expectation's in the advancement of the Moss Property.  In just 18 months this management team has brought a historical (non NI 43-101) resource to near a million ounces of gold MI&I. 


 


Structure, Structure, Structure: 

Northern Vertex Mining now holds a NI 43-101 Resource of near a million ounces of gold essentially at surface which should be amenable to open pit mining.  Arguably more impressive than the spine like near surface structure at the Moss is the corporate structure of the company.  Ken Berry has built tremendous shareholder value in a very difficult market without diluting his shareholder base.  With just 45,000,000 shares outstanding (54,000,000 on a fully diluted basis) Northern Vertex Mining has lots of breathing room in terms of financing and at these levels (current $1.23) has the ability to keep the structure tight. 

Management: 

Ken Berry - President & CEO: 

Mr. Berry has over twenty years experience in the financing and corporate communications of public companies. He has served as an investment advisor and founder of various public companies including Northern VertexTheia ResourcesKootenay Silver and Highpoint Telecommunications. His involvement resulted in the more than $300 million in financings for public companies. He currently holds the position of CEO/Director of Northern Vertex, Director of Theia Resources and Chairman/Director of Kootenay Gold. Mr. Berry also participated in the 1980 and 1988 Winter Olympics, and played professional hockey in North America and Europe.


Dr. Bob Thompson - Cheif Geologist:


Bob Thompson has more than 35 years experience as a field geologist. In the course of managing major multi-parameter geological programs for the geological Survey of Canada, he has mapped extensively in the Yukon, northeastern British Columbia, the Queen Charlotte Islands, south central British Columbia and the Kootenays. From each project came innovative ideas that underscored geological understanding, new models, and resource potential. Mr. Thompson has served as a consultant to the mining industry for the past five years. He is a Queen's grad, having obtained a BSc (hons) in 1968 and a PhD in 1972. The Canadian Society of Petroleum Geologists awarded him the R.J.W. Douglas medal in 1998.

Jim McDonald - Strategic Advisor:

Co-founded and successfully developed Black Bull Resources, National Gold (merged w/Alamos Gold) and White Knight Resources. Mr. McDonald continues to serve on the board of Alamos Gold Inc. Mr. McDonald, P. Geo., is currently the President & CEO of Kootenay Silver Inc.


Tiziano Romagnoli - Financial Advisor:

Mr. Romagnoli has an extensive career in the banking and brokerage industries. He has worked for a number of renowned firms such as Banco di Roma, Overland Trust Bank, AG Becker Paribas, Paine Webber, Tucker Anthony, SOGENAL and Nesbitt Burns. He has served as a senior member of the Investment Banking arm of an Geneva based group which provides its clients with a fully integrated, personalized investment banking service. Mr. Romagnoli has been instrumental in the setting up of 2 foreign mutual funds not registered for public offering with the Swiss Banking Commission: Mohawk Capital International Limited and Ecosol Natural Resources Fund Limited.


David Farrel - Director

David is President of Davisa Consulting, a private consulting firm working with junior to mid-tier global mining companies. Prior to founding Davisa, he was Managing Director, Mergers & Acquisitions at Endeavour Financial where he successfully closed over US$25 billion worth of M&A transactions for junior and mid-tier natural resource companies. Before his 12 years at Endeavour Financial, David was a lawyer at Stikeman Elliott, working in Vancouver, Budapest and London. Mr. Farrell graduated from the University of British Columbia with a B.Comm (Honours, Finance) and an LL.B and is called to the bar in both British Columbia and England. He is also a board and finance committee member of Yaletown House, a non-profit, critical-care seniors' residence in downtown Vancouver. 


Joseph Bardswich - Director:  

Mr. Bardswich is a graduate of the University of Windsor (B.A.Sc.,Civil Engineering) and received his Masters Degree (M.Eng. Mining) from McGill University. His career has ranged from contract miner, through production supervision, mining engineering, heavy civil engineering and mine management in both underground, open pit and alluvial operations in Canada, the United States, Europe and Africa. He was the founding president and a director of several junior companies including Cline Mining Corporation (1981-1998), BRC Diamond Corporation (May, 1999 - Feb 2007), and Gentor Resources Inc. (June, 2004 to June 2010). Mr. Bardswich is a mining consultant residing in rural Montana. He is a registered Professional Engineer in the Province of Ontario, a member of the Society of Mining Engineers, and a life member of the Canadian Institute of Mining and Metallurgy (CIM). He is a "Qualified Person" as defined in NI 43-101.

Northern Vertex Mining has taken a monumental step in advancing the Moss Project close to a million ounces of near surface gold just a stones throw away from Las Vegas.


Witnessing the growth that NEE has experienced over the past 18 months one can't help but be excited about what the future may hold for Northern Vertex Mining.

I am an advisor of Northern Vertex Mining Corp. As always - please do your own due diligence.



***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.

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Tue, 18 Sep 2012 10:43:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/18818/northern-vertex-mining-strength-in-numbers-2166.html
Temex: Abitibi 90210 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/18816/temex-abitibi-90210-2164.html  

Temex Announces Initial NI 43-101 Resources of Measured and Indicated & inferred resource of 1,031,000 oz Gold at Upper Hallnor, Whitney Gold Project, Ontario
 
Temex Resources Corp. (TSX.V:TME) announced "an initial National Instrument   43-101 ("NI 43-101") compliant mineral resource estimate on the Upper Hallnor portion (top 550 metres) of the Whitney Gold Property located in Timmins, Ontario. Temex holds 60% and Goldcorp Canada Ltd. holds 40%...

... Mineral Resource Upper Hallnor In-pit at 0.30 g/t Au cut-off grade
  • Measured ("M"): 232,100 ounces contained in 2,964,000 tonnes at a grade of 2.44 g/t gold
  • Indicated ("I"): 544,000 ounces contained in 8,664,000 tonnes at a grade of 1.95 g/t gold
  • TOTAL M+I: 776,100 ounces Measured and Indicated at a grade of 2.07 g/t gold
  • Inferred: 231,900 ounces contained in 4,024,000 tonnes at a grade of 1.79 g/t gold
  • Wide open for expansion
"...We are particularly pleased with the high gold grade of the resources, amenable to open pit mining, which exceeds those that have been recently mined directly along strike to the east at lower gold prices. Furthermore, excellent potential for expansion of the resource has been demonstrated by our drilling along a 1.5 kilometre strike length to the west including the Upper Broulan Reef Mine where we have intersected gold mineralization with drill results up to 37.90 g/t gold over 8.80 metres...."
 
--- Ian Campbell, President & CEO of Temex Resources Corp.
 
Please click on image to enlarge 3 year chart - TME.V
 



Ian Gordon
Why I like Temex Resources Corp (TSX.V: TME)
 
 
"Every now and again, one is lucky enough to discover a precious metals company with outstanding assets that has been overlooked by the investment community. Temex Resources is, in my opinion, one such company.
 
The company’s most prospective properties are all situated in Northern Ontario along the prolific Abitibi greenstone belt which has already produced more than 150 million ounces of gold.
 
Juby Lease Property-Gowganda NE Ontario. Temex 100%
 
The Juby Main Zone has an indicated resource of 14.1 Mt grading 1.36 g/t gold (614,000 oz) and an inferred resource of 18.3 Mt grading 1.14 g/t gold (602,000 oz). The total is, therefore, in excess of 1.2 million oz gold. These grades are similar to the grades at Detour Gold’s massive Detour Lake gold deposit (17.7 million ounces gold). The indicated resource exists above 350 metres and feasible to open pit operation.
 
There is an excellent opportunity to grow this resource in newly discovered gold zones along strike and in parallel structures.
 
Juby Joint Venture Property. Temex 60%, Goldeye 40% (Temex is the operator)
 
This joint venture property surrounds the Juby Lease Property and Temex is the operator. The company recently announced that multiple new priority targets have been identified as a result of ongoing and expanded surface work.
 
According to Ian Campbell, Temex’s President and CEO, "our intent is to discover new gold zones that will add to the gold resources already established on our 100% owned Juby main zone deposit where we are currently drilling." Oct 19th, 2010.
 
The Shining Tree area, where these two properties are situated, is highly prospective as evidenced by increased exploration activity that is currently proceeding throughout the area.
 
Whitney Joint Venture Property, Timmins, Ontario. Temex 60%, Goldcorp 40% (Temex is the operator)
 
This property historically produced 2.3 million gold oz with 1.7 million ounces of that production coming from the Hallnor mine with an average grade of 0.40 oz per ton. This was the highest grade from the 1 million plus oz gold producers in the Timmins camp. These past mines included the Hollinger mine, which produced gold for 59 years, the McIntyre mine with a production life of 77 years, the Dome mine which is in its 100th year of operation and the Pamour mine which produced gold for 64 years. The production life of the Hallnor mine was 32 years. Gold production from the Timmins camp has already produced in excess of 70 million ounces.
 
The lower Hallnor Mine is wide open at depth and the joint venture partners have determined to work aggressively to advance the exploration around and at the depth of the old mine workings.
 
In addition to the Hallnor Mine, there are another two past producing mines on the Whitney property. These are the Broulan Reef and the Bonetal mines and the joint venture partners expect to aggressively conduct exploration in these two locales as well.
 
Gowganda Silver Property, situated between Timmins and the Juby property. Temex 100%
 
This property historically produced 41 million ounces of silver at an average grade of 22 opt and has a pre-NI 43-101 inferred 2.6 million ounces of silver in the tailings. There is excellent exploration potential for additional vein discoveries in several areas of the property; one drill hole completed by Temex intersected 12,541 g/t (403 opt) over 0.3 metres while others reported up to 32,316 g/t (1,039 opt) over 0.30 m.
 
The current market cap of Temex is about $40 million (CAD), which effectively values the gold in the ground on the Juby property at about $33 per ounce and gives no added value for any of the other outstanding properties. We have recently noted a report from a major Canadian brokerage firm that values gold in the ground at $100 per ounce. By that measure alone Temex’s current share price is trading at about one-third of its value and that doesn’t take into consideration any value for the other excellent properties.
 
--- Ian Gordon: Why I like Temex Resources Corp (TSX.V: TME)


 Please click on the image to veiw Temex Corporate Video
 
Ian Gordon



 
Temex Resources (TSX.V:TME) Closing price Thursday September 6th. – $0.215. Market cap equals $27 million (CAD).
 
"On Wednesday September 5, 2012 Temex Resources released a NI 43 101 resource for the upper Hallnor deposit on the Timmins, Whitney property, of which it owns 60% and Goldcorp 40%. This is an open- pit deposit and reaches to a depth of 550 meters. In the measured and indicated category the resource totaled 776,100 au ounces grading 2.07 grams and in the inferred category there are an additional 231,900 ounces grading 1.79 grams. Ian Campbell, President and CEO commented, "This is an important milestone for the company since it is the initial resource estimate based on our exploration efforts on this highly prospective property. The high-grade near surface gold resource announced today is just from the upper Hallnor Mine area, the portion of the property acquired in July 2010 and validates our thesis that Temex controls a very attractive asset strategically located in Canada’s most prolific gold mining district. We are particularly pleased with the high grade gold of the resource amenable to open pit mining, which exceeds those that have been recently mined directly along strike to the east at lower gold prices. Furthermore, excellent potential for expansion of the resource has been demonstrated by our drilling along a 1.5 kilometre strike length to the west, including the Upper Broulan Reef Mine where we have intersected gold mineralization with drill results up to 37.90 g/t gold over 8.8 metres." Wow, that’s great, but would you believe it the stock price fell $0.05 following the news announcement. Anyway, with the 600,000 gold ounce which Temex owns on the Whitney property (60% of 1 million ounces) and its 100% owned 1.8 million ounces on the Juby property, Temex has a combined gold inventory of 2.4 million ounces. The market is assessing Temex a value of just $11.25 (U.S.) per ounce in the ground. In other words, the stock price is very cheap. I own shares in Temex Resources."
 

 
Please click to enlarge 6 month chart - TME.V

Johnston-Sequoia Commentary:
 
"The secret of success is to know something nobody else knows"
 
I have been following TME for quite some time now.  I was first introduced to the story at the Cambridge House Pheonix Silver Summit in 2010.  I've always been impressed at the entire property portfolio that even at present (+190% in the past 4 months) seems to be heavily undervalued by the market. 
 
The closest comparison in terms of assets alone that I can draw for our readers is Midway Gold Corp. (AMEX: MDW).  In fact Temex it is essentially the Canadian version of Midway.  Like MDW Temex has an embarrassment of riches in terms of its ounces in the ground vs. its share price.  Although, unlike MDW Temex is the operator on the Whitney Joint Venture.  This is of course positive because they own 60% of the project vs. MDW's 40% (Barrick 60%) of Spring Valley, however the financing for advancing the project at the current 122,388,760 shares issued & outstanding (139,354,189 fully diluted) may be the only concern I have with TME at the moment.
 
It's been accurately stated that "you're only as strong as your shareholders" - Sprott Asset Management owns 11.83% of TME (14,482,780 shares) along with a gentlemen that (as many of our readers know) I have a tremendous amount of respect for Mr. Ian Gordon.
 
Timmins Gold Project:
 
Whitney Joint Venture with Goldcorp. Summary
 
Temex holds a 60% interest in a joint venture with Goldcorp in the Whitney Property. The property includes the past producing Hallnor, Broulan Reef and Bonetal mines. The Hallnor Mine was the highest grade gold mine in the Timmins gold camp, having produced 1.7 million ounces of gold at an average grade of 0.40 opt (13.71 g/t). The Whitney Property is located on a 4 kilometre long, 10 million ounce mine trend. 

Drilling Highlights:

Broulan Reef

  • TW08-67: 33.46 g/t gold over 5.40 metres including 204.00 g/t gold over 0.70 metres

Hugh Pam

  • TW05-11: 8.41 g/t gold over 27.50 metres including 17.17 g/t gold over 12.00 metres and 141.28 g/t gold over 1.00 metre

Lower Hallnor 19 Vein

  • TW08-77: 21.10 g/t gold over 6.55 metres including 270.62 g/t gold over 0.50 metres

Q Zone

  • TW09-78: 17.71 g/t gold over 2.90 metres including 90.35 g/t gold over 0.50 metres
  • TW10-94: 180.00 g/t gold over 0.50 metres
  • TW11-154: 122.85 g/t gold over 0.50 metres
 
I've made the choice to "initiate coverage" on Temex Resources Corp. at this time - simply because I would like to begin to add to my portfolio of Canadian based Assets.  In my opinion TME  is the best Gold exploration and development story in Canada's prolific Abitibi Greenstone Belt from a pure value investorsstandpoint.
 
I do not currently own shares of Temex Resources Corp. & I am not an advisor of the company - however I reserve the right to buy TME  on weakness below $0.26.  As always please do your own due diligence.


***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.

 

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Mon, 17 Sep 2012 10:44:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/18816/temex-abitibi-90210-2164.html
$724,000,000 All Cash Acquisition of Talison Lithium by Rockwood http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/18633/724000000-all-cash-acquisition-of-talison-lithium-by-rockwood-1980.html  

Talison Lithium Limited (TSX:TLH | US: TLTHF) announced today “that it has entered into a definitive Scheme Implementation Agreement (“SIA”) withRockwood Holdings, Inc. (“Rockwood”) under which it is proposed that Rockwood, or a wholly-owned entity of Rockwood, will acquire 100% of the ordinary shares in the capital of Talison (the “Shares”) by way of a Scheme of Arrangement (“Scheme”) under the Australian Corporations Act 2001 (Cth) for cash consideration of C$6.50 per share. This values the equity of Talison at approximately C$724 million on a fully diluted basis.


The cash consideration of C$6.50 per Share, represents:
  • A 53% premium to Talison’s last closing price on August 22, 2012 of C$4.24; 
  • A 52% premium to Talison’s 10 day volume weighted average price (“VWAP”) of C$4.28; and 
  • A 59% premium to Talison’s 30 day VWAP of C$4.08.

The cash consideration provides an opportunity for Talison Shareholders to realise immediate value for their Shares at a substantial premium to market and reflects the size, strategic nature and growth potential of Talison’s lithium operations.


The SIA entered into by Talison and Rockwood also proposes that Rockwood, or a whollyowned entity of Rockwood, will acquire 100% of the options to acquire Shares (“Options”) through an option scheme of arrangement (“Option Scheme”) for cash consideration of C$6.50 per Option less the exercise price for that Option.


The board of directors of Talison (“Talison Directors”) has considered the Scheme and the Option Scheme and unanimously recommends that Shareholders and Optionholders vote in favour of the Scheme and the Option Scheme, in the absence of a Superior Proposal (as defined in the SIA) and subject to an Independent Expert concluding that the Schemes are in the best interests of security holders. Each of the Talison Directors intends to vote the Shares and Options held or controlled by them in favour of the Scheme and Option Scheme.


Resource Capital Fund IV L.P. and Resource Capital Fund V L.P. (collectively, the “RCF Funds”), together having a 36.8% shareholding interest in Talison, have each confirmed to Talison that, in the absence of an offer which the RCF Funds determine is superior, they support the Scheme and intend to vote all of their Shares in favour of the Scheme.


Peter Robinson, Chairman of the Board of Talison, said, “Today marks a significant milestone in the history of Talison. Under the Scheme, Rockwood is offering cash consideration representing an attractive premium for Shareholders and allowing Shareholders to realise immediate value for their Talison Shares. This reflects positively on Talison’s position in the global lithium market....”


Rockwood is a NYSE-listed global specialty chemicals and advanced materials company.  Rockwood focuses on global niche segments of the specialty chemicals, pigments and additives and advanced materials markets.


The expectation of Talison’s Directors is that Talison, as part of the Rockwood group, will continue to support its existing lithium concentrate customers in China and the rest of the world....


The completion of the Scheme and Option Scheme is subject to minimal conditions including:
  • Approval under the Australian Foreign Acquisitions and Takeovers Act 1975 (Cth); 
  • Regulatory approvals from the Australian Securities and Investments Commission and the Australian Court; 
  • Approval of the requisite majority of Talison Shareholders at a meeting of Shareholders; 
  • No Material Adverse Change (as defined in the SIA) occurring to Talison; and 
  • No Prescribed Occurrence (as defined in the SIA) occurring in relation to Talison.
Further due diligence is not a condition to completion of the Scheme or the Option Scheme.”


August 23rd, 2012 Talison Lithium Press Release


Johnston-Sequoia Commentary:


To all of our readers who stuck with TLH through the days of the Salares Lithium Inc. - Talison Lithium Merger, the exponential rise from the September 2010 reverse merger IPO, the dark days of late 2011 & early 2012 to this $724,000,000.00 all cash offer by Rockwood - let me be the first to say congratulations.  This is Discovery Investing 101.



***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.

 

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Fri, 24 Aug 2012 08:34:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/18633/724000000-all-cash-acquisition-of-talison-lithium-by-rockwood-1980.html
World's Largest Producer Doubles Capacity http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/18140/worlds-largest-producer-doubles-capacity-1484.html Talison Lithium Limited (TSX:TLH | US: TLTHF) announced that "the Stage 2 Expansion at the Greenbushes Lithium Operations has been completed and commissioned on time, within budget and initial performance is exceeding expectations.

Peter Oliver, Chief Executive Officer and Managing Director said, “Talison expects to progressively increase production from the expanded plant as market demand grows. Talison also intends to continue its strategy of seeking higher product prices to support its further CApital expenditure to provide a long term, stable and growing supply of lithium.”


Supporting Talison’s Future Growth

The Expansion more than doubles Talison’s production CApacity and was deliberately designed to be large sCAle, to both provide operational efficiencies and enable Talison to support the needs of the lithium market into the future.
Talison expects to progressively increase CApacity utilization of its expanded chemiCAl-grade concentrate processing plant as the lithium market grows. However, the Expansion also provides Talison with the CApacity to respond rapidly to changing conditions in the lithium market.
In addition, the Expansion will provide high quality feedstock for Talison’s own proposed 20,000 tonne lithium CArbonate plant. Talison is targeting production of lithium CArbonate in 2015 and, at full production, the lithium CArbonate plant would consume approximately 20% of Talison’s annual chemiCAl-grade concentrate production CApacity. Talison is targeting an investment decision on the proposed lithium CArbonate plant by the end of CAlendar 2012."

Conveyer feeding ore into the ChemiCAl-Grade Concentrate processing plant at the Greenbushes Lithium Operations

Talison Lithium: Execution Equals Results
Chris Berry, MBA

"Late last week Talison Lithium (TSX:TLH | US:TLTHF) announced that the Stage II expansion at its Greenbushes operation had been completed on time and within budget.  The company controls over 30% of the lithium market worldwide and with this expansion in place, has now doubled CApacity to 110,000 tonnes of lithium CArbonate equivalent (LCE). We visited TLH’s Greenbushes operation a year ago and were able to witness the initial stages of the expansion.  The fact that it has been completed in a year’s time is testament to the ability of company management to execute and complete their business plan...


Overview of the ChemiCAl-Grade Concentrate processing plant at the Greenbushes Lithium Operations

Talison: Well Positioned for the Long-Term

...  For Talison, non-binding MOUs are in place with Sojitz and Mitsui in Japan to diversify geographiCAlly from China where TLH is responsible for 80% of China’s lithium needs. TLH has AUD $85 million CAsh on its balance sheet with minimal debt and has put itself in a powerful position going forward.

In Q3 2012, the company sold 16,600 tonnes of lithium concentrate at an average sales price of US $340/t. For comparisons sake, in Q2 2012, the company reported sales of 11,200 t of lithium concentrate at an average sales price of US $310/t.

TLH also confirmed that the price increase reported for the first half of 2012 has been initiated and this, coupled with decreasing CAsh operating costs, has led to an EBITDA margin greater than 30%...
 
CAtalysts
 
TLH has several objectives on its 2012 agenda, but none as important as the decision to build a 20,000 tpy lithium CArbonate plant. The company believes that it CAn CApture additional value by producing LCE as opposed to producing techniCAl and chemiCAl grade lithium....

...  An engineering study on the proposed plant is nearing completion. A decision is expected by the end of 2012. TLH anticipates a two-year construction period for a plant loCAted in South Western Australia (minimizing evident geopolitiCAl risk in other Asian countries) and LCE production by 2015...

...  TLH has 118.8 million shares outstanding on a fully diluted basis, AUD 85 million CAsh and minimal debt according to the most recent MD&A. We own shares in Talison Lithium."

--- Chris Berry, MBA


 

Talison set for Final Investment Decision on Lithium Plant 

Kate Emery 

Australia could have its first lithium CArbonate plant in WA within three years, with Talison Lithium to make a final investment decision on the multimillion-dollar project by the end of the year.

Having completed the latest expansion of its Greenbushes operation, 250km south of Perth, last week Talison said it hoped to use some of the additional output as high-grade feedstock for the proposed plant and was targeting first production in 2015.

If approved by the Talison board it would be the country's first move into downstream processing of lithium, used in electric CAr batteries, phones, computers and ceramics, into lithium CArbonate. WA's other lithium producer, Galaxy Resources, already has a lithium CArbonate plant but it is in China.

Although the lithium market is an opaque industry, sources say demand for lithium minerals has been growing at between 10 and 15 per cent a year since 2008.

Lithium CAn be processed into a number of different higher-value chemiCAls, including lithium CArbonate, lithium bromide and lithium chloride.

Of global lithium production last year, about 26 per cent was used to make lithium-ion batteries, 29 per cent glass and ceramics and 14 per cent lubriCAnt greases.

If Talison were to run Greenbushes at full CApacity its production would be equivalent to the size of the global lithium market two years ago.

However, the company, which is listed on the Toronto Stock Exchange, has signaled it will bring on new CApacity slowly to avoid depressing prices."


Johnston-Sequoia Commentary:

When I sat down at my computer essentially 3 years ago to the day to begin researching the lithium industry - I never could have imagined that 3 years later I would be an advisor to the world's largest lithium producer that had just announced that they have the ability to double CApacity (not as an industry - but as a company).  The story of the world's conversion to electrifiCAtion grows stronger & is reinforced with each iPhone, iPad, Nissan Leaf & Chevy Volt purchased today.

In November 2009 Todd Hilditch  (Currently Terraco Gold's President & CEO) was asked to come in as a new President & CEO of a small $3,800,000.00 market CAp company with Lithium & Potash assets in Chile CAlled Salares Lithium Inc. The "Salares 7 Project" consisted of seven salars (salt lakes) loCAted in the AtaCAma Region of Northern Chile. Five of the seven salars were 100% owned by Salares Lithium and its Chilean partners, and were clustered within a radius of approximately 30 kilometres (~ 70% of global lithium production comes from the AtaCAma Region).  After some strong initial exploration success in delineating the amount of brine bearing horizon at the project (area where Lithium & Potassium occur in these salt lakes) - Salares Lithium merged with Talison Lithium in a $350,000,000 reverse merger to create the world`s largest producing lithium company (announced July 15th, 2010).  

Since September 22nd, 2010 we have watched Talison grow as large as $780,000,000.00 in market CApitalization (currently $365,000,000.00) & she has under-promised and over-delivered every step of the way.  This is a management team that has been producing lithium at Greenbushes for over 25 years - they know what they're doing and they have yet to disappoint on a single milestone they've set (unfortunately this CAn be somewhat of an anomaly in the mining industry).

"On June 7, 2012, Talison Lithium Ltd. reported the stage 2 expansion at the Greenbushes lithium mine has been completed: The expansion was commissioned on time, within budget and the company reports initial performance is exceeding expectations. Over the last deCAde, the company has increased production ~15% per annum; with the expansion now completed, we expect 15–20% per annum production growth over the next five years. . .we are maintaining our Top Pick rating and CA$7.60 target." 
--- Edward Otto, Cormark Securities 

"Talison Lithium Ltd.'s 14.99 P/E ratio is roughly in-line with the TSX, but the growth profile in the next 12 months is much stronger than the overall TSX or the overall global economy. We expect earnings to grow by over 40% in the next 12 months due to the following three factors: 1.) Increased production, 2.) Lower unit operating costs and 3.) Higher selling prices—Talison just announced the company is inline to achieve items 1 and 2. . .we expect Talison to have pricing power as demand continues to outstrip supply in the near-term." 
--- John Lee, Byron Capital Markets

Taking into account the increase in production, the growing demand for lithium technology & the strong prospect of the 20,000 tpy Lithium CArbonate Plant - the future of Talison Lithium appears very bright indeed.

Just 2.02% above the 0 line on a 3 year chart

 

I am an advisor of Talison Lithium Ltd. (formerly an advisor of Salares Lithium Inc.) & own shares in the company.

As always - please do your own due diligence 



***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia CApital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone CApital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We CAnnot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.

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Wed, 13 Jun 2012 10:12:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/18140/worlds-largest-producer-doubles-capacity-1484.html
Intergenerational Wealth http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/18033/intergenerational-wealth-1377.html
The Three Ways 'Old Money' Holds on to Its Riches

By James Rickards

"While America claims to be a class-free society, the opposite often seems to be the case. Americans are obsessed with social status in all its forms whether based on celebrity, artistic or athletic accomplishment, or just plain money. Although royalty is not legal in America, our economic royalty including Bill Gates and Warren Buffett are as highly regarded as any English duke or earl.

When it comes to status, we don't look just at the size of one's bank account, we make distinctions based on the nexus of money and social standing. This leads to contrasts such as "old money" and "new money" with the former connoting generations of life on country estates and Ivy League credentials while the latter is something flashier. The Astor family have been wealthy for over 200 years and practically define old money in America.

Yet as one goes abroad, there is an even older kind of money, true dynastic wealth that has existed in some families for 300 years or longer. This type of wealth has survived not only business cycles but also war, invasion, the collapse of empires, revolution, and natural disaster. In order for family wealth to persist through so many centuries and through such adversity, something more is needed than ordinary investment skill. This rare kind of success in wealth preservation requires a longer view, infused with a sense of history and a keen appreciation for worst-case scenarios that too frequently become real.

When one inquires of family members and representatives as to what it takes to preserve wealth over centuries and not just cycles, the frequent reply is "a third, a third, and a third." This is shorthand for dividing one's wealth into one-third land, one-third gold, and one-third fine art. Obviously some liquidity is needed for day-to-day expenses and some room can be made for a speculative portfolio, but the basic idea that land, gold, and art outlast and outperform riskier assets such as stocks, bonds, and cash seems sound when viewed from the perspective of centuries and not just years or decades.

This may be difficult to grasp for Americans who have been badgered with mantras like "stocks for the long run" by Wall Street salesmen more concerned with their commissions than their clients. Stocks can indeed perform well for long periods although major indices have barely budged over the last 12 years. Yet stocks, bonds, and even cash all involve some claim on a third party and therefore contain credit risk in addition to whatever market risk they embed. The investor is always at the mercy of the issuer. Companies eventually go bankrupt. Bonds eventually default. Every paper currency in the history of the world has eventually proved worthless and there is little reason to believe the reigning paper money champions such as the dollar, euro, or yen will prove different in the fullness of time.

In contrast, the value of land, gold, and art is intrinsic. If you own it, you own it. There is no issuer who can suddenly make your land disappear or turn your gold into confetti. A painting cannot go bankrupt. Of course, it is possible that a totalitarian regime or an invading army might confiscate tangible wealth. Yet, even then there are defensive strategies that have been pursued with success.

Gold can be gathered up and stuffed in a saddlebag or sewn into the lining of a coat and moved. Art can be removed from frames, rolled up, and carried in one's luggage. Admittedly land cannot be moved, but with good title and patience a family can reassert its claim even generations later once interlopers have been ousted. Many Cuban families in South Florida are waiting to recover their estates seized by Castro in the late 1950s once the Communist government collapses, and they may do so with some success.

No portfolio is perfect or without risk. Yet, too often we think of risk narrowly and ignore the greatest risks of all in the form of monetary collapse, social disorder, regime change, and emergency edicts. Warren Buffett disparages gold because it has no yield. The reason it has no yield is that is has no risk. Yield is what you earn when you take risk. Gold has no credit risk, no currency risk, no maturity risk, indeed no risk of any kind. It is just gold.

In contrast, Buffett's Berkshire Hathaway stock when priced not in dollars but in ounces of gold has declined in value by about 75 percent since 2000 from 280 ounces per share to 70 ounces per share. Put differently, someone who bought gold rather than Berkshire in 2000 could today buy four times as much Berkshire stock using the same gold. There has been similar appreciation in the value of fine art. Admittedly this is a selective example. Yet it is true that over centuries it is the hard assets not the paper assets that retain value through collapse and catastrophe. The old money knows this—they have seen it all before."

--- The Three Ways 'Old Money' Holds on to Its Riches - By James Rickards

James Rickards is a hedge fund manager in New York City and the author of Currency Wars: The Making of the Next Global Crisis from Portfolio/Penguin. Follow him on Twitter: @JamesGRickards.

Intergenerational Income Mobility

"Intergenerational income mobility refers to the extent to which income levels are able to change across generations. If there was no intergenerational mobility at all (that is, the intergenerational income elasticity was equal to 1), all poor children would become poor adults and all rich children would become rich adults.

In the case of complete intergenerational mobility (that is, the intergenerational income elasticity was equal to zero), there would be no relationship between family background and the adult income outcomes of children. A child born into poverty would have exactly the same likelihood of earning a high income in adulthood as a child born into a rich family.

As described by Statistics Canada researcher Miles Corak, “If we live in a society characterized by a high degree of mobility then low income during childhood may not be an experience that necessarily leaves a scar, pre-ordaining individuals to low-income as adults or to less engagement in society. In a society with a low degree of intergenerational mobility this is not the case: where one is going is closely linked to where one has been.

How is intergenerational income mobility measured?

Intergenerational income mobility is measured by calculating the intergenerational earnings elasticity. A higher elasticity number implies that it is more difficult for a person to move outside the income class he or she was born into. There are large differences among peer countries.

Canada ranks among the top performers and receives an “A” grade, with an intergenerational earnings elasticity of 0.19. If an individual earns $10,000 less income than the average, 19 per cent of that difference (or, $1,900) will be passed on to the individual’s children. In other words, the children will earn $1,900 less than the average.
The most income mobility is found in Denmark, which has an intergenerational earnings elasticity of 0.15. This means that 15 per cent the relative difference in parental earnings is transmitted, on average, to their children.

The U.K. is the worst performer on this indicator, with an earnings elasticity of 0.5. Parents earning $10,000 less than the average will pass on 50 per cent of that difference to their children. The children, in other words, will earn $5,000 less than the average.
Father-Son Earnings Elasticities (Click to enlarge)

 Johnston-Sequoia Commentary:

When we cross reference Jim Rickard's thesis with a sample of 5 of the top 20 wealthiest men in history (All American & all lived in the mid 1800's) we discover some shocking commonalities:

#16 Stephen Van Rensselaer: (November 1, 1764 – January 26, 1839)
Peak fortune: $68.5 Billion
Source of wealth: Major of the US Militia and member of the New York State Assembly, Rensselaer was also heir to one of the most well-endowed estates in the US. He founded the Rensselaer Polytechnic Institute with a portion of his wealth.
--- Business Insider: Stephen Van Rensselaer

#15 Jay Gould: (May 27, 1836 – December 2, 1892)
Peak fortune: $71.2 Billion
Source of wealth: Railroad baron and gold speculator, Jay Gould masterminded the 19th century transportation boom in America. He and financier James Fisk also bought up a dominating share of the gold market at the time - enough to directly affect market movements during Gould's lifetime.
--- Business Insider: Jay Gould

#8 John Jacob Astor:   (July 17, 1763 – March 29, 1848)
Peak fortune: $121 billion
Source of wealth: A successful fur trader, he established a near monopoly within the U.S. by around 1800. He subsequently switched trades and went on to investing in real estate, focusing on New York City.
--- Business Insider: John Jacob Astor

#4 Cornelius Vanderbilt: (May 27, 1794 – January 4, 1877)
Fortune: $185 billion
Source of wealth: An American industrialist and philanthropist who built his wealth in shipping and railroads. He was also the patriarch of the Vanderbilt family and one of the richest Americans in history. He provided the initial gift to found Vanderbilt University, which is named in his honor.
--- Business Insider: Cornelius Vanderbilt

#1 John D. Rockefeller: (July 8, 1839 – May 23, 1937)
Fortune: $336 billion
Source of wealth:
Fortune: $336 billion
Source of wealth: An American oil industrialist, investor, and philanthropist. He was the founder of the Standard Oil Company, which dominated the oil industry and was the first great U.S. business trust. Rockefeller revolutionized the petroleum industry and defined the structure of modern philanthropy.
---  Business Insider: John D. Rockefeller

 


The point of all of this is obviously not marvel at the amount of capital these gentlemen were able to amass or to strive to be the next J.D Rockefeller of John Jacob Astor, the point is that all of these men understood the value of investing for the future (Intergenerational wealth). 

This concept is why I invest - today at 32 years of age and having two children (ages 2 and 3 months) Intergenational wealth creation is my ultimate goal.  My grandfather (who came from a very modest background in Newburg, New Brunswick Canada) was fortunate enough to become a doctor as a result of serving in the Second World War- went on to have 12 children (7 doctors, 2 lawyers, 2 teachers and a business man) and became one of the largest land owners in South Eastern New Brunswick, Canada. 

Finally, as suggested in our last piece "Smooth Seas do not Make Skillful Sailors " we may have reached a bottom and subsequent Key point reversal on the S&P/TSX Venture Composite Index ($CDNX), the AMEX Gold Bugs Index ($HUI) and the spot price for Gold ($GOLD).  This as many (if not all) of our readers know can provide an opportunity - which may in turn translate into a tremendous amount of wealth creation in a very short period of time.  If this is in fact the case for some of you (my hope is of course all of you) please consider the above as a proven way for a contrarian to diversify and more importantly preserve wealth.

As always please do your own due diligence.

"The Breakers" Vanderbilt Mansion - Newport, Rhode Island

 

 

 

 

***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.

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Tue, 29 May 2012 12:03:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/18033/intergenerational-wealth-1377.html
Fueling the Future? http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17743/fueling-the-future-1084.html Francoise Faverjon-Fortin,
Vice-President, Infrastructure and Environment, Export Development Canada
February 27th, 2012 Globe & Mail Special - Sustainable Development

"Lignol Innovations has demonstrated its unique and economical integrated process technology for bio-refining abundant and renewable ligno-cellulosic biomass feedstocks into ethanol (fuel alcohol), pure lignin and other valuable co-products. Lignol’s unique de-lignification pretreatment Organosolv process separates woody biomass into its components of cellulose, hemi-cellulose and lignin. The cellulose and hemi-cellulose are enzymatically hydrolysed into sugars, which are then fermented, distilled and dehydrated to fuel-grade ethanol. The higHPurity lignin can be processed into a great variety of high-value products. This innovation is a key solution for producing ethanol and high-value products from low-value feedstocks, while providing an alternative to reliance on fossil fuels."

Lignol Innovations Ltd.
Economic Sector: Energy Exploration and Production
Environmental Benefits:  Climate Change, Clean Air, Clean Soil, Clean Water
--- Francoise Faverjon-Fortin,
Vice-President, Infrastructure and Environment, Export Development Canada
February 27th, 2012 Globe & Mail Special - Sustainable Development

The Optimal Margin of Safety Pattern?

Lignol receives approval of four new key biorefining and lignin patent applications
 
"Lignol Energy Corp.ration (TSXV: LEC), announced that it has received confirmation  that four new patent applications have been approved, bringing the total number of approved patents to seven.

"These approvals demonstrate the strength of our patent portfolio covering not only our unique process and systems but also our unique range of high performance lignins (HP-L lignin)," said Ross MacLachlan, President and CEO. "The combination of our strong patent portfolio, trade secrets and knowhow provides significant barriers to competitors and creates long-term value for shareholders."

The patents titled "Continuous counter-current organosolv processing of lignocellulosic feedstocks", "Concurrent Saccharification and fermentation of fibrous biomass" and "Derivatives of native lignins from hardwood feedstocks", were approved in the United States, while the patent titled "Concurrent anaerobic digestion and fermentation of lignocellulosic feedstocks" was approved in China.

Lignol's rapidly growing intellectual property portfolio currently consists of eight-six patents in various stages of prosecution of which seven have been approved.  The portfolio includes twenty-four patent families relating to processes, systems, the composition of extractives (including lignin derivatives), and their applications. Lignol also owns several trademarks and a significant body of trade secrets." 
--- Jan. 24, 2012 Lignol Energy Inc. Press Release 


Johnston-Sequoia Commentary: 

"The farther backwards you can look, the farther forward you are likely to see."
 ---Sir Winston Churchill    

This technology holds particular interest to me - growing up in the town of Dalhousie New Brunswick, Canada the primary industry was pulp & paper.  Our family moved to Dalhousie in June of 1988 from Calgary Alberta, Canada (shortly after the Winter Olympics). The town was booming - it seemed every last person who wished to work had a good job & at the time the quality of life was very high.  Since that time a lot has changed for the North Shore New Brunswick shire town - slowly but surely the mill cut back on its workforce before ultimately closing its doors January 31, 2008. My father is one of the only remaining doctors in the town which today has a population of just 2,300 people.

"The late 1920s, when Dalhousie was picked as the site of a giant paper mill. The International Paper Company built what was then one of the largest newsprint mills in the world and the town changed forever. From 1929 on, the mill would dominate life in Dalhousie...

...  The 2007 merger of Bowater and Abitibi Consolidated resulted in the decision by the newly merged company to announce the closure of the Dalhousie newsprint mill on November 29, 2007. The mill, which produced 640 tonnes of newsprint per day for shipment by rail, truck and ship to domestic and international markets, was officially closed on January 31, 2008. Consequently the town of Dalhousie's economy is facing uncertainty during the post-industrial adjustment. Due to the closure of this mill, hundreds were left without jobs and were forced to move."
--- Dalhousie, New Brunswick Wikipedia page    

This is one of the most fascinating component's of both cycles & innovation.  North American town's like Winnimucca Nevada, Weiser Idaho & Dalhousie New Brunswick decimated by the downturn in industrial production from 1980 to present may have a breath of new economic life with the "evolution of the industrial revolution (clean & renewable technology wave). 

Does LEC.V compliment our mandatory discovery factors

Management:

Dr. E. Kendall Pye, Chief Scientific Officer – Dr. Pye developed Lignol’s core pre-treatment technology while with an affiliate of General Electric.  Prior to founding Lignol he held a senior management position in Repap Technologies Inc. where he oversaw the development and industrial scale up of the technology after it was acquired from General Electric.  Dr. Pye has over 35 years experience in biotechnology research and consulting in commercial and academic environments. He is recognized as one of the world’s leading biorefining experts and reputable biochemical professors.  He is a former tenured professor at the University of Pennsylvania. 

Ross MacLachlan, President and Chief Executive Officer – Mr. MacLachlan has served as Lignol’s President and CEO since 2005.  He is an executive with project financing and public company experience including working extensively with companies in the conventional and alternative energy sectors.  He is a frequent speaker and panel participant relating to public policy and development of the Cleantech industry.  He is an active member of the BC Cleantech CEO Alliance, serves on the boards of independent power producers Pristine Power and Swift Power (both acquired by Veresen Inc. TSX: VSN) and also serves as a board member of BIOTECanada.

Michael Rushton, Chief Operating Officer – Mr. Rushton is a seasoned business executive and chemical engineer with extensive experience in the demonstration and commercialization of chemical process technology and in project development, engineering and construction.  He is a former senior VP with Chemetics International and also former CEO of Membrane Reactor Technologies

Balance Sheet: 

Lignol Project Awarded $2.06 Million in Additional Funding from SDTC
February 7th, 2012 Lignol Energy Corp. Press Release

"Lignol Energy Corp.ration (TSXV: LEC) , a leading technology company in the advanced biofuels and renewable chemical sector, announced that a project led by its wholly-owned subsidiary, Lignol Innovations Ltd., has been awarded up to $2.06 million in additional funding contributions from Sustainable Development Technology Canada (“SDTC”).

“Our Government is committed to supporting clean technology in Canada as an effective measure to reduce greenhouse gas emissions and create high-quality jobs for Canadians,” said the Honourable Joe Oliver, Minister of Natural Resources. “This project demonstrates our leadership in driving clean technology innovation to help create viable new industries for Canada’s economy.”

“Lignol has a proven track record of innovation, a trend that will be made stronger with this new investment,” said SDTC President and CEO Vicky J. Sharpe. “It is innovation like this that brings Canada ever closer to using key resources sustainably and creating the next generation of biofuels.”

This award is in addition to the $4.72 million awarded to date from SDTC’s SD Tech Fund™, representing an aggregate contribution to Lignol from SDTC of up to $6.78 million. The duration of the current work plan, that commenced September, 2009 with the support from SDTC, will be extended until Q3 2013 with an overall total project cost estimated to be $20.4 million. The original project resulted in the establishment of a world-class integrated industrial scale facility for the production of cellulosic ethanol and unique renewable biochemicals. The additional scope of the project will result in further enhancement to Lignol’s biorefinery technologies, focusing on greater utilization of hemicellulose-derived sugars and demonstration of industrial, value added applications for Lignol’s high performance lignin (“HP-L™ Lignin”) in the plastics and materials industries.

--- February 7th, 2012 Lignol Energy Corp. Press Release

100% ownership & Potential World Class Discoveries: 

"Lignol Innovations is commercializing its unique integrated cellulose to ethanol process technology for biorefining ethanol (fuel alcohol), pure lignin and other valuable co-products from renewable and readily available biomass.  The technology is based on original ‘Alcell’ biorefining technology that was developed by General Electric and Repap Enterprises at a cost of over $100 million.  Lignol also intends to invest in, or otherwise obtain, an equity ownership in energy related projects which have synergies with its biorefining technology.

Lignol’s growth is taking place in a period of unprecedented demand for fuel ethanol in North America driven by renewable fuel standards, high fossil fuel prices, environmental impacts on climate change, and fundamental concerns for energy security in the U.S. Currently 12% of the US corn crop is used to produce fuel ethanol. Increasing demand is expected to drive that figure to nearly 30% in 2012. New technologies are required to produce ethanol from biomass cellulose rather than from the fermentation of valuable grains. The company's technology and know-how has positioned the company as one of the world's most promising "Cellulose to Ethanol" solutions.

Lignol is also considering several strategic investment opportunities in energy related projects, which have synergies with its biorefining technology. Examples of such projects include: electric power projects, ethanol projects with access to cellulosic feedstocks and pulp mill conversions to alternative energy opportunities."
--- Lignol Energy Corp: Company Overview 

Why now?

As part of a Jan. 23 2007 State of the Union address outlining his plan to reduce the nation's dependency on foreign oil, President George W. Bush required the production of 35 billion gallons a year of renewable and alternative fuels by 2017, a 500% increase over 2012 targets set by congress. 

"One way to reach the president's objective is offered by Chris Somerville, professor of biological sciences at Stanford University and director of the Carnegie Institution's Department of Plant Biology. Somerville advocates increasing the production of cellulosic ethanol, which is distilled from the fermentation of sugars from the entire plant, not just the grains.

The main reason behind the call for increased biofuel production is to reduce emissions of greenhouse gases, not because we are running out of fossil fuels, he added. ''There are reserves of coal for 200 years at least, and coal can be liquefied into fuel, but it produces an awful lot of CO2,'' he explained.

Biofuels, on the other hand, are carbon-neutral sources of energy, Somerville said, noting that plants absorb atmospheric carbon dioxide during photosynthesis, which compensates for the CO2 that is released when biofuels burn."
--- Science Daily.com 

"Government mandates for the use of renewable fuels, concerns for energy security and reductions in greenhouse gas emissions are driving demand for fuel-grade ethanol and renewable chemicals world-wide. The clean energy industry has predicted that the global market for biofuels such as cellulosic ethanol will grow to US$112.8 billion by 2020."
--- Clean Edge Inc., Clean Energy Trends 2011 .

Finally - prior to going public Lignol had what would be equivalent to $2.00 per share (based on approximately 50,000,000 shares issued & out) worth of proprietary GE developed technology. 

To all of our readers - a very happy Easter weekend to each and every one of you.  I own shares in Lignol Energy Corp. - As always please do your own due diligence.
The Port of Dalhousie, New Brunswick Canada - Part of the Clean Tech Future?

 

 

 

***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.

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Tue, 10 Apr 2012 04:26:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17743/fueling-the-future-1084.html
Am I Part of the Cure? http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17631/am-i-part-of-the-cure-0971.html  

"Senesco Technologies Inc. (AMEX: SNT) is a development-stage biotechnology company with a proprietary technology that regulates programmed cell death (apoptosis), working in the areas of oncology and rheumatology alongside larger competitors like Dendreon Corporation (NASDAQ: DNDN), Merck & Co., Inc. (NYSE: MRK) and many others.

Initially, the company’s unique technology was developed for agricultural applications to enhance the quality, productivity and stress resistance of fruits,flowersvegetables and other crops. The firm has licensed these technologies to several parties and continues to receive milestone payments, but it has shifted its focus to human therapeutic applications.

The company’s eIF5A gene regulatory technology could have broad applicability in human therapeutics by either inducing or inhibiting programmed cell death (apoptosis). Inducing apoptosis is useful in treating cancer where defective cancer cells don’t respond to normal apoptotic signals, while inhibiting apoptosis can be useful in modulating immune responses.

Senesco Targets Cancer with SNS01
Senesco’s primary focus is on the treatment of multiple myeloma – or cancer of the plasma cells in bone marrow. In animal studies, the company’s technology showed a 91% reduction in tumor volume and a decrease in tumor weight at high doses, while the survival rate was approximately 80% among those treated at the same dosage.

After filing for an IND with the FDA, the company initiated a Phase 1b/2a clinical study at the Mayo Clinic and has begun treating patients. Patients in each cohort will receive twice-weekly dosing for six weeks followed by a safety data review period before escalating to higher doses in subsequent cohorts.

Finally, the company has also been investigating the use of the same treatment for other B cell cancers, such as diffuse large B-cell lymphoma.Preliminary animal studies for these indications have shown an average 148% increase in median survival compared to treatment with control nanoparticles versus its SNS01-T treatment.

A Unique Business Model
Senesco’s promising clinical results to date are only dwarfed by its unique business model that could unlock significant value for shareholders. With the ability to target many different cancers and other diseases, promising clinical data from its existing studies could lead to partnerships to target other indications, and ultimately generate tremendous long-term value.

But even on its own, the company’s near-term income from its agricultural developments should help finance its human therapeutic indications and manage shareholder dilution. And with a recent capital raise under its belt, the company’s balance sheet is favorable for investors looking to get involved with the stock in the near-term."
--- March 13th, 2012 Biotechstocktrader.com

 Chairman of Senesco Technolgies Dr. Harlan Waksal (co-founder of ImClone Systems -acquired by Eli Lilly NYSE: LLY)

Senesco Adds Second Clinical Site to Evaluate SNS01-T in Multiple Myeloma
March 3rd, 2012 Senseco Technologies Press Release

"Senesco Technologies, Inc. (NYSE AMEX:SNT) announced that it has received Institutional Review Board approval and has finalized a clinical trial research agreement with the University of Arkansas for Medical Sciences ("UAMS") in Little Rock, Arkansas to evaluate SNS01-T, the Company's lead therapeutic candidate for the treatment of multiple myeloma in the on-going Phase 1b/2a study. 

"We are very pleased to have added UAMS as a clinical site along with the Mayo Clinic in order to accelerate patient enrollment and increase awareness of the SNS01-T study," stated Leslie J. Browne, Ph.D, President and Chief Executive Officer of Senesco. "We believe that the addition of UAMS will help accomplish both of these objectives by broadening access to the trial." 

In the study, patients are dosed twice-weekly for 6 weeks followed by an observation period. The first group of three patients will receive 0.0125 mg/kg by intravenous infusion. At the end of their 6 weeks of dosing, safety data for the group will be reviewed before the subsequent group receives a higher dosage. The escalated doses administered to the second to fourth groups will be 0.05, 0.2 and 0.375 mg/kg, respectively. The study is an open-label, multiple-dose, dose-escalation study, which will evaluate the safety and tolerability of SNS01-T when administered by intravenous infusion to a total of approximately 15 relapsed or refractory multiple myeloma patients. While the primary objective of this study is to evaluate safety and tolerability, the effect of SNS01-T on tumor response and time to relapse or progression will be assessed using multiple well-established metrics including measurement of the monoclonal protein (M-protein). Patient dosing in the study was initiated in November, 2011 at the Mayo Clinic in Rochester, Minnesota."
March 3rd, 2012 Senseco Technologies Press Release

Once again - the Optimal Margin of Safety Pattern?
Senesco Adds Additional Clinical Site to Evaluate SNS01-T in Multiple Myeloma
March 7th 2012 Senesco Technologies Press Release 
"Senesco Technologies, Inc.(NYSE AMEX:SNT) announced that it has received Institutional Review Board approval and has finalized a clinical trial research agreement with the West Virginia University Research Corporation of Morgantown, West Virginia to evaluate SNS01-T, the Company's lead therapeutic candidate, at the Mary Babb Randolph Cancer Center in the on-going Phase 1b/2a trial for the treatment of multiple myeloma. 

The Mary Babb Randolph Cancer Center (MBRCC) is West Virginia's premier cancer facility with a national reputation of excellence in cancer treatment, prevention and research. Located in Morgantown, within the Robert C. Byrd Health Sciences Center at West Virginia University School of Medicine, MBRCC is recognized by the American College of Surgeons Commission on Cancer for providing the best in cancer care. A multidisciplinary team of physicians, researchers and other healthcare experts work together to develop and implement the best possible individualized treatment plans, which include standard treatments and exciting alternatives offered through clinical trials. The principal investigator in the study at West Virginia University is Dr. Mehdi Hamadani. 

"With the addition of MBRCC, we now have a total of three excellent clinical sites involved in recruiting patients into the multiple myeloma study with SNS01-T," stated Leslie J. Browne, Ph.D, President and Chief Executive Officer of Senesco."We expect that the additional broadening of patient access to SNS01-T achieved in the last week should significantly speed up completion of the study." 
--- March 7th 2012 Senesco Technologies Press Release 


Johnston-Sequoia Commentary:

"Am I part of the cure, or am I part of the disease?"
--- Christopher A. Martin (Coldplay - Clocks 1:58)

Cancer is a disease that is ubiquitous in our society, conversations and often our thoughts.  In fact - it is (unfortunately) the disease that indirectly led this writer to be typing on his computer this Saturday AM in South Surrey, British Columbia.  Our family was faced with this disease in 2005 and is the reason this Maritimer now lives on the West Coast.  Watching the people you love go through this terrible illness leaves one feeling helpless.  Needless to say this is where our intrinsic interest is rooted in assisting companies like Senesco Technologies.

As many of our readers know the four major components that we consider as mandatory for an emerging company (as we're perpetual students of Discovery Investing) are;
  • Strong Management;
  • Strong Balance Sheet;
  • 100% Ownership &
  • Potential World Class Discoveries


Management:

Dr. Harlan Waksal
Chairman
"Dr. Waksal has been the President and Sole Proprietor of Waksal Consulting L.L.C., which provides strategic business and clinical development counsel to biotechnology companies. Dr. Waksal co-founded the biotechnology companyImClone Systems Inc. in 1984. From March 1987 through July 2003, Dr. Waksal had served in various senior roles for ImClone Systems Inc. as follows: March 1987 through April 1994 - President; April 1994 through May 2002 - Executive Vice President and Chief Operating Officer; May 2002 through July 2003 - President, Chief Executive Officer and Chief Operating Officer. Dr. Waksal also served as a director of ImClone Systems Inc. from March 1987 through January 2005. Dr. Waksal is currently a member of the Board of Trustees of Oberlin College. Dr. Waksal received a Bachelor of Arts in Biology from Oberlin College and an M.D. from Tufts University School of Medicine."
--- Forbes.com

Dr. John Thompson  
Executive Vice President, Chief Scientific Officer and Director
"Dr. Thompson was appointed President and Chief Executive Officer of Senesco in January 1999, and he continued in that capacity until September 1999 when he was appointed Executive Vice President of Research and Development. In July 2004, Dr. Thompson became Executive Vice President and Chief Scientific Officer. Dr. Thompson is the inventor of the technology that we develop.Since July 2001, he has been the Associate Vice President, Research and, from July 1990 to June 2001, he was the Dean of Science at the University of Waterloo in Waterloo, Ontario, Canada. Dr. Thompson has a Ph.D. in Biology from the University of Alberta, Edmonton, and he is a Fellow of the Royal Society of Canada. Dr. Thompson is also the recipient of a Lady Davis Visiting Fellowship, the Sigma Xi Award for Excellence in Research, the CSPP Gold Medal and the Technion Visiting Fellowship."
--- Forbes.com

Christopher Forbes
Director
"Mr. Forbes has been Vice Chairman of Forbes, Inc., which publishes Forbes Magazine and Forbes.com. From 1981 to 1989, Mr. Forbes was Corporate Secretary at Forbes. Prior to 1981, he held the position of Vice President and Associate Publisher. Mr. Forbes has been a director of Forbes, Inc. since 1977. Mr. Forbes is the Chairman of the American Friends of the Louvre, and he also sits on the boards of The Friends of New Jersey State Museum, The New York Academy of Art, and the Prince Wales Foundation. He is also a member of the board of advisors of The Princeton University Art Museum. Mr. Forbes received a Bachelor of Arts degree in Art History from Princeton University in 1972. In 1986, he was awarded the honorary degree of Doctor of Humane Letters by New Hampshire College and in 2003 was appointed a Chevalier of the Legion of Honor by the French Government."
--- Forbes.com

Balance Sheet:

"Senesco Announces Additional $1.0 Million Equity Financing Follow-on to January 2012 Financing
March 2nd, 2012 Senesco Technologies, Inc. (AMEX: SNT) announced  that it has entered into a securities purchase agreement to raise an additional $1.0 million in gross proceeds through the sale of 3,846,154 shares of its common stock. The investor will also receive 50% warrant coverage at an exercise price of $0.286 per share. The common stock and 50% warrant coverage was priced at $0.26 per Unit.
The follow-on to the January 2012 offering is expected to close on or about March 6, 2012. The net proceeds of the financing will be used primarily for working capital, research and development and general corporate purposes."

--- March 2nd 2012 Senesco Technologies Press Release

100% Ownership & Potential World Class Discoveries:

“Eukaryotic Translation Initiation Factor 5A (eIF5A)

eIF5A is a translation factor that functions as an elongation factor in protein translation as well as a shuttle protein regulating mRNA transport. eIF5A has been implicated in the regulation of cell growth, apoptosis (cell death), and inflammation (Taylor et al, 2007; Jin et al, 2008; Sun et al, 2010) and is the only mammalian protein where the naturally occurring amino acid, hypusine, is known to occur. The eIF5A gene encodes a lysine containing eIF5A protein that regulates apoptosis. The lysine is converted by a post translational modification into hypusine. The resulting structurally similar hypusine eIF5A protein promotes cell growth and survival. The two proteins possess almost opposite properties and appear to function like a switch to promote either cell death or cell survival, which enables them to play a key role in cancer and inflammation.

The regulation of the eIF5A is the basis for the design of SNS01-T, our first product candidate.

Our preclinical studies have shown that modulation of unmodified eIF5A kills cancer cells through both the intrinsic (mitochondrial) and the extrinsic (cell death receptor) pathways via activation of MAPK/SAPK signaling pathways, up-regulation of p53, and activation of caspases. Our studies indicate that over-expression of unmodified eIF5A is non-toxic to normal cells”

--- Senesco Technologies:  Eukaryotic Translation Initiation Factor 5A (eIF5A)

Why now?

"The world’s 10 largest drugmakers by sales, which include Pfizer and Glaxo, all have U.S. patents that will expire in the next two years, according to data compiled by Bloomberg. Pfizer, which lost patent protection on its cholesterol pill Lipitor yesterday, faces expirations on at least five drugs in 2012."

Sales of Lipitor, the world’s top-selling medicine with $10.7 billion in revenue last year, may drop by 58 percent to $4.5 billion next year, according to analysts’ estimates compiled by Bloomberg. Some patents on Glaxo’s Advair asthma inhaler, its best-selling product that accounted for almost 20 percent of revenue, will begin expiring in 2013, the data show.
“Large pharma is facing unprecedented revenue loss as these multiple blockbuster drugs lose their exclusivity,” Bloomberg Industries’ Berens said in a telephone interview. “Historically, they haven’t been able to replace them through internal R&D, so they have to look externally.”

--- Joseph Ciolli and Rita Nazareth
Bloomberg Businessweek December 1, 2011 


We believe this eIF5A ("Factor 5A") may have application in many different types of cancer - including leukemia & lymphoma.  We're very honored to be a part of this (as substantial shareholders) potentially game changing Technology.

To all of our readers, Happy St. Patty's day - hope you all enjoy the festivities!  We are shareholders of Senseco Technologies - as always please do your own due diligence.



***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.

 

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Mon, 19 Mar 2012 08:22:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17631/am-i-part-of-the-cure-0971.html
Terraco Gold Secures Second Royalty Option on the Barrick Led Spring Valley Gold Project, Nevada http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17590/terraco-gold-secures-second-royalty-option-on-the-barrick-led-spring-valley-gold-project-nevada-0930.html Terraco Gold Corp. (TSX.V TEN | US: TCEGF) announced that it has entered into a transaction whereby the Company acquired a portion of a pre-existing net smelter returns royalty (“NSR”) and will have the option to acquire an additional NSR interest on private fee land  covering part of the Spring Valley Gold Project, located in Pershing County, Nevada.  The Spring Valley Project is a joint venture between Barrick Gold Corp. (NYSE: ABX) and Midway Gold Corp. (AMEX: MDW) & is adjoins the south side of Terraco’s 100% owned Moonlight Property .

Transaction Terms

"Under the terms of the Transaction between Terraco, the current royalty owner (the “Royalty Vendor”) and a third party investor (the “ Strategic Investor”):           
  • Terraco will acquire from the Royalty Vendor a 0.5% NSR on the Fee Land in consideration for 2,500,000 common shares of the Company;
  • the Strategic Investor will acquire from the Royalty Vendor a 1.5% NSR on the Fee Land (the “Purchased NSR Interest”) for US$2,368,421.00; and
  • Terraco will be granted an option to acquire, for US$983,211.00, 0.5% of the Purchased NSR Interest from the Strategic Investor for a period of 5 years from closing of the Transaction or within 1 year of a change of control of Terraco."
--- March 9th, 2012 Terraco Gold Press Release

This NSR Transaction, on Fee Land consisting of 920 acres, covers the remaining portion of land covering the known gold deposit in the Barrick-led Spring Valley Project and is in addition to the first NSR transaction announced by Terraco on December 21st and December 23rd, 2011. The two transactions give Terraco direct royalty ownership, a royalty option and a first right of refusal on a perimeter royalty that collectively covers the gold deposit currently outlined in the Spring Valley Project’s National Instrument 43-101 technical report on the project filed by Midway. Terraco is excited to add significant value for its shareholders by having an opportunity to enjoy cash flow when Barrick brings the Spring Valley Project to production

--- Todd Hilditch President & CEO

Terraco Gold Announces Acquisition of Royalty Option on the Barrick Gold / Midway Gold Spring Valley Gold Deposit, Nevada and a US$5 million Cash Infusion
Terraco Gold Corp. December 21st, 2011 Press Release 

Highlights Include:         
  • A third party Strategic Investor will acquire 5% of net smelter returns (when gold prices exceed US$700 per ounce and on production greater than 500,000 ounces of gold from the claims covered by the Royalty Vendor’s NSR).
  • The Strategic Investor will pay US$20,000,000 to the Royalty Vendor and US$5,000,000 to Terraco.
  • Terraco will retain an option to acquire 2.5% of the NSR Royalty (based on gold being above $700 per ounce), for US$12,500,000 from the Strategic Investor for a period of 5 years from the closing of this transaction or within 1 year of a change of control of Terraco.
  • Terraco will also issue 4,000,000 shares to the Royalty Vendor for a right of first refusal on all or part of a separate 1% area of interest royalty owned by the Royalty Vendor, also located on the Spring Valley Project.
  • As partial consideration for the US$5,000,000 cash infusion, Terraco has issued to the Strategic Investor a 1% net smelter return royalty on its Moonlight Project and a 0.5% net smelter return royalty (and up to a 1.0% net smelter return royalty in certain circumstances) on its Almaden Gold Project in Idaho (“Almaden Project”). The Strategic Investor will also be issued 1,000,000 warrants with an exercise price of CAN$0.35 per share for a period of 5 years, subject to early expiry at the discretion of Terraco if Terraco’s shares trade at CAN$0.70 or higher for 20 consecutive trading days.
  • The Strategic Investor specializes in funding the advancement of mining projects. Terraco and the Strategic Investor have structured a right of first refusal to finance Terraco’s Almaden Project and an off-take for 30% of the minerals produced from the Almaden Project during the life of the mine.
  • Terraco intends to use the US$5,000,000 proceeds to fund continued exploration programs at both its Almaden and Moonlight Projects.
Dr. Michael Berry
Morning Notes
March 12th, 2012
"We valued the original option using Black Scholes and $1,000 gold produced 5 years hence at $47 million in present value. That transaction was worth $.22 per share alone. (See appendix from Morning Note of December 21st)...
...Please be aware that royalties such as the ones that Terraco has acquired are very liquid. Furthermore as the Midway Gold / Barrick resource expands (and we believe it will expand) the value of the current royalty and the options to acquire royalties will increase in value substantially."
---Dr. Michael Berry
Morning Notes: March 12th, 2012


Johnston-Sequoia Commentary: 

This is yet another huge piece of the puzzle for Terraco shareholders in this developing district in Pershing County Nevada. 

Now, if I may for a moment look back on the past year on the evolution of this precious metals district just off the I-80 (exit 119 - Oreana - Rochester) in northwestern Nevada.  Beginning on;
  • May 2nd, 2011 - Barrick announced through Midway that Spring Valley had grown by 186% to 3,450,000 ounces of gold in the MI&I categories;
  • June 13th, 2011 - Terraco announces a significant enhancement of their land package at it's 100% owned Moonlight Project (which directly adjoins the north side of the Barrick/Midway Spring Valley joint venture);
  • July 13th, 2011 - Midway Announces 166 meters of 1.48 gpt gold, including 23 meters of 2.15 gpt gold in SV10-510 & 218 meters of 2.7 gpt gold including 41 meters of 12.3 gpt in SV10-511c (drill holes that are not included in the current NI 43-101 resource & also the drill holes located closest to Terraco's Moonlight Project);
  • August 18th, 2011 - One of the top Analysts (in our opinion) in the gold exploration industry has the Spring Valley deposit modeled as high as 6,000,000 (grading 0.75 gpt) ounces of gold - still open to the north towards Terraco's Moonlight Project & at depth;
  • August 25th, 2011 - Midway announces 201 meters of 0.82 grams per tonne (gpt) gold in SV11-515; and 94 meters of 1.06 gpt gold in SV11-517 (also not included in the NI 43-101 resource).
Followed by three consecutive blockbuster announcement's;
In the humble opinion of this writer - it is only a matter of time before people begin to truly understand the value of this evolving precious metals district in Nevada.

We are advisors of Terraco Gold & own shares in the company.  As always - please do your own due diligence.




***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.

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Mon, 12 Mar 2012 11:36:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17590/terraco-gold-secures-second-royalty-option-on-the-barrick-led-spring-valley-gold-project-nevada-0930.html
Technological Ascendancy in an Age-old Search http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17566/technological-ascendancy-in-an-age-old-search--0906.html
Through the application of a contemporary ground water geochemical exploration technology, Nevada Exploration Inc. (TSX.V: NGE | US: NVDEF) systematically explores Nevada’s covered bedrock.


“  Traditional exploration methodologies work well where bedrock is exposed, but are challenged where bedrock is covered. Approximately half of Nevada’s bedrock is exposed, and much gold has been discovered there. There is likely an equivalent amount of gold remaining to be found in Nevada’s covered half, but new exploration technology is needed to find it.

NGE has developed innovative proprietary exploration technology to test directly for gold in covered bedrock environments using a sampling medium that to date has largely been ignored: groundwater.  When groundwater flows near a concealed, covered gold deposit, it retains a unique kind of chemical “memory” or “scent” of the encounter.  NGE uses its proprietary technology to identify the unique groundwater chemistry scent associated with gold mineralization and to follow it back up-stream to search for its potentially gold-bearing bedrock source.
Groundwater chemistry is an important emerging exploration technology.  When used alone in covered bedrock settings, conventional exploration technologies are risky.  Groundwater chemistry exploration technology reduces exploration risk by focusing conventional exploration on areas most likely to contain large, near-surface, oxidized gold deposits.  NGE is the first to apply modern groundwater chemistry exploration technology in Nevada and is currently advancing a portfolio of properties exhibiting groundwater chemistry similar to that found at Nevada’s major gold mines.

Once NGE has used groundwater chemistry to identify exploration targets, the Company then applies a staged exploration program to delineate and test prospective drill targets.  NGE’s risk managed exploration program is designed to test targets quickly.  Properties that show promise are advanced, properties that don’t are dropped.  Once NGE has demonstrated that a property exhibits gold mineralization, NGE works to partner with well funded and technically competent groups to move the property through the later stages of development.”
--- Nevada Exploration Inc.: Strategy


         

Wade Hodges, M.Sc.

President, CEO, and Director

Mr. Hodges is a former director and the former Vice President for Exploration for Battle Mountain Gold Exploration Corp. He has over 30 years experience in field exploration, including 13 years as Exploration Geologist and Sr. Exploration Manager of Santa Fe Pacific Gold Corporation (now Newmont Mining Corporation). Mr. Hodges has had extensive involvement in the initial discovery and pre-mine development of nine gold mines in the western US, totaling over 30 million ounces of gold.

--- Nevada Gold Inc: Management

The Awakening Gold Project - Humboldt County, Nevada
             
Size/Ownership:  432 Unpatented Mining Claims owned 100% by NGE (3,590 Hectares) - Subject to 3% NSR
              
Exploration:

  •     Hydrogeochemistry
  •     Gravity Geophysics
  •     Air Magnetic Geophysics
  •     Soil Geochemistry                        


Project Summary:

 

“The Awakening Project is located approximately 53 km (33 miles) north-northwest of Winnemucca, Nevada, and 5 km (3 miles) north of the Sleeper Gold Mine. The fault zones and host-rock geology that control the gold mineralization at the Sleeper Gold Mine continue northward to Awakening along the same range front geologic setting.

NGE identified elevated gold and trace elements in the groundwater at Awakening during its reconnaissance groundwater chemistry sampling program.  The Awakening Project is a fully covered pediment target that has seen limited exploration to date.  NGE secured the target by staking unpatented mining claims, and leasing 15 unpatented mining claims.”

--- Nevada Gold Inc.: Awakening Gold Project 


The Optimal Margin of Safety pattern?


Johnston-Sequoia Commentary:

 

Very seldom do we see major technological advancement's in the field of gold exploration.  The same old story of stake claims, sample, geophysics, drill & repeat is a recurring theme in the gold exploration industry.  I've often wondered why (apart from Peñasquito) more major gold discoveries have not been made since the beginning of the current gold bull market?  A possible explanation may be that we have not properly adapted the way we systematically go about searching for a major discovery.  When exploration programs were being funded by major companies (drilling 40,000 ft at $75 per foot) - a $3,000,000 exploration drilling program was a "ripple in the pond" on the balance sheet.  In today's environment a $0.10 incubator stock would have to issue 30,000,000 shares (and likely 60,000,000 on a fully diluted basis) to do a $3,000,000 round of financing.  With this at stake you better be right on where you're drilling.


This is where technology and arguably more importantly the way we think of gold exploration becomes so important.  Some of the names that have changed the way we think of gold exploration (in particular in the state of Nevada) include; Ralph Roberts, John Livermore & (as many of our readers know) Ken Snyder.  Please see bio's below:
   
"Ralph Roberts - was an American geologist and research scientist with the USGS. He is credited with the discovery of the Carlin and Battle Mountain Gold Belts, which make up the richest gold-mining region in Nevada as well as the United States."


--- Ralph Roberts Wikipedia Page


"John Livermore - is an American geologist who has discovered or helped to discover four major gold deposits in northern Nevada. The Carlin deposit, from which the current Nevada gold-mining industry grew, was his first discovery. In 1961, after reading an article by Ralph J. Roberts, Alignment of Mining Districts in North-Central Nevada, and then hearing a talk by Roberts, Livermore, then a Newmont Mining geologist, pursued Roberts' theory to track down the 4 million ounce gold ore body now known as the Carlin Mine. The entire Carlin Trend has now produced well over 50 million ounces of gold."


--- John Livermore Wikipedia Page


"Ken Snyder - PhD, P.Geo, has over 28 years of national and international exploration experience directed toward the discovery and mining of precious, base metal and mineral deposits. Highlights of his career include the discovery of the Templemore Lead-Zinc Deposit in the Republic of Ireland and the discovery of the Rex Grande gold vein in Nevada, which became known as the Ken Snyder Mine and is currently in production with Newmont Mining. As a mineral exploration geologist, Dr. Snyder specializes in the planning, design coordination and implementation of mineral exploration programs."


--- Terraco Gold Corp.: Management



Newmont's Lowest Cost Producing Mine - The Ken Snyder "Midas" Mine

With the discovery of 30,000,000 ounces of gold should Wade Hodges name and methodology be considered as part of this list?


After being introduced to the story at the California Resource Investment Conference in Palm Spring's we  are initiating coverage on (and are shareholders of) Nevada Exploration Inc. (TSX.V: NGE | US: NVDEF).
As always - please do your own due diligence.


Does Volume Precede Price?

 

 

 

 

***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.

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Mon, 05 Mar 2012 07:19:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17566/technological-ascendancy-in-an-age-old-search--0906.html
International Finance Corporation (World Bank Group) Invests in Côte d’Ivoire’s Mining Sector for the First Time http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17489/international-finance-corporation-world-bank-group-invests-in-cte-divoires-mining-sector-for-the-first-time--0829.html The International Finance Corporation (IFC) has committed to investing C$1.2-million in resource company Sama Resources to support its Nickel/copper exploration project in Côte d’Ivoire.

The IFC’s investment will be used to advance the Samapleu project, which is expected to provide future jobs and government revenues for Côte d’lvoire. The organisation will work with Sama to ensure that exploration is undertaken in an environmentally and socially sustainable manner.

Global Best Practice “The company looks forward to drawing from the IFC’s expertise to assist in ensuring that the progress at Samapleu follows global best practice for the mineral exploration industry, the environment and when working with local communities,” says Sama president and CEO Dr Marc-Antoine Audet.

He believes that the IFC’s support for the project will help to promote good environmental and social standards in the country’s mining sector and send a positive message for future foreign direct investment in the country.

Côte d’Ivoire has significant mineral resources; however, development of the mining sector in the country has been marred by political and military crises over the past decade.

Meanwhile, IFC global head for mining Tom Butler says the IFC is excited about making its first mining investment in Côte d’Ivoire, which is in line with its strategy to support early-stage exploration companies with financing and advice.

The Samapleu project is located about 600 km north-west of Abidjan. The area has good infrastructure with a road network leading to the project and all the required services are available in the nearby towns of Man and Biankouma, Sama reports.

The Samapleu licence is located adjacent to the large world-class Nickel/cobalt laterite deposits of Sipilou, Foungouesso, Moyango and Viala.


---Jessica Hannah
Mining Weekly 2012-01-27

Sama Resources Intersects 69 Metres at 1.10% Nickel+Copper and 1.06 gpt palladium+platinum at its Samapleu Nickel‑Copper Deposits in Côte d’Ivoire, West Africa
February 16th 2012 Sama Resources Press Release

Sama Resources Inc. (TSX.V SME | US: LNZCF) announced assay results from mineralized intersections of 11 holes drilled in October and November of 2011 at its Samapleu project in Côte d’Ivoire, West Africa.

Highlights Include:
·    Hole SM25-009620 returned 69.50 m at 1.10% Ni+Cu & 1.06 gpt Pd+Pt; including 2.1 m at 2.9% Ni+Cu & 2.27 gpt Pd+Pt
·    Hole SM44-494350a returned 26.95 m at 1.12% Ni+Cu & 0.51 gpt Pd+Pt; including 1.70 m at 3.41% Ni+Cu & 1.52 gpt Pd+Pt
·    Hole SM44-494350b returned 39.60 m at 1.21% Ni+Cu & 0.46 gpt Pd+Pt; including 2.1 m at 4.89% Ni+Cu & 1.34 gpt Pd+Pt
·    Hole SM24-771588 returned 11.45 m at 1.12% Ni+Cu & 0.98 gpt Pd+Pt 

  

SM25-009620 returned 69.50 metres combined highly disseminated and massive sulphides grading 1.10% Nickel+copper and 1.06 grams per tonne palladium+platinum, including 2.1 m of massive sulphide grading 2.29% Nickel, 0.50% copper, 0.13% cobalt  and 2.19 gpt palladium.  The mineralized intersection starts at 33.75 m from surface, immediately below the overburden.

SM24-627794, located at the southwest end of the Samapleu Extension 1 poly‑metallic zone, returned 1.95 m of massive sulphide grading 2.29% Nickel and 0.36% copper, indicating that the mineralized zone is also open toward the southwest.

Heavy media separation metallurgical tests showed that in treating material at 0.35% Nickel and 0.33% copper, the resultant material grades are 0.66% Nickel and 0.53% Cu, while rejecting 55% of the feed material mass prior to the flotation circuit.

A 19‑km long Discovery at Gangbapleu-Bounta ridge  contain several outcropping mafic and ultramafic bodies, as well as newly discovered Massive Chromite occurrences.  These Massive Chromite occurrences, in addition to having significant potential by themselves as possible candidates for direct shipping economic material, are indicative of a highly favourable geological environment for additional Samapleu Ni-Cu style mineralization.


Johnston-Sequoia Commentary:

 

Led by Dr. Marc-Antoine Audet (former Nickel laterite expert at Xstrata & Falconbridge) - Sama Resources continues to show impressive discovery potential at both its Samapleu Nickel-Copper project and its Samapleu Extension Nickel-Copper project in Côte d’Ivoire, West Africa.  Dr. Audet's team is developing a historically under explored area for base metals (Ni-Cu) which also hosts palladium, platinum, cobalt, massive chromites and small amounts of gold.  

Dr. Audet's track record includes the Falcondo laterite Nickel operation, the newly discovered Serra do Tapas and Vale dos Sonhos deposits in Brazil and New Caledonia's Koniambo Ni-Co laterite project. Dr. Audet was manager of resource estimation and mine development, and the exploration manager and chief geologist for Falconbridge in New Caledonia.
Sama Resources Ownership model:

China Minmetals Corporation:
Minmetals Ownership in Sama (10% - with pre-emptive right to maintain):                        
Issued & Outstanding  - 6,601,317  SME.V shares                          
Fully Diluted – 8,133,371  SME.V shares                                                                                                                                                        
China Minmetals Corporation is one of the largest metals and minerals trading companies in the world and the largest iron and steel trader in China. The company handles more than 12 million tons of steel products annually. It also trades iron, Nickel, coal, copper, zinc, and lead. 

In 2011, Minmetals launched a $6.5 billion takeover bid for Equinox Minerals, a Canadian mining company. It was the largest unsolicited takeover attempt by a Chinese mining company to date. Equinox Minerals rejected the takeover offer later accepting a 16% higher bid by Barrick Gold.”

--- Minmetals – Wikipedia page ( http://en.wikipedia.org/wiki/China_Minmetals )

International Finance Corporation (IFC)
IFC Ownership in Sama (9.76% - with pre-emptive right to maintain):                        
Issued & Outstanding  - 6,442,886 SME.V shares                          
Fully Diluted – 7,938,170  SME.V shares      
                                                    
“The International Finance Corporation (IFC) promotes sustainable private sector investment in developing countries.

is a member of the World Bank Group and is headquartered in Washington, D.C.

IFC is the largest multilateral source of loan and equity financing for private sector projects in the developing world. It promotes sustainable private sector development primarily by:
  1. Financing private sector projects and companies located in the developing world.
  2. Helping private companies in the developing world mobilize financing in international financial markets.
  3. Providing advice and technical assistance to businesses and governments.

Advisors of the company include:

Ron Netolitzky:  A gentlemen who has been directly involved in the mineral exploration industry in Western Canada since 1964. His knowledge of mineral exploration and aggressive business acumen has resulted in exploration success on three Western Canadian gold projects (all of which became producing mines): the Snip and Eskay Creek deposits in British Columbia and the Brewery Creek deposit in Yukon. He was honoured with the Bill Dennis Prospector of the Year Award in 1990 by the Prospectors and Developers Association of Canada. 

Todd Hilditch (Director): As many of our readers know - a gentlemen who has over 15 years experience in the natural resource sector.  Former President & CEO of  Salares Lithium Inc. (TSX.V: LIT) which merged with Talison Lithium Inc (TSX: TLH) to become the world's largest producing lithium company in a $340 million merger - Current President & CEO of Terraco Gold Corp (TSX.V: TEN) which just acquired the option to purchase up to 2.5% net smelter royalty on the Barrick Gold/Midway Gold joint Venuture of Spring Valley, Nevada.

In addition - Sama is partnered with the government of Côte d’Ivoire (66.67% Sama & 33.33% SODEMI) on the Samapleu project (and arguably more importantly) - Sama has taken the initiative to develop the community in Côte d’Ivoire.  Building Schools, clean water pumps, homes and providing technical jobs for the locals as well (this initiative is being led by Dr. Audet).


We shall watch with keen interest as Dr. Audet & his team develop this area in West Africa.  We own shares in Sama Resources & are advisors of the company.  As always please do your own due diligence.




***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.

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Thu, 16 Feb 2012 07:27:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17489/international-finance-corporation-world-bank-group-invests-in-cte-divoires-mining-sector-for-the-first-time--0829.html
President Ron Paul? http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17416/president-ron-paul-0756.html  

Dr. Ron Paul - The Exponential Rise in Popularity & Why He May Represent the Very Same Voter that Propelled Barrack Obama in 2008

Johnston-Sequoia Commentary: 

Let me begin by saying this is the first & quite possibly the last time I speak publicly in regard to politics. This bloghub is intended to be a community - which by definition is an organization of individuals committed to supporting a shared vision.  It is for this reason and this reason alone I choose to write this piece. 

As of January 1st, 2012 approximately 500 million people use Facebook, 300 million use Twitter, 200 million use Mobile Youtube & 100 million professionals use LinkedIn worldwide.  This is the media if you were born after 1972.  We work 10 -14 hour days before you consider the daily commute and we simply do not have the time to watch the evening news.  However, thanks to the internet individuals (in particular younger individuals) can share an idea in an instant.  We watched in 2008 as this very concept and model assisted the world's largest economy take a progressive step in it's storied evolution by electing it's very first African American President.  It is this very same vehicle that may be dominated by the very intelligent, very polite Ron Paul supporters in 2012.


"Ronald Ernest "Ron" Paul (born August 20, 1935) is an American physician,author, Republican United States Representative, and a candidate for the 2012 Republican Party presidential nomination. He has been an outspoken critic of American foreign and monetary policies, recognized for sharply opposing his own party on many issues. Since 1997, Paul has represented Texas's 14th congressional district, which covers an area south and southwest of Houston that includes Galveston. Paul serves on the House Committees on Foreign Affairs and Financial Services, and on the Joint Economic Committee, as well as chairman of the Financial Services Subcommittee on Domestic Monetary Policy and Technology.

A native of Pittsburgh, Pennsylvania, Paul is a graduate of Gettysburg College and Duke University School of Medicine, where he earned his medical degree. He served as a flight surgeon in the United States Air Force from 1963 until 1968. He worked as an obstetrician-gynecologist during the 1960s and 1970s, delivering more than 4,000 babies, before entering politics in 1976.

Following his 2008 run for the Republican Party presidential nomination, Paul became the initiator of the advocacy group Campaign for Liberty and his ideas have been expressed in numerous published articles and books, including Liberty Defined: 50 Essential Issues That Affect Our Freedom (2011), End The Fed(2009), The Revolution: A Manifesto (2008), Pillars of Prosperity (2008), A Foreign Policy of Freedom: Peace, Commerce, and Honest Friendship (2007), and The Case for Gold (1982). His son Rand Paul was elected to the United States Senate for Kentucky in 2010, making the elder Paul the first Representative in history to serve concurrently with a child in the Senate. Paul has been characterized as the "intellectual godfather" of the Tea Party movement.He has become well known for his libertarian ideas on many political issues, often differing from both Republican and Democratic Party stances.

On July 12, 2011, Paul announced that he would not seek another term in Congress in order to focus on his presidential bid."


Legislation

Highlights Include:
  • Imposing term limits
  • Abolish the Federal Reserve 
  • He has written successful legislation to prevent eminent domain seizure of a church in New York, and a bill transferring ownership of the Lake Texana dam project from the federal government to Texas.
  • He has helped prohibit funding for national identification numbers, funding for federal teacher certification, International Criminal Court jurisdiction over the U.S. military, American participation with any U.N. global tax, and surveillance of peaceful First Amendment activities by citizens. 
  • He introduced "Sunlight Rule" legislation, which requires lawmakers to take enough time to read bills before voting on them, after the Patriot Act was passed within 24 hours of its introduction. Paul was one of six Republicans to vote against the Iraq War Resolution, and (with Oregon representative Peter DeFazio) sponsored a resolution to repeal the war authorization during February 2003. Paul's speech, 35 "Questions That Won't Be Asked About Iraq," was translated and published in German, French, Russian, Italian, and Swiss periodicals before the Iraq War began. 
  • Paul says his fellow members of Congress have increased government spending by 75 percent during the presidency of George W. Bush.After a 2005 bill was touted as "slashing" government waste, Paul wrote that it decreased spending by a fraction of one percent and that "Congress couldn't slash spending if the members' lives depended on it." He said that during three years he had voted against more than 700 bills intended to expand government. 
  • Paul has introduced several bills to apply tax credits to education, including credits for parental spending on public, private, or homeschool students (Family Education Freedom Act); for salaries for all K–12 teachers, librarians, counselors, and other school personnel; and for donations to scholarships or to benefit academics (Education Improvement Tax Cut Act). In accord with his political opinions, he has also introduced the Sanctity of Life Act in each Congress from the 109th (2005–06) through the 112th (2011–12),  the We the People Act, and the American Freedom Agenda Act. 
  • During June 2011, Paul co-sponsored a bill with U.S. Representative Barney Frank that is intended to end the federal prohibition of marijuana.
--- Source -  Ron Paul Wikipedia 

Who Does the Best Against Barrack Obama? 

Dr. Ron Paul. "The congressman from Texas, who also ran as a libertarian candidate for president in 1988 and who is well liked by many in the tea party movement, trails the president by only seven points (52 to 45 percent) in a hypothetical general election showdown. Huckabee trails by eight points, with Romney down 11 points to Obama."
--- CNN Poll 2011-05-05


Social Media in Barrack Obama's 2008 Presidential Campaign:

How Obama Tapped Into Social Networks’ Power

David Carr
New York Times

"“Thomas Jefferson used newspapers to win the presidency, F.D.R. used radio to change the way he governed, J.F.K. was the first president to understand television, and Howard Dean saw the value of the Web for raising money,” said Ranjit Mathoda, a lawyer and money manager who blogs at Mathoda.com. “But Senator Barack Obama understood that you could use the Web to lower the cost of building a political brand, create a sense of connection and engagement, and dispense with the command and control method of governing to allow people to self-organize to do the work.”

All of the Obama supporters who traded their personal information for a ticket to a rally or an e-mail alert about the vice presidential choice, or opted in on Facebook or MyBarackObama can now be mass e-mailed at a cost of close to zero. And instead of the constant polling that has been a motor of presidential governance, an Obama White House can use the Web to measure voter attitudes....

“It’s clear there has been a dramatic shift,” said Andrew Rasiej, the founder of the Personal Democracy Forum, an annual conference about the intersection of politics and technology. “Any politician who fails to recognize that we are in a post-party era with a new political ecology in which connecting like minds and forming a movement is so much easier will not be around long. 

“Yes, we have met Big Brother, the one who is always watching. And Big Brother is us.""

--- David Carr
New York Times

Why Do Young Voters Care?: 

Ron Paul supporters are passionate, young, intelligent and full of energy.  They're also the demographic that is by far the most affected by the downturn in unemployment.  With student loans at all-time highs - being unemployed or underemployed in your twenty's can be nearly impossible to recover from. 

We shall watch with keen interest as this social media led campaign unfolds for Dr. Paul. "Ron Paul Supporters - They're Everywhere..." - As always please do your own due diligence. 

 


***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.

 

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Thu, 12 Jan 2012 11:25:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17416/president-ron-paul-0756.html
Terraco Gold Announces Acquisition of Royalty Option on the Barrick Gold / Midway Gold Spring Valley Gold Deposit, Nevada http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17366/terraco-gold-announces-acquisition-of-royalty-option-on-the-barrick-gold-midway-gold-spring-valley-gold-deposit-nevada-0704.html Terraco Gold Announces Acquisition of Royalty Option on the Barrick Gold / Midway Gold Spring Valley Gold Deposit, Nevada and a US$5 million Cash Infusion
Terraco Gold Corp. December 21st, 2011 Press Release 

Terraco Gold Corp. (TSX.V: TEN | US: TCEGF). announced that it has entered into a  three way transaction whereby Terraco will have the option to acquire an interest in a net smelter returns royalty (“NSR”) on part of the Spring Valley Gold Project located in Pershing County, Nevada.  The Spring Valley Project is a joint venture between Barrick Gold Corp. and Midway Gold Corp., Terraco’s 100%-owned Moonlight Project located along strike and adjoins the north of the Spring Valley Project.

Highlights Include:

  • A third party Strategic Investor will acquire 5% of net smelter returns (when gold prices exceed US$700 per ounce and on production greater than 500,000 ounces of gold from the claims covered by the Royalty Vendor’s NSR).  
  •  The Strategic Investor will pay US$20,000,000 to the Royalty Vendor and US$5,000,000 to Terraco.   
  • Terraco will retain an option to acquire 2.5% of the NSR Royalty (based on gold being above $700 per ounce), for US$12,500,000 from the Strategic Investor for a period of 5 years from the closing of this transaction or within 1 year of a change of control of Terraco.  
  •  Terraco will also issue 4,000,000 shares to the Royalty Vendor for a right of first refusal on all or part of a separate 1% area of interest royalty owned by the Royalty Vendor, also located on the Spring Valley Project. 
  • As partial consideration for the US$5,000,000 cash infusion, Terraco has issued to the Strategic Investor a 1% net smelter return royalty on its Moonlight Project and a 0.5%  net smelter return royalty (and up to a 1.0% net smelter return royalty in certain circumstances) on its Almaden Gold Project in Idaho (“Almaden Project”).  
  •  The Strategic Investor will also be issued 1,000,000 warrants with an exercise price of CAN$0.35 per share for a period of 5 years, subject to early expiry at the discretion of Terraco if Terraco’s shares trade at CAN$0.70 or higher for 20 consecutive trading days. 
  • The Strategic Investor specializes in funding the advancement of mining projects.  Terraco and the Strategic Investor have structured a right of first refusal to finance Terraco’s Almaden Project and an off-take for 30% of the minerals produced from the Almaden Project during the life of the mine. 
  • Terraco intends to use the US$5,000,000 proceeds to fund continued exploration programs at both its Almaden and Moonlight Projects.
This transaction affords Terraco the right to acquire a significant royalty on a Barrick-led gold project neighbouring our 100% owned Moonlight Project and gives Terraco the ability to fully fund its 2012 exploration activities without the need for additional shareholder dilutionFurthermore, this transaction increases Terraco’s presence in the growing Humboldt Range where Coeur D’Alene operates the Rochester mine and Barrick has spent nearly US$16,000,000 towards earning a 60% interest in Spring Valley Project”,
--- Todd Hilditch, President and CEO 


Terraco Featured in Dr. Michael Berry's Morning Notes
Dr. Michael Berry
Wednesday December 21st, 2011
Morning Notes 

"We learned this AM that Terraco Gold (developing the Almaden gold property in Idaho and the Moonlight gold / silver property in Nevada) has just completed a non-dilutive $5 million financing. How can this be, you ask? How does one pull off a non-dilutive financing in this market environment?  In the case of Terraco Gold, management thinks outside the box...  I am certain, this AM, that Barrick must be wondering what happened. After all Barrick should rightly have been in line to acquire the royalty. Such is the tempo in “Good Times at Terraco.”

But there is more. Terraco now has a strategic partner. The company reports that the unnamed partner (we will find that identity out soon) has the right to purchase 30% of the off-take from Terraco’s Almaden property and first right to provide development funding for Almaden. The strategic partner receives a 1% royalty on Moonlight and ½% royalty on Almaden.

The Option: 

Let us assume that Spring Valley comes into production in 2017 – 5 years from now with an annual production of 300,000 ounces of gold. Further that the average price of gold over the following 10 years is $1,000 per ounce and a discount rate of 5%. We assume that Midway and Barrick prove up 3 million ounces of recoverable gold which we believe is a low ball. 

In this case Terraco’s option on 2.5% of the sliding royalty is worth $47 million in present value terms. 

Using the Black Scholes option pricing model for Terraco’s option valuation we have:
C Terraco = S* N(d1) – X* e-rft * N(d2)
C Terraco = 47,000,000*(1) – 12,500,000* (1)*.86
= $36,250,000 (Value of Terraco’s Call option on the sliding royalty)

Terraco’s 5 year call option is worth approximately $36 million today given our assumptions. We think this approximation is conservative. We assume the call ends in the money and it will be exercised (Barrick will bring Spring Valley into production). Since there are 167 million shares out (fully diluted) the option in the deal is worth $.22 alone. This is higher than Monday’s closing price. 

That valuation assumes 3 million ounces proven and recoverable and an average gold price of $1,000 per ounce. 

So management of Terraco has neatly secured financing needs for another year or more (to be determined), avoided the dilution death knell of so many Incubator stocks, aligned itself with a major mining finance group and secured potential future financing and a potential off-take for its Almaden project. 

Here are a few bullets from Terraco on the important points in this transaction:
1. Terraco has partnered on this transaction with a strategic investor and in a 3-way agreement whereby the strategic investor is buying 5/7ths of a sliding scale royalty on the Spring Valley Project
2. Terraco has the option to purchase one-half of the sliding scale royalty from the (see below) for USD$12,500,000 any time in the next 5 years or within one year of a change of control
3. Terraco will receive a non-dilutive cash infusion of USD$5,000,000
4. Terraco's strategic partner has financed 3 mining projects this year to production and will provide project funding on a first right for the Almaden Project as well as purchase in an off-take 30% of the mineral produced. They will receive from Terraco a 1% royalty on the Moonlight Project and 0.5% on the Almaden Project
5. Terraco is issuing 1,000,000 share purchase warrants to the strategic partner at 57% premium to the market…$0.35 for 5 year subject to a call provision if the shares of Terraco trade at $0.70 or great for 20 trading days.”
We are advisors to Terraco Gold and own shares in the company."

--- Dr. Michael Berry
Wednesday December 21st, 2011
Morning Notes

 

Johnston-Sequoia Commentary:

Just over two weeks after Rye-Patch Gold & Midway Gold's blockbuster announcements along the evolving Humboldt District (Pershing Country, Nevada) - Todd Hilditch puts together one of the strongest shareholder value creation deals we've seen.  To have the ability for a company the size of Terraco to be essentially carried on an option to purchase a 2.5% NSR royalty on a deposit that has grown by 186% in the past six months to 3,450,000 ounces of gold (still open to the north towards Terraco's Moonlight Project & at depth) is nothing short of outstanding.  In addition, Terraco's Chief tacked on a non-dilutive $5,000,000 financing (which will fully fund Terraco's exploration activity in 2012) to TEN and a strategic partner that will have the financial ability and expertise to take Almaden to the next level. Terraco's announcement is yet another a milestone advancement in this evolving district.  

We include a photo of yours truly standing on the Black-ridge Fault (on the Moonlight property approximately 60 feet from Spring Valley).  We shall continue to watch with keen interest the evolution of this Humboldt district. Terraco remains our top overall pick from a pure value investor standpoint. We are advisors of Terraco and own shares of the company.  As always - please do your own due diligence & have a safe and wonderful holiday season.  For your editor - today is my 32nd birthday & I am looking forward to spending the evening with my wife Ali & son Joey. 

 



***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.

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Thu, 22 Dec 2011 10:02:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17366/terraco-gold-announces-acquisition-of-royalty-option-on-the-barrick-gold-midway-gold-spring-valley-gold-deposit-nevada-0704.html
Spring Valley Gold Project Advances to Barrick's Development and Mine Site Exploration Group http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17360/spring-valley-gold-project-advances-to-barricks-development-and-mine-site-exploration-group-0698.html Midway Gold Corp. (TSX.V: MDW | AMEX: MDW) announced today third quarter progress at its Spring Valley project based on information provided by Barrick Gold Exploration Inc.

Highlights include:
  • Continued drilling of gold intercepts outside of the present resource area.
  • Increased participation of Barrick's Project Development group and Barrick's Mine Site Exploration group. 
  • Barrick has expanded the project office in Lovelock. Additionally, Barrick has initiated cultural and biological studies to support an environmental assessment for an expanded drilling area.
  • At the north end of the resource a new intercept of 65 meters of 0.86 gpt gold in SV11-513c was reported. Barrick's 2011 drilling through the third quarter totals 33,610 feet in 29 reverse circulation (RC) holes, 3,450 feet of pre-collar RC in the upper levels of core holes, and 15,283 feet in 10 core holes.
  • Spring Valley is a large, porphyry-hosted gold system. A May, 2011 updated resource estimate reported 4,100,000 ounces of gold in the Measured plus indicated and Inferred categories.
  • Barrick can earn a 60% interest in the project by completing work expenditures totaling US$30 million before December 31, 2013 under the terms of an agreement executed between Midway and Barrick March 11, 2009 - Barrick has the option to purchase 75% of the project by bringing it into a production scenario.

Johnston-Sequoia Commentary:

On the heels of Rye Patch Gold Corp.'s announcement yesterday - Midway announces; "Increased participation of Barrick's Project Development group"Just four years ago the Spring Valley deposit (please click photo above) was just 434,000 ounces of gold in the Measured plus Indicated and Inferred categories.  Today the world's largest gold company appears to be taking the project to the next level at nearly ten times it's original size.  Trading at just $0.32 per share (October 20th, 2008) when the joint venture was announced and as low as $0.18 - MDW has done a tremendous job at resurrecting it's share price.  Today's announcement is a milestone advancement in this evolving district.  We shall observe with keen interest as the blanket is lifted from Humboldt's just off the I-80 between Lovelock and Winnemucca. 





***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.

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Tue, 06 Dec 2011 04:20:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17360/spring-valley-gold-project-advances-to-barricks-development-and-mine-site-exploration-group-0698.html
Rye Patch Expands Oreana Trend Holdings Stakes Mining Claims On Existing Gold And Silver Resources http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17359/rye-patch-expands-oreana-trend-holdings-stakes-mining-claims-on-existing-gold-and-silver-resources--0697.html

 


Rye Patch Gold Corp (TSX.V: RPM; OTCQX: RPMGF) announced today it has acquired land and mineral rights by staking open, locatable public lands which contain gold and silver resources in the Rochester Mining District, Pershing County, Nevada. 

Highlights Include:
  • Rye Patch Gold identified open locatable public lands and staked claims covering portions of the Rochester and Nevada Packard gold and silver mines and their resource inventory.
  • Approximately 400 unpatented mining claims covering 30.3 square kilometres. An unknown portion of the Rochester and Nevada Packard resources along with numerous gold-silver targets are within the newly staked ground.
  • Rye Patch's geologic team is on the ground sampling, mapping and permitting drill targets on the new LH claims. There are several targets within the claim block that require immediate follow up. 
  • The Rochester orebody is open to the north and northwest and the pit boundary is expanding on to Rye Patch Gold's LH claims. Published drill results show the Nevada Packard resource continued from the patented claims on to the LH claims.
  • The geologic team is working to assess the amount of gold and silver resource present on the LH claims. Several additional targets are within the claim block including the Mystic, Looney and Limerick Basin will be permitted. 
  • Finally, the Blackridge fault zone is on the LH Claims. This ore control has significant potential and controls gold and silver mineralization at the Relief Canyon, Packard, Rochester, and Spring Valley deposits.
  • Lincoln Hill, Wilco, and Jessup projects, Rye Patch Gold's resource inventory along the Oreana trend now totals 2,117,000 ounces of gold and 30,505,000 ounces of silver in the inferred category.
December 5th, 2011
Rye Patch Gold Corp.

 Johnston-Sequoia Commentary:

The image below will be familiar to many of our readers (please keep in mind that the image is counter intuitive - i.e. you're looking south). The purpose of the image is to articulate the dominance of this evolving district in Pershing County Nevada.  Over the past three years we have watched this district evolve with Midway growing Spring Valley from 993,000 ounces in 2008 (in a "blind" Alluvium covered basin) to 1,835,000 ounces in 2009.  Within the span of nine days the world's largest gold company joint ventured the project (March 11, 2009)Since that time Barrick Gold has grown the deposit to 4,100,000 ounces of gold in the inferred category (still open to the north and at depth). Previous to the tremendous work that was done by Midway this was long thought of as a silver district.  This of course is because the Coeur d'Alene Rochester Mine is one of the largest producing silver mines in North America over the past twenty years (125,000,000 ounces of silver and 1,200,000 ounces of gold produced since 1986) and has just recently returned to production.  It's very well documented that the Blackridge Fault is the structural control at Rochester which is makes Rye Patch's new claims so significant.  Shall be very interesting to monitor the progress over the next few months as this new ground is explored by Mr. Bill Howland's exploration team.

To round out the companies working along the Blackridge fault we would be remiss if we did not mention Terraco Gold Corp. - which remains our top overall pick from a pure value investor standpoint.  Terraco continues to drill arguably the last untested area along this evolving Humboldt district.  We are advisors of Terraco Gold and are shareholders as well.  As always please do your own due diligence.




***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.

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Mon, 05 Dec 2011 04:15:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/17359/rye-patch-expands-oreana-trend-holdings-stakes-mining-claims-on-existing-gold-and-silver-resources--0697.html