Proactiveinvestors USA & Canada column http://www.proactiveinvestors.com Proactiveinvestors USA & Canada column RSS feed en Thu, 24 May 2012 05:05:43 -0400 http://blogs.law.harvard.edu/tech/rss Genera CMS action@proactiveinvestors.com (Proactiveinvestors) action@proactiveinvestors.com (Proactiveinvestors) Proactiveinvestors USA & Canada column http://www.proactiveinvestors.com http://www.proactiveinvestors.com/img/rss/na.jpg Proactiveinvestors USA & Canada column 31 88 Smooth Seas do not Make Skillful Sailors http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/1266/smooth-seas-do-not-make-skillful-sailors--1266.html Question:  What is happening with the TSX Venture Exchange?

"The TSX Venture has been the worst performing stock exchange in North America for over a year now.

For many companies on the TSX Venture, this is a time period filled with anxiety; much like it was in late 2008, the Venture has fallen to the hands of panic sellers. Investors are scared and have been thinking illogically for several months now. Companies that were being bought for $1.00 per share with heavy volume, just 12 months ago, are having a hard time finding bids in this market for $0.30. Volume and risk appetite have vanished. Again, this is similar to how it was in December of 2008 in that respect.

It's funny how quickly the psyche of investors can change. And this latest correction in the TSX Venture (a 1 year collapse in value of roughly 45%), is a testament to how powerful emotions are when it comes to moving markets.

This latest correction is the second worst (from a percentage standpoint) in the TSX Venture's history - yet commodity prices remain at historically high levels and the Dow continues to shake off all negative macro-economic data.

Venture investors are scratching their heads as to why this is happening.

The truth is that the TSX Venture has always been a boom/bust exchange. It's extremely volatile. The exchange has existed for 11 years and during that time, it has gone through 7 bear markets of its own (market downturns of 20% or more).

Let's think about the global economic situation for a few seconds. What has really changed in the last 12 months that would cause the Venture to lose 45% of its value?

Last year we were all well aware of Europe's debt crisis and the potential for it to spill into other countries. We were all well aware that America's national debt was skyrocketing out of control. We knew inflation was going to hit the world in a meaningful way (good news for commodity plays), but didn't know exactly when. We knew China's growth was going to temporarily slow down. Commodity prices were flirting with record high levels. Unemployment in the Western World was historically high. What's changed?

The answer is nothing. Uncertainty has hung around the market for a couple years now. The only thing that has changed is the date on your calendar. We are living in just as uncertain times as we were in April of 2011. As mentioned, this hasn't bothered the Dow Jones. It has continued its ascent to flirt with record highs. Meanwhile, the TSX Venture, an exchange that is heavily weighted in commodities, and more specifically, mineral exploration, has collapsed...

... The TSX Venture is Trading at the Same Level it Did Nearly 9 Years Ago In October of 2003, the TSX Venture Exchange traded at the same level it does today. What's important to note about October 2003 is that gold traded for roughly $380 an ounce - it trades 425% higher today. In October of 2003, silver traded for about $5 an ounce - it trades 600% higher today. In October of 2003, a barrel of oil traded for $30 - it trades 320% higher today. In October 2003, Comex copper traded for $0.92 - it currently trades 415% higher....

...The exploration companies on the Venture don't cash-flow, that's not what they're about. These companies are about making discoveries and being bought out, or years later going into production and then cash-flowing. When a company doesn't cash-flow and only drills, it must regularly go to the market for financing's. This creates uncertainty and volatility. This creates the fear factor we are seeing in the market right now. During uncertain times, investors are fearful that many companies on the Venture won't be able to raise capital and could potentially dissolve. This, in most cases, is an irrational fear. Many companies have deep pocketed management teams which can raise capital in any market. Some companies won't need to raise capital for another 2 years. Let's not forget that we recently came off the greatest rally in the TSX Venture's history (December 2008 - March 2011) and the fundamentally sound explorers were able to raise major cash at much higher levels than today. Many of these prudent juniors are sitting on several million dollars in their treasuries from previous financing's.

Let's also not forget how nimble these junior explorers can be when hard times hit. These companies don't have hundreds of employees on the payroll. Drillers are typically on contract work and many of these junior explorers have a dozen full-time workers or less. A junior with a burn rate of half a million dollars a month can quite easily cut that down to $50k by stopping drilling during a down market. After all, as you will soon see, a typical bear market for the TSX Venture only lasts 5.8 months anyway.


Because of the Venture's capital intensive business models (particularly with its 1275 mining/exploration companies), it should come as no surprise that this exchange has experienced 7 bear markets (a correction of 20% or more) in its 11 year history.

History of Major TSX Venture Corrections And What Followed (I define a major correction as a 20% decline or more in the overall TSX Venture Index):

The TSX Venture officially formed in 2001. Its starting value was 1,000.  The TSX Venture's first major correction began on June 4, 2002 after it hit 1,244 (at that date it was a new all-time high). By October 30, 2002, it had bottomed out at 899.30 (losing 27% of its value). This marked a nearly 5 month long correction (downtrend). After bottoming out on October 30, 2002, the TSX Venture went on a 16 month rally and peaked out on February 17, 2004 at 1,931.61. This marked a 114% rally from bottom to top over that 16 month period.


The next significant correction occurred from February 17, 2004 through to July 27, 2004. This was when the exchanged collapsed from 1,931.61 to 1,467.59 - a modest correction in comparison to what we are seeing today. Over that 5.5 month period, the TSX Venture lost 24% of its value. However, once it bottomed out on July 27, 2004, it proceeded to go on an 8 month rally and touched 2,040.29 on March 7, 2005. This marked a 39% gain for the TSX Venture in that 8 month period.

The next significant correction was short-lived. The TSX Venture Exchange dropped from 2,040.29 on March 7, 2005 and bottomed out on May 17, 2005 at 1,593.63. This marked a 2 month decline of 22%. It was quite a vicious decline considering how quickly it happened. However, once the correction bottomed out, the TSX Venture went on a monster rally. After bottoming on May 17, 2005 at 1,593.63, the TSX Venture went on a 12 month rally to 3,292.49 (hit May 11, 2006). This marked a gain of 106% in a year.

Following that massive rally, the TSX Venture collapsed from 3,292.49 on May 11, 2006, to 2,322.48 on October 4, 2006. This marked a 5 month decline of 29.5%. However, following that correction, the TSX Venture rallied to all-time highs. It hit 3,369.79 on May 7, 2007. This marked a 7 month gain of 45%.

The next significant correction, after the TSX Venture hit an all-time high, was short and vicious. The TSX Venture went from 3,369.79 on May 7, 2007 to 2,445.23 on August 16, 2007. This marked a 3 month decline of 27.5%. However, following that correction, the TSX Venture rallied to 3,173.64 on November 6, 2007. This marked a 3 month gain of 29.5%.

The next significant correction was the worst any of us have ever seen, but it set up a golden rally for those that stayed at the table and kept buying. After hitting 3,173.64 on November 6, 2007, the TSX Venture went on a 13 month decline and bottomed out at 686 on December 9, 2008. This marked a 78.3% decline over a 13 month period. Great companies with world-class assets were deemed worthless by the market. What a mistake that turned out to be for those selling anywhere near the lows. After the TSX Venture bottomed out, it went on a 27 month rally and hit 2,439.83 on March 4, 2011. This marked a 255% gain in just over 2 years - the greatest rally for any of the major markets in North America during that time period.

10 Year Chart on the TSX Venture Composite Index

The next significant correction for the TSX Venture is the one we currently find ourselves in. Although there was a short-lived rally at the start of 2012, the downtrend in the TSX Venture has been steady since March 4th of last year. Since hitting 2,439.83 on March 4, 2011, the TSX Venture has collapsed down to as low as 1333 on October 4, 2011 (it has been bumping along the bottom ever since). That marks a 45.5% decline from its March 4th 2011 value. That also marks the 2nd largest drop in the history of this exchange. Now, given that we have been bumping along near the bottom of this collapse for 7 months, one can argue that 'this time is different'. However, every time a market crash occurs, that argument is brought to the forefront.

Those are the statistics behind the 7 crashes the TSX Venture has experienced in its 11 year existence. Crashes and rallies are a part of its genetic make-up. No one will deny that it's a boom/bust index and if timed well (doesn't have to be perfect), it can make investors fantastic returns in very short periods. This is what will keep investors coming back to the TSX Venture - the greed factor. Let's look at the TSX Venture's historical averages:

Average loss (in percentage terms) during a correction (peak-to-trough): -36.25%
Average duration of a bear market in the TSX Venture: 5.78 months
Average gain after a correction (trough-to-peak): 98.08%
Average duration of a bull market in TSX Venture: 11.83 months 

Conclusion:

It can be argued which stage the Venture is in for its boom/bust cycle right now. However, historical statistics are showing us that at these levels, the Venture is looking like a buy. There is no doubt that volatility is going to be around for a long period of time (for all stock exchanges), but that isn't necessarily a bad thing....

... An interesting statistic I found on the TSX website (TMX.com) was that "total financings raised in March 2012 was up 182% compared to February2012 [for the TSX Venture]."

Could this be a sign that the smart money believes a bottom in the Venture has been established?..." 

--- Aaron Hoddinott 
Pinnacle Digest 

Generational Buying Opportunity in the Juniors
by Michael J. Ballanger B.Sc., B.A.
Linkedin
Investment Advisor - Union Securities Ltd.

"Over the past thirty-five years of covering the juniors, there has always been a direct relationship between the price of gold ($1662.30) and the level of the TSX Venture Exchange (1,412.76). We therefore start with a look at the trend of gold prices going back ten years to 2002. There have been numerous corrections along this path but the underlying trend of gold, when viewed in the Monthly context, could not be construed as anything but ragingly bullish. 

However, when one looks at the events of the past three years, one observes a much different picture. The Mainstream Media (MSM) would have us all believe that there is a wondrous "recovery" developing in the global economy and that the reasons for owning precious metals are now dissipating. To that assumption, I refer to a terrific piece recently compiled by Eric Sprott and David Baker entitled "When Fundamentals No Longer Apply, Review the Fundamentals" which can be accessed here: www.sprott.com/markets-at-a-glance/when-fundamentals-no-longer-apply,-review-the-fundamentals/.  When one reviews the fundamental reasons for owning gold and silver, the reality remains that NOTHING has changed since 2002. If anything, the reasons for precious metals ownership is even greater, as you will read from the Sprott link...

...The 10-year chart of the TSX Venture Exchange shows the effect of the Crash on the paper markets and since the TSXV is the speculative proxy for precious metals ownership, it has not come anywhere close to recovering the losses incurred during the 2008 Crash. Despite its long controversial history as a "gunslinger's market", the fact remains that it has been proven to be an incubator for some of the most successful mining companies in the world. (Barrick Gold, Silver Wheaton, Diamondfields, DiaMet etc.). The current period is almost a clone to the post Bre-X period of 1997-2002 during which there were countless proclamations of "Juniors are dead forever". It can also be likened to the period of 1987-1991 after the Great Crash of '87 when investors shunned the juniors like the plague. The current period has had neither a fraud nor a crash in gold prices as the excuse and it is for this reason that I maintain that we are currently experiencing a GENERATIONAL BUYING OPPORTUNITY in well-funded, well-managed juniors...

... Taking the current gold price ($1,662.30) and assuming an average multiple of the 2000-2008 period of 3.875, it would imply a TSX Venture Exchange value of 6,393.75 versus the current level around 1,412.  

Three times during the past three years, the TSXV:Gold ratio has bottomed in the .80 to .90 range after a brief bounce to 1.75 times the gold price in March of 2011. The three events were in late 2008 during the Sub-Prime Meltdown, October 2011 during the European Debt Crisis and during the past month of March during the - what? Was it the institutional community "selling the PDAC"? Was it the horrid first quarter performances of the Funds that triggered redemptions? There is no doubt that the dismal performance of the Senior Gold Producers was a factor. Here is a quote from U.S. Global Advisors' CEO Frank Holmes: 

"We believe in thinking contrarian and keeping a close eye on historical trends to discover inflection points, as stocks tend to eventually revert to their means. For example, in March 2009, we noted significant changes signaling the market had hit rock bottom; following that time through the end of the first quarter, the S&P 500 Index rose more than 100 percent. 

Today’s extreme divergence in oil and gold stocks and their underlying commodities presents a rare opportunity: what these stocks need now are investors to take advantage of it " The full article can be accessed here: 
 www.usfunds.com/media/files/advisors-library/2012/12-279IAComm_Oil_Gold_Stocks.pdf?CFID=35915&CFTOKEN=85197677.

Other Bottoming Signs:

1. Iamgold last week made a $600mm takeover bid for Ontario-based Trelawney Mining and Exploration Ltd. for around $3.30 per share, a level representing 55% of the 2011-high for TRR.V. This was a significant development for the junior Canadian miners.

2. Numerous proposed financings in the junior space have been either postponed or cancelled.

3. Massive redemptions in the Resource Fund Industry.

4. In the silver developer space, a recent report from Canaccord confirms that the in-situ average value-per-ounce for these juniors has declined from over $5.00/ounce in February 2011 to under $1.50/ounce as of March 31/2012. With silver trading at $31.87, this represents a "capitulation-type" event.

Conclusions:

The TSX Venture Exchange is trading at valuation levels not seen since the dark days following the infamous Bre-X fiasco of 1997-2000. The junior miners were completely ignored for a three-year period after which the market embarked upon six years of uptrend comprising a tenfold advance off the bottom. It took great courage to buy the juniors in 2000 but those investors that did benefited greatly. Stock selection is critical in today’s junior market...

... The opportunity described above is compelling. It is not without risk; these are junior mining/exploration companies. However, if the junior has an undervalued asset (ore body) that is growing and is well-financed, it will get absorbed by a larger company that needs ounces (or pounds) in order to maintain its own growth profile. I favour companies that have already established either an inferred or a measured/indicated resource. There will be ample time to acquire the exploration-only deals that are suffering in this financing-starved world (Think“Yukon”). 

Finally, refer back to the ten-year chart of gold. That trend-line tells us that physical demand for gold (and silver) is strong and growing – in due course, that demand will trickle down to the companies that are finding and developing new deposits. Owning these little jewels at these major inflection points has always proven to be an extremely profitable venture – and those that have the courage and tenacity will prosper.


---Michael J. Ballanger B.Sc., B.A.
Investment Advisor - Union Securities Ltd.

Johnston-Sequoia Commentary: 

First of all - just wanted to mention how impressed I continue to be by the perspective of other young analysts like Mr. Hoddinott, Chris Berry, Keith Schaefer & Peter Spina .  In the midst of an absolutely brutal correction (since March 4th 2011) - to come out with a piece like this just days before what I'm sensing may be an interim bottom at 1,338.37 May 8th (& 1,323 Intra day May 9th) on the TSX Venture Composite Index is outstanding.  Perhaps it's the ease of information access on the internet, or the power of the instantaneous worldwide social-media network or just the knowledge that anyone can get a strong handle on investing if they put in the time & effort.  Whatever it is my hope is that this is a trend that continues & the number of young Analysts grow.

1 year Chart TSX Venture Composite Index
One of the most impactful notes in Aaron Hoddinott's article was:
"What's important to note about October 2003 is that gold traded for roughly $380 an ounce - it trades 425% higher today. In October of 2003, silver traded for about $5 an ounce - it trades 600% higher today. In October of 2003, a barrel of oil traded for $30 - it trades 320% higher today. In October 2003, Comex copper traded for $0.92 - it currently trades 415% higher." 

Now, please take a moment to look again at the 10 year chart above on the TSX Venture composite Index (10 year Chart TSX.V) and note the beautiful/text book five waves up that followed the October 2003 bear market going into November 2007. 

So, in an environment that has in large part had the risk washed out of it - increases in the the price of gold, silver, oil & copper increasing by 425%, 600%, 320% & 415% respectively since October 2003 & with fewer and fewer world class discoveries - wouldn't it stand to reason that the companies with large proven discoveries (&/or royalties), be set to rise to historically high level's?  Our view is that they very well could... 

Here are the 3 year Charts of our three top TSX Venture listed resource companies from a pure/deep value investor standpoint: 

1: Terraco Gold Corp. (TSX.V: TEN | US: TCEGF)
2: Quaterra Resources Inc. (TSX.V: QTA | AMEX: QMM)
3: Midway Gold Corp. (TSX.V: MDW | AMEX: MDW)


I own shares in Terraco Gold Corp. & Quaterra Resources.  As always please do your own due diligence. Hope you all have an outstanding weekend.

]]> Mon, 14 May 2012 11:26:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/1266/smooth-seas-do-not-make-skillful-sailors--1266.html Innovation is the Whim of an Elite Before it Becomes a Need of the Public http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/1221/innovation-is-the-whim-of-an-elite-before-it-becomes-a-need-of-the-public--1221.html "Senesco and Celgene Test a Combination Cancer Therapy

 

We have been following Senesco Technologies (SNT AMEX) for 8 years. Why, you might ask would anyone follow a company for that long without any monetary reward? I think it has to do with the one of the basic tenets of Discovery Investing. That is, that while inordinately risky (no doubt about that) it is, in my mind, a socially responsible investing style. Of course it is not at all like traditional socially responsible investing. There you have to be Green or conscious of the social good even if it disenfranchises people and destroys jobs. It may be traditionally defined as,

“Sustainable, socially conscious, green or ethical investing, is any investment strategy which seeks to consider both financial return and social good. In general, socially responsible investors encourage corporate practices that promote environmental stewardship, consumer protection, human rights, and diversity. Some avoid businesses involved in alcohol, tobacco, gambling, pornography, weapons, and/or the military.”
But I have a much broader and I think more powerful view of socially responsible investing that also involves the good of all the people. 

Think, for example, about the discovery of a new material that revolutionizes battery technology for electric vehicles. Think of the benefit of the discovery of a thorium fuel cycle in a modular reactor framework. Think of the discovery of insulin. Think of the discovery of the semiconductor. Think of the applications yet to be discovered for graphite’s allotrope, graphene. Think of the iPad and iPod that have revolutionized education and a broader understanding of the quality of life possible.
This is what our Discovery Investing Factor 4 (Immediacy and Potential) references. This kind of discovery is much more powerful than our targeted and desired “world class discovery.” It is also quite rare. 

It is about a discovery that revolutionizes an industry and therefore society’s welfare. Of course these are hard to come by and there are many false starts and failures in scale up. I won’t go into these at present but I can assure you that I have experienced more than a few disappointments. And yet I keep coming back. 

So why continue for so long with a company like Senesco Technologies? When I developed the discipline of Discovery Investing with its framework of 10 score-able factors, I decided I would seek only the top experts in various fields of endeavour – biology, medicine, geology, infrastructure, computer science, materials science, etc. 

Many years ago I met Dr. John Thompson a biologist at the University of Waterloo, my alma mater. It was his conviction that a gene technology, Factor 5A1, developed in his lab on plants would apply to immune related diseases as well as cancer. 

Dr. Thompson was correct. Factor 5A1 has proved effective in most agricultural commodities (increasing both yield and disease resistance) though SNT’s contracts (Monsanto, Bayer, Rahan Mierstem, etc.) have not paid off for investors. The technology has been used in rice, cotton, wheat, trees and bananas. But most important, the technology has worked in plants. Bananas for example are being grown in Israel using the Senesco technology and they are resistant to Black Sigatoka a fungus which threatens the world’s banana crop. 

If food supply is to be a problem in the future such GMO technologies will be critical to feed the poor, certainly a “social good.” I will be presenting a seminar on Thursday in Saskatoon to the Saskatoon Club titled, “The Global Food Supply: Is It Time to Panic?”
Perhaps, more important, is the success the company has had in cancer therapy – particularly multiple myeloma. As you may know they are now in the clinic at three different hospitals (the Mayo Clinic, the National Myeloma Center (U Arkansas) and West Virginia University). This is significant as they are now in human trials with the therapy called SNST-01. 

This is what we have all been waiting for over the years. It takes a long time and a lot of investor patience to successfully enter the clinical trial phase – but the company is there now. The chief risk is not the efficacy of the therapy, according to experts, it is the possible side effects of the nano-particle delivery mechanism. So far the therapy seems to have had no negative side effects on humans.

 



 

However this AM the company published a most interesting news release titled,
“Combination of Lenalidomide and SNS01-T Effective in Cancer Model - Tumors Eliminated in Over 80% of Animals Treated with Optimal Dose”. 

It seems that the Eukaryotic Initiation translation Factor 5A1 in combination with Celgene’s Revlimid (active factor Lenalidomide) is even more effective in eliminating tumors in mice. While SNST-01 alone eliminated tumors in 40% of the animals, the combination therapy at an optimal dose eliminated tumors in 83% of the animals. Senesco’s release noted, 

“Lenalidomide is the active ingredient of REVLIMID®, which is marketed by Celgene (Nasdaq: CELG) and is widely used to treat multiple myeloma. While SNS01-T alone performed well by completely eliminating tumors in 40% of the animals, complete tumor eradication was achieved in five out of six or 83%of the treated animals that received SNS01-T combined with the optimal study dose of lenalidomide. This effect has lasted throughout 3 weeks of observation after the end of treatment. Neither dose of lenalidomide used alone eliminated tumors in any of the treated mice.” We look forward to results from Senesco’s human trials in place today at three clinics and trials with Celgene’s therapy in the future. These animal results are intriguing because Celgene must be watching with undue interest. We are also encouraged that the Factor 5A1 therapy has many more potential applications with respect to immune system disorders. The company believes it can treat other blood cancers such as lymphoma with SNST-01. 

We have stayed long in the Senesco camp, because if they have an effective multiple myeloma therapy, then the social good will have been well served. This will have been a truly socially responsible discovery investment. We grow more confident every day. Catalysts are in the near future.

Discovery Investing can indeed be a socially responsible investing approach. It’s all in the Discovery.

Below I show the Discovery Scoreboard output (www.discoveryboard.com) for the company.

The crowd size is excellent at 23 analysts.

 

The final score is 5.71 (see the output graph below).
The centroid is 6.31. The dispersion is quite large.
The centroid low 5.24 and the centroid high 7.37 

This indicates some uncertainty and imprecision in analysts’ views. My view is that the crowd hasn’t yet caught on to the progress that has been made by Senesco.

 

You may use the Discovery Investing Scoreboard for free to score Senesco – simply register and you are on your way."

--- Dr. Michael Berry

Combination of Lenalidomide and SNS01-T Effective in Cancer Model Tumors Eliminated in Over 80% of Animals Treated with Optimal Dose 
May 1st, 2012 Senesco Technologies Press Release

Senesco Technologies, Inc. (NYSE AMEX: SNT) announced that "a high level of tumor eradication in a mouse model of human multiple myeloma was achieved with a combination of SNS01-T and lenalidomide. 

“SNS01-T has once again demonstrated excellent efficacy alone and even more when combined with lenalidomide,” said Leslie J. Browne, Ph.D., President and CEO of Senesco. “Lenalidomide is the active ingredient of REVLIMID®, which is marketed by Celgene and is widely used to treat multiple myeloma. While SNS01-T alone performed well by completely eliminating tumors in 40% of the animals, complete tumor eradication was achieved in five out of six or 83%of the treated animals that received SNS01-T combined with the optimal study dose of lenalidomide. This effect has lasted throughout 3 weeks of observation after the end of treatment. Neither dose of lenalidomide used alone eliminated tumors in any of the treated mice.” 

The Company recently reported that SNS01-T significantly inhibits the growth of both human mantle cell and diffuse large B-cell lymphomas in mouse xenograft models and that the combination of lenalidomide and SNS01-T, performs better than either treatment alone in a mouse xenograft model of human mantle cell lymphoma. 

Summary of Multiple Myeloma Model Results 

The purpose of the study was to determine whether SNS01-T treatment increases the effectiveness of lenalidomide in a murine xenograft model of multiple myeloma. SNS01-T (0.375 mg/kg i.v.) was combined with either a sub-optimal dose (15 mg/kg i.p.) or an optimal dose of lenalidomide (50 mg/kg i.p.). Mice received SNS01-T twice weekly and 5 doses/week of lenalidomide for 6 weeks. 

Tumors were initiated by implanting human myeloma RPMI 8226 cells into the flank of SCID mice. The mice were randomized into 6 groups of 5 or 6 animals when the subcutaneous tumors were approximately 40 mm3 in size. 

At the end of 6 weeks of dosing, tumor growth was inhibited compared to control nanoparticles by 96 % (p = 0.0001), 94 % (p = 0.0002), and 99 % (p = 0.00003) in animals treated with SNS01-T, SNS01-T plus 15 mg/kg lenalidomide and SNS01-T plus 50 mg/kg of lenalidomide, respectively. By comparison, tumor inhibition in mice treated with 5 doses/week of lenalidomide for 6 weeks at 15 mg/kg i.p. or 50 mg/kg i.p. was 51 % (p = 0.03) and 78 % (p = 0.0008), respectively. 

No surviving animals treated with control nanoparticles or lenalidomide alone had undetectable tumors at the end of 6 weeks. In the SNS01-T and SNS01-T plus 15 mg/kg of lenalidomide groups, 2 of 5 animals in each group had no detectable tumor. In the SNS01-T plus 50 mg/kg treatment group, 5 of 6 animals (83 %) had no detectable tumor, and remained undetectable even after 3 weeks without further treatment. 

The median survival of mice treated with control nanoparticles or 15 mg/kg lenalidomide was 48 days and 53 days, respectively. Mice treated with SNS01-T or SNS01-T in combination with lenalidomide had 100 % survival following 6 weeks of dosing and 11 days of observation after cessation of treatment. 

In conclusion, SNS01-T alone and in combination with sub-optimal and optimal (15 and 50 mg/kg respectively) doses of lenalidomide demonstrated significantly improved efficacy compared to lenalidomide alone. However the most significant finding was that SNS01-T plus 50 mg/kg of lenalidomide completely eliminated tumor burden in 83% of treated animals compared to 40% in animals treated with SNS01-T alone or SNS01-T plus 15 mg/kg lenalidomide. The eradication of tumor has lasted for at least 3 weeks."

--- May 1st, 2012 Senesco Technologies Press Release

10 Yr SNT Chart - The Optimal Margin of Safety Pattern?

Johnston-Sequoia Commentary:


In terms of the technology (SNS01-T) arguably the most impactful statement by both Dr. Michael Berry & President & CEO Dr. Leslie Browne is:

"While SNS01-T alone performed well by completely eliminating tumors in 40% of the animals, complete tumor eradication was achieved in five out of six or 83% of the treated animals that received SNS01-T combined with the optimal study dose of lenalidomide."

It's worth noting that in our due diligence process over the years we've learned (as many of our readers know) that it's very common to use oncology (cancer) drugs in combination with other oncology drugs.  It's also intriguing that in the control group - no surviving animals treated with control nanoparticles or lenalidomide (REVLIMID®) alone had undetectable tumors at the end of 6 weeks.  While using SNS01-T alone achieved 40% eradication of tumors and 83% when used in combination with lenalidomide.  As Dr. Michael Berry notes "These animal results are intriguing because Celgene (Nasdaq: CELG) must be watching with undue interest."

We reinterate the importance of SNT's management team:

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 company ImClone 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."

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

Dr. Leslie Browne
President & CEO
"Leslie J. Browne, Ph.D. was appointed our President and Chief Executive Officer in May 2010. Dr. Browne has over 30 years of experience in the pharmaceutical industry. Prior to joining Senesco he served (from April 2007 to January 2009) as an independent director of Genelabs Technologies, which was sold to GSK, and from September 2004 to May 2008 as President, CEO and Director of Pharmacopeia, a Nasdaq listed company, where he transformed the company from a discovery contract research organization to a clinical development stage biopharmaceutical company with multiple internal development programs. In 1979, Dr. Browne began his industrial career at Ciba-Geigy, now Novartis, where he invented fadrozole, for the treatment of breast cancer and was closely involved in the discoveries of Femara and Diovan, which became major products for Novartis. Dr. Browne received his Bachelor of Science degree in Chemistry in 1972 from the University of Strathclyde, Glasgow Scotland. He received his Ph.D. in Organic Chemistry in 1978 from the University of Michigan and his postdoctoral training as a National Institutes of Health Postdoctoral Fellow at Harvard University from January 1978 to April 1979."
--- 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

Finally, in the humble opinion of this writer (& this is certainly not investment advice, just purely an observation) - SNT is a long-term/buy-side investors dream. SNT continuously comes out with monumental news releases regarding the progression of SNS01-T & one can continue to accumulate a position between $0.22 - $0.26 (please see 3 Yr chart above). Is this company an overnight hallelujah - certainly not. However, we continue to believe that Senesco Technologies has a very realistic shot at the cure for multiple myeloma (& potentially numerous forms of cancer and ischemic diseases).

I own shares in Senesco Technologies.  As always - please do your own due diligence.  Hope you all enjoyed the Cinco de Mayo festivities.
]]> Mon, 07 May 2012 13:20:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/1221/innovation-is-the-whim-of-an-elite-before-it-becomes-a-need-of-the-public--1221.html Each Time History Repeats Itself, the Price Goes Up. http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/1190/each-time-history-repeats-itself-the-price-goes-up--1190.html Royalty - the right to receive a percentage or other denomination of mineral production from a resource extraction operation. 

Net Smelter Return (“NSR”) Royalty - a defined percentage of the gross revenue from a resource extraction operation, less a proportionate share of incidental transportation, insurance, refining and smelting costs.

" Franco-Nevada initially began trading as a public gold exploration company in 1983 with no real success. In 1995 Franco-Nevada executives Seymour Schulich and Pierre Lassonde made the decision to focus on investing in royalties. At the time, oil and gas royalty ownership—but not gold royalty ownership—was an established business strategy. In 1985 Franco-Nevada raised $930,000 to purchase gold royalties in a follow-on offering. The company made its first royalty investment in 1986, spending half the corporate treasury ($2 million) to acquire 4% of revenues from a mine in Nevada owned by Western States Minerals. The mine had an annual production of 44,000 ounces of gold. Franco-Nevada assumed that known reserves would allow the royalty to pay for itself regardless of additional exploration results. By 2002 the property generated $23 million annually for Franco-Nevada.

 


In April 2001, Franco-Nevada sold the Nevada Midas mine, its only wholly owned mine, to Normandy Mining in exchange for 20% of the Normandy and a five-percent royalty on the mine. That September, Anglo Gold made a bid for Normandy at a valuation 60% greater than Franco-Nevada's acquisition cost. Seeing the potential to take advantage of Newmont's rivalry with Anglo, Schulich and Lassonde approached Newmont Mining Corporation to discuss purchasing Franco-Nevada and Normandy, striking a deal richer than Anglo's offer, and ultimately valuing Franco-Nevada shares at a 22% premium."

 

"Royal Gold, Inc. owns and manages royalties and similar interests primarily on precious metals mines, with a focus on gold. The Company's portfolio provides investors with a unique opportunity to capture value in the precious metals sector without incurring many of the costs and risks associated with mine operations.

A royalty is simply a right to receive a percentage of production from a mine.  By investing in a royalty, Royal Gold buys a percentage of the metal produced from a given property in exchange for an initial payment, without assuming any responsibility for the actual mining operation.  Another interest similar to a royalty is known as a metal stream.  This product allows for a smaller front end payment, but requires that payments be made as metal is delivered to Royal Gold over the life of a mine.  In either case, Royal Gold does not have to contribute to the operating or capital costs at the mine after the initial payment is made.

Royal Gold owns a large portfolio of producing, development, evaluation and exploration stage royalties and similar interests located in some of the world's most prolific gold regions.  Through this high quality portfolio, Royal Gold maintains upside potential through any exploration successes by the operators and benefits when new reserves are produced.

The Company is guided by the experience of a senior executive management team with expertise in the fields of geology, engineering, law and finance.  Our successful business model generates strong cash flow and high margins with a lower cost structure, providing shareholders with a premium precious metals investment."

 

Lake Shore Gold and Franco-Nevada Complete $50 Million Royalty and Equity Investment Transaction

March 8th, 2012 Lake Shore Gold Press Release

Lake Shore Gold Corp. (TSX: LSG|AMEX: LSG)  announced "that the Company has closed its previously announced royalty and equity investment agreements (the "Agreements") with Franco-Nevada Corporation (TSX: FNV|NYSE: FNV) ("Franco-Nevada"). Under terms of the Agreements, Franco-Nevada has paid to the Company US$35 million for a 2.25% net smelter return royalty on the sale of minerals from the Company's Timmins West Complex. In addition, Franco-Nevada has paid C$15 million to acquire 10,050,591 common shares of the Company on a private placement basis. 

Tony Makuch, President and CEO of Lake Shore Gold, commented: "We are pleased to have completed this transaction and to welcome Franco-Nevada as a new shareholder of the Company. With the funds we have received, our pro forma cash position at the end of February stood at approximately $95 million, which provides significant financial flexibility as we prepare for a sharp increase in production beginning late this year."" 
--- March 8th, 2012 Lake Shore Gold Press Release 

Current Royalty Valuation per oz of Gold Production

Franco-Nevada, Royal Gold Valuation per oz of gold production (Please click on image to enlarge)

--- AUgMentor.com 2012-04-05


Johnston-Sequoia Commentary:

Just over a year ago a very dear friend of mine told me one of the most endearing/self-deprecating market related stories I've ever heard. This gentlemen is an energy expert, former President & CEO of International Operations of one of Canada's largest energy crown corporations and today a frequent energy expert on Bloomberg and CNBC (point being - the guy knows what he's talking  about).  So, the story begins in the mid 1980s - one evening he and his wife have a guest couple over for dinner & drinks. Both the wives worked together at the time as Professional Engineers in the Nuclear Energy area of this same large Crown Corporation and were the glue that brought the couples together that evening. As the dinner progressed with the inevitable consumption of a few bottles of nice french wine, the conversation eventually evolved in to a potential investment that the host couple should consider making in a new company being formed by the husband of the guest couple (a gentlemen by the name of Pierre Lassonde).  It was then a somewhat innovative idea called 'Franco-Nevada Mining Corporation'. The idea was to establish a 'Royalty' gold company... not a simple gold E&P Co... the basic idea this time being to take royalty positions in various good looking gold companies and grow indirectly through the efforts of others. The price of a unit of this new company would be about $5,000 CDN. The question posed by the guest was - are you interested in this investment idea? 

Later that evening as they cleaned up after the dinner party, the host couple discussed the suggestion and decided that the pressure of their day to day bills and the 'obviously' superior and predictable pensions from a stable Crown Corporation was the best bet for returns to make their eventual retirement years comfortable!  Well, as my friend now knows, a mere 27 years later, the same $5000 investment in Franco-Nevada would be worth somewhere in the neighborhood of $5-7 million today.  

We discover in the most recent transaction from Franco-Nevada above that the value per ounce in the ground gold that Franco-Nevada paid to acquire the 2.25% NSR royalty on Lake Shore's Timmins West Complex was approximately $800.00 per ounce & as you see in the graphic above the market values FNV & RGLD at between $800 - $1,200 per ounce in the ground gold production.  Now, if we cross reference that deal with what gold exploration and development companies we see on average between $90 - $113 per ounce in the ground gold. Point being - the market is valuing ounces in the ground from royalty transactions approximately 800% higher on average than explorers and developers.  

The attraction of royalty companies in this market of course is that they're tied directly to the gold price & they have little to no production risk as their returns will simply be less if a particular mine experiences difficulties.  They do not have to pay for equipment, staffing, insurance, pensions etc. that would be the obligation of a producing company.

Now, as many of our readers know our Terraco Gold Corp. (TSX.V: TEN) has acquired two royalty options (up to 2.5%) on the Barrick Gold - Midway Gold Spring Valley Gold Project in Nevada.
Terraco Gold Royalty Claim Block on the Spring Valley Gold Project & the 100% owned Moonlight Project (Outlined & Shaded in Black) on the North side of Spring Valley - (Click to enlarge)
In addition - (in terms of six degrees of separation) Charles Sulfrian, Terraco Gold's Vice President of Exploration was "acquired" in the Barrick Gold - Western States transaction (the same project that Franco-Nevada acquired as a royalty in 1986 which is now Barrick's Goldstrike Mine) & Ken Snyder, Terraco's Lead Consulting Geologist discovered the "Ken Snyder" Midas mine in Nevada for then Franco-Nevada and now is Newmont's lowest cost producing mine.


Will our Terraco Gold Corp. be a story that can be told in the same breath as a Franco-Nevada one day? Only time will tell.  What we do know (in particular my dear friend in Florida) - "Every time history repeats itself - the price goes up".



I am a shareholder of Terraco Gold Corp & am an advisor of the company.  As always - please do your own due diligence.

]]> Mon, 30 Apr 2012 11:21:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/1190/each-time-history-repeats-itself-the-price-goes-up--1190.html Creation of the Largest 100% U.S. Pure-play Uranium Producer http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/1149/creation-of-the-largest-100-us-pure-play-uranium-producer-1149.html

Energy Fuels Inc. (TSX:EFR) and Denison Mines Corp. (TSX:DML;  AMEX:DNN) announced "that they have entered into a Letter Agreement to complete a transaction (the "Transaction") whereby EFR will acquire all of Denison’s mining assets and operations located in the United States (the “US Mining Division”) from Denison in exchange for 425,441,494 common shares of EFR (the "EFR Share Consideration"). Immediately following the closing of the Transaction, Denison will complete a Plan of Arrangement (the "Denison Arrangement") whereby Denison will complete a reorganization of its capital and will distribute the EFR Share Consideration to DML shareholders on a pro rata basis as a return of capital in the course of that reorganization. Upon completion of the Denison Arrangement, Denison shareholders will receive approximately 1.106 common shares of EFR for each common share of DML owned and will in aggregate own approximately 66.5% of the issued and outstanding common shares of EFR.

Energy Fuels and Denison believe that the Transaction and the Denison Arrangement will provide a number of substantial benefits for shareholders of both companies, including the following:

 

  •  Creation of the largest 100% U.S. pure-play Uranium producer and one of the largest holders of National Instrument 43-101(“NI 43-101”) compliant U.S. based Uranium resources.
  • 2012 production forecasts totaling greater than 25% of total U.S. estimated production.
  • Measured and Indicated Resources of 49.8 million lbs of U3O8, plus Inferred Resources of 17.9 million lbs of U3O8.
  • U.S. focus provides compelling fundamentals: domestic consumption of 55 million lbs of U3O8 per year vs. domestic production of only 4 million lbs of U3O8 per year.
  • Clear operational synergies and capital efficiencies to increase production.
  • Combination of mining and development assets which will accelerate the rate of development of EFR mines, provide higher throughput of mill feed, and extend the number of years of production at the White Mesa Mill.
  • EFR’s Sheep Mountain Project is an advanced-stage development asset which provides flexibility to bring an additional 1.5 million lbs per year of U.S.-produced U3O8 on-line.
  • Creation of a strategic platform for continued Uranium consolidation within the U.S.
  • Substantial vanadium by-product from the White Mesa Mill and Colorado Plateau Properties, where historic Uranium to vanadium ratios have averaged approximately 5:1.
  •  Combined management expertise, with decades of combined Uranium mining and processing experience.

    DML shareholders to benefit from the division of two distinctly different business profiles as well as exclusive management focus on exploration and development, such as DML’s high-profile Wheeler River project in the Athabasca Basin region of northern Saskatchewan and its Mutanga project in Zambia.

 

Steve Antony, President and CEO of Energy Fuels commented, “This transaction is transformational for Energy Fuels and reshapes the landscape of the Uranium sector within the U.S. It combines the highly strategic asset of the only operating Uranium mill in the U.S., White Mesa, with a significant resource base that substantially increases White Mesa's available feedstock. The result is an unmatched production growth profile and the opportunity for both Energy Fuels and Denison shareholders to benefit from the clear operational synergies that result from this transaction. I look forward to working with Denison's U.S. team to maximize the benefits of this important combination.”

 

Ron Hochstein, President and CEO of Denison added, “This transaction is an important step forward for Denison. The Company has evolved on two parallel but different tracks, being both an exploration and development entity with a global footprint and an established producer in the United States. We are pleased to have the opportunity to combine our U.S. operations with such a complimentary set of assets and people. I'm excited about the opportunities that lie ahead for both Denison and Energy Fuels shareholders and believe that this transaction only serves to strengthen the operations of both companies.”

Transaction Details

Pursuant to the Letter Agreement, the parties have agreed to enter into exclusive negotiations with a view to entering into a definitive agreement in respect of the Transaction (the “Arrangement Agreement”). The execution of the Arrangement Agreement is subject to the following conditions:

 

  • Korea Electric Power Corporation (“KEPCO”) shall have waived its right of first opportunity provided for in the strategic relationship agreement dated as of June 15, 2009 among Denison, KEPCO and a subsidiary of KEPCO, or the 30-day period for exercising such right shall have expired without KEPCO exercising right;
  • the entering into of support agreements with all directors and officers of Denison, who own shares of Denison, and Zebra Holdings and Investments S.a.r.l. and Lorito Holdings S.a.r.l.;
  • the entering into of support agreements with all directors and officers of Energy Fuels, who own shares of Energy Fuels, and with the three largest shareholders of Energy Fuels;
  • the prior approval by the boards of directors of each of Denison and Energy Fuels;
  • there shall not have been any event or change that has had or would be reasonably likely to have a material adverse effect on the business, operations, results of operations, prospects, assets, liabilities or financial condition of the U.S. Mining Division and of the Energy Fuels group taken as a whole.

 

The three largest shareholders of Energy Fuels, Dundee Resources Ltd., Pinetree Capital Ltd. and Mega Uranium Ltd. who collectively own approximately 22.7% of Energy Fuels’ outstanding common shares, have indicated their willingness to enter into support agreements in respect of the Transaction. Zebra Holdings and Investments S.a.r.l and Lorito Holdings S.a.r.l., which combined are one of the largest shareholders of Denison, owning approximately 9.9% of Denison’s outstanding commons shares, have also indicated their willingness to enter into support agreements in respect of the Transaction.

 

At its shareholder meeting to approve the Transaction, Energy Fuels also expects to seek shareholder approval to implement a 10-for-1 consolidation of its common shares.

Following execution of the Arrangement Agreement, it is anticipated that completion of the Transaction will be subject to the following additional conditions:

 

  • approval of the Denison Arrangement by Denison shareholders;
  • approval of the issuance of the EFR Share Consideration as part of the Transaction by Energy Fuels shareholders;
  • court approval of the Denison Arrangement;
  • receipt of third party approvals and consents; and
  • receipt of all required regulatory approvals, including acceptance by the Toronto Stock Exchange.

 

The Letter Agreement contains customary deal protection mechanisms, including a reciprocal break fee of Cdn$3.0 million payable in certain circumstances, non-solicitation provisions and a right to match any superior proposal...

Overview of EFR and Denison’s U.S. Mining Division

Energy Fuels Inc.

Energy Fuels Inc. is a Uranium and vanadium mineral development company. The Company recently acquired Titan Uranium Inc., including the Sheep Mountain Project in the Crooks Gap District of Wyoming. The Company also received a Final Radioactive Materials License from the State of Colorado for the proposed Piñon Ridge Uranium and Vanadium Mill in March 2011. The mill will be the first Uranium mill constructed in the United States in over 30 years...

 

On March 1, 2012, Energy Fuels announced an updated Preliminary Feasibility Study for Sheep Mountain. The study contemplates the concurrent development of the underground and open pit deposits for a 15 year mine life. This option generates a pre-tax Internal Rate of Return (IRR) of 42% and a Net Present Value (NPV) of US$201 million, at a 7% discount rate and a $65/lb long term U3O8 price. This option has an expected initial CAPEX requirement of US$109 million and OPEX of US$32.31 per lb. recovered. The Sheep Mountain project is currently at an advanced stage of permitting. Production is expected to commence in 2015, with a peak production rate of 1.5 million lbs U3O8 per year.

 

The Sheep Mountain Project contains an Indicated Resource of 12,895,000 tons at an average grade of 0.12% U3O8 (30,285,000 lbs U3O8). This figure includes Probable Reserves of 7,453,000 tons at an average grade of 0.123% U3O8 (18,365,000 lbs U3O8). Energy Fuels’ Colorado Plateau properties additionally contain Measured & Indicated Resources of 1,951,486 tons at an average grade of 0.24% U3O8 and 0.89% V2O5 (9,371,821 lbs U3O8 and 34,862,116 lbs V2O5).

 

The technical information in this news release regarding the Sheep Mountain Project was prepared in accordance with the Canadian regulatory requirements set out in NI 43-101 and is extracted from Preliminary Feasibility Study for Sheep Mountain dated April 13, 2012 which is filed on EFR's SEDAR profile and is available for viewing at www.sedar.com.

 

Denison’s U.S. Mining Division

 

All of Denison’s U.S. assets are held directly or indirectly through its wholly-owned subsidiary Denison Mines Holdings Corp. (“DMH”). DMH holds its Uranium mining and milling assets through subsidiaries, as follows:

 

  • the White Mesa Mill, a 2,000-ton per day Uranium and vanadium processing plant near Blanding, Utah through Denison White Mesa LLC;
  • the Colorado Plateau mines, straddling the Colorado and Utah border, through Denison Colorado Plateau LLC;
  • the Daneros Uranium mine in the White Canyon district of southeastern Utah, and other exploration properties through Utah Energy Corporation;
  • the Arizona Strip properties through Denison Arizona Strip LLC;
  • the Henry Mountains Uranium complex in southern Utah and other exploration properties through Denison Henry Mountains LLC; and
  • miscellaneous properties through Denison Properties LLC.

 

All of the U.S. properties are operated by Denison Mines (USA) Corp., a wholly-owned subsidiary of DMH.

 

Denison’s White Mesa Mill in Utah is the only conventional Uranium mill currently operating in the U.S. It is fully licensed and permitted to process 2,000 tons per day, producing up to 8 million lbs of Uranium per year. A vanadium co-product recovery circuit allows for the processing of vanadium ore within the Colorado Plateau mines and its central location allows for hauling of Uranium ore from Arizona, Utah, Colorado, and New Mexico.

 

The Arizona Strip has higher grade production from breccia pipes. The Arizona 1 mine is currently producing with a track-record of resource replacement. A second mine (Pinenut) is expected to open in 2012. Shaft sinking is expected to begin at the Canyon mine in the fourth quarter 2012, pending regulatory approval, and the EZ1 & EZ2 properties are progressing through permitting.

 

The Henry Mountains Complex in Utah consists of the Bullfrog and Tony M deposits and represents Denison’s largest resource in the U.S. (12.8 million lbs Indicated Resources, 8.1 million lbs Inferred Resources). Currently the complex is on care and maintenance. It was fully permitted in September 2007 and has excellent infrastructure, access, and is production ready. Haulage to the mill is along County and State highways."

 

--- April 16, 2012 Energy Fuels Press Release

 

Johnston-Sequoia Commentary: 

 

“Opportunity is missed by most people because it is dressed in overalls and looks like work.” 

--- Thomas Edison 

 

To say the Uranium sector has been under pressure since the natural disaster & nuclear consequences of Fukashima  would be a severe under statement.  Look at any Uranium stock since that moment & you'll find some of the most catastrophic collapse in share prices since October 2008.  

 

 

Picking up the pieces of this disaster for Uranium companies, nuclear operators, government officials & most importantly the people of Japan has not been an easy task.  Though, in the midst of all this as Albert Einstein once said - "in the middle of every difficulty lies opportunity".  The reality is that we have an increasing population  globally in particular in places like India, Brazil & China.  These economies are demanding a higher quality of life and as Dr. Michael Berry has said many times in the past; for a population to improve their quality of life - they need access to readily available inexpensive energy.  The cheapest energy (which also has no carbon emissions) is nuclear energy.  We have seen strong consolidation in this space with Cameco's (TSX: CCO) bid for followed by Rio Tinto's (NYSE: RIO) acquistion of Hathor for US$623,000,000.00 or $4.78 per share completed January 12th, 2012.

 

Here in North America we have an energy sector that some would argue is in a state of (or is in serious need of) renewal.  One part of the equation and solution is the expansion and safe development of domestic nuclear energy.  

 

"The USA currently has 104 reactors of which 102 are operating and 4 new ones are in various stages of approvals , design or site construction work (SE USA).

 

On average over the last 5 years, 100 of the reactors have operated at a capacity factor in the 90% range. This has required on average 55 Million lbs of U3O8/yr.  The same 5 year average production of U3O8 in the USA is only in the 5-6 million lbs/yr range.  The USA therefore imports 90 % of its U3O8 annually from a variety of sources:  Canada, Kasakhstan, Australia, Namibia, Uzbeckistan, Niger, The Megatons to Megawatts Program via Russia, Strategic National Reserves in the USA etc."

--- Source Drolet Energy

 

Does the nuclear industry need to start reassessing standards of operation,  revamping existing facilities and ultimately decommissioning plants that are becoming dangerously out of date?  Certainly.  However it does not mean that we should not consider nuclear as a part of our growing need for inexpensive easily accessible sources of energy.

 

Finally, I believe both companies seemed to benefit from the transaction and the market agreed with the two companies up an average of 25.69% and have traded an average of 5,793,687 shares in the past two days - which in this market environment is a real win for both sides.

 

We have initiated coverage on Energy Fuels Inc. (TSX:EFR) due to our interest in American Uranium production.  As always please do your own due diligence.

 

]]> Mon, 23 Apr 2012 11:11:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/1149/creation-of-the-largest-100-us-pure-play-uranium-producer-1149.html Fueling the Future? http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/1084/fueling-the-future-1084.html Francoise Faverjon-Fortin,
Vice-President, Infrastructure and Environment, Export Development Canada

"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 Corporation (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." 
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 Corporation (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?
]]> Tue, 10 Apr 2012 08:26:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/1084/fueling-the-future-1084.html Patience & Perseverance http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/1046/patience-perseverance--1046.html "Patience & Perseverance Have a Magical Effect by Which Difficulties Disappear & Obstacles Vanish"--- John Quincy Adams

Dr. Michael Berry

"Yesterday Terraco reported the results of a 19 hole, 4000 meter drill program on its wholly owned Moonlight Basin property in Pershing County, Nevada. The company intersected significant gold of 1.964 grams per tonne gold over 1.5 meters in an interval of 1.386 gpt gold over 3.0 meters from 42.7m - 45.7 meters depth in hole TML-37. In hole TML -36 the company reported .34 grams per ton over 1.5 meters.
 
The good news is that there is gold mineralization at Moonlight. You may remember that drilling in 2008 by Terraco discovered silver. I remember meeting with John Livermore (the discoverer of the Carlin Trend) and Andy Wallace in Reno at the time (former owners of Moonlight). Livermore was a principal of Cordex and identified the Moonlight as a significant target. They both suggested that there would be a great deal of silver on the property...
 
...There are two historic mines on the property, the Moonlight silver mine (formerly called the General Grant renamed in 1864), at one time the most prolific silver mine in the country, and the Pflueger mine to the north near the Moonlight Basin northern property line. 

Remember Ralph Rooney’s admonition, “You find a mine where there’s been a mine.”
 
Subsequent 2008 drilling near historic Phlueger Mine in 2008 discovered 24.4 meters of silver grading 35.31 gpt silver (1.03 ounces), including 10.67 meters of 73.03 gpt silver ( 2.13 opt silver)...

...  Putting these results in perspective requires that Terraco’s investors realize that sometimes drill results come slowly but as they improve they tend to accelerate because of the knowledge gained from the drill. This was the experience of Western Silver in 6 years of drilling at Penasquito in Mexico.

We must also realize that the company has recently added a significant land package that now totals 35 square kilometers. The land will undoubtedly be very attractive, perhaps necessary, for any company that wants to develop Spring Valley or consolidate the district further.

But there is more - Terraco management has acquired royalty positions and options on Royalties (see previous Morning Notes) on the Spring Valley land immediately to the south. We estimate using Black Scholes that these are worth, conservatively, $60 to $70 million in present value to Terraco shareholders. We will know more when we see the Barrick estimates of gold at Spring Valley...

... It was certainly not a home run announcement. Nevertheless it is clear that the much larger Moonlight property is in line (South to North) with:
 
  • Pershing’ Relief Canyon Mine (100,000 plus ounces of gold production), 
  • Coeur’s Nevada Packard Mine, Coeur’s Rochester Mine - (The Rochester mine is one of the great silver mines of the world, having produced more than 125 million ounces since production began in 1986, along with 1.2 million ounces of gold.)
  • Rye Patch’s Lincoln Hill (and Rochester?),
  • Midway / Barrick’s Spring Valley (perhaps ~4 million ounces Au) 
  • Terraco’s Moonlight Property and north to the historic gold mining district of Unionville.
Terraco also has the ~1 million ounce gold resource at its Almaden project north of Boise, Idaho that should see the drill sometime this year. Given the aggressive drilling at Almaden and Moonlight as well as the land acquisitions and royalty deals we think the market may be missing the boat on Terraco Gold.

I own shares in Terraco Gold and I am an Advisor to the company."

--- Dr. Michael Berry

 

Terraco Closes Seymork Land Acquisition at its Moonlight Project (Nevada) 

Terraco Now Controls Over 35 Sq Km of Land at Moonlight Project 

March 21, 2012 Terraco Gold Corp. announced that "further to its news releases dated June 13, 2011 and February 3, 2012, the Company and its wholly owned Nevada subsidiary, TGC Holdings Ltd. ("TGC", and collectively with the Company, "Terraco"), have received TSX Venture Exchange approval of the purchase by TGC from Seymork Investments Ltd. ("Seymork") of certain private fee lands and mineral rights (the "Seymork Properties") in Pershing County, Nevada (the "Transaction"). The Transaction has now closed.
Moonlight Project
The Transaction significantly enhances Terraco's land position to over 35 square kilometres (13 square miles), at its "Moonlight Project" located in Pershing County, Nevada. The Moonlight Project now encompasses over 8,830 gross acres of land and 7,980 acres of net mineral rights, providing Terraco with a larger strategic land package and a better exploration opportunity for its early stage Moonlight Project. Terraco's 100% owned, now consolidated, Moonlight Project is located along trend to the north of and adjoins the "Spring Valley Project". The Spring Valley Project is a joint venture between Barrick Gold Corp. and Midway Gold Corp...  

Terraco Identifies Gold Mineralization at its Moonlight Project   

"March 26, 2012 Terraco Gold Corp.  announced "initial drill results from its 2011 drill campaign at the Moonlight Gold Project ("Moonlight"), located in Pershing County, Nevada, and adjoining the northern boundary of the Spring Valley Gold Project....

Drill Results 

... The fall 2011 drill campaign at Moonlight included approximately 4,000 meters ("m") (13,050 feet ("ft")) of reverse circulation ("RC") drilling in 19 holes, completed by AK Drilling of Butte, Montana, between 24 October and 21 December 2011. Drilling focused on targets related to the northerly extension of the Black Ridge Fault zone and further defined by anomalies from aeromagnetic and ground geophysical surveys (CSAMT/CSIP)...
Assay highlights for the drill program include gold grades of up to 1.964 grams per tonne ("gpt") gold (0.057 troy ounces per ton ("opt")) over 1.5m within an interval of 1.386 gpt gold over 3.0m from 42.7m - 45.7m depth (10ft of 0.040 opt from 140ft - 150ft) in hole TML-37. The best gold mineralization was related to quartz veining encountered within sheared, altered volcanics of the Limerick Formation."

A very favorable Margin of Safety Pattern?
 
Johnston-Sequoia Commentary: 

"Two men looked out from prison bars, one saw the mud, the other saw the stars."
--- Frederick Langbridge

They say beauty is in the eye of the beholder.  This statement hold's a particular amount of weight for Terraco Gold Corp. since January 26th, 2011 (stock closed at $0.47 that day) when Terraco finalized the agreement to merge/acquire Western Standard Metals in a $64,000,000 merger.  The key component of the acquisition was (& is) the 100% owned Almaden (Nutmeg Mountain) Gold Project in Idaho which contains a NI 43-101 MI&I resource of 948,000 ounces of gold within 91 m of surface.  Terraco issued 45 million shares to complete the transaction which equated to $19.67 per ounce of gold in the ground.  Since that time Terraco has traded over 38,634,000 shares at an average price of $0.2963 per share or ~$11,447,000.00 (42% of current market cap) in buying over the past 14 months.
  

Since January 2011 Terraco has amassed the following value creation components: 

 

The net effect of all this value creation by the TEN.V team led by President & CEO Todd Hilditch has resulted in a 57.46% decline in share price since January 26th, 2011.   As many of our readers know - this is exactly the type of pattern we search for in value investing.

Finally, I have spent thousands of hours (literally) studying the market, how it lives & breaths, what cyclical market characteristics may apply to current conditions & where can I find true value. So, in the humble opinion of this writer - Terraco Gold is the right company, in the sector, in the right cycle that we believe may create tremendous value to those who believed in it when no one else did.

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

Your editor at The Moonlight Project - standing along the Blackridge Fault in Pershing County, Nevada.
]]> Mon, 02 Apr 2012 12:29:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/1046/patience-perseverance--1046.html In the Middle of Every Difficulty Lies Opportunity http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/1008/in-the-middle-of-every-difficulty-lies-opportunity--1008.html "As you may know I presented “The Wisdom of the Crowd” last week at our joint Discovery Investing / Murdock Capital seminar in New York City. Sometimes Crowds are wise and sometimes they are “delusional” in their decision making ability.

One year ago QMM shares were trading close to $1.80. They closed yesterday at $0.52. Last Friday it traded 627,000 shares in the U.S. It certainly appears that the market has turned against this company.  In short, the stock is for sale.

This turn of events would be more understandable if the company held no assets or had mismanaged the discovery process. That is most definitely NOT the case.
It holds a project pipeline with several good to excellent assets it has developed. As you know we have a ten factor Discovery model we use to rank companies. Factor 1 is the “world class asset factor.” I am convinced that Quaterra’s Yerington copper project, acquired and developed by CEO Tom Patton over the years, has world class potential.

Recently we learned that Rob McEwen will develop a 12 billion pound, $2 billion copper deposit in Argentina. We believe that Quaterra’s Yerington is as good a project because it is in Nevada and has two former mines (Yerington and MacArthur) on the property. These include an economic and reasonably near term resource of 1.8 to 2 billion pounds of acid leachable oxide copper and chalcocite ore.


Independent analysts (Christopher Ecclestone and GMP) have valued Quaterra’s three pieces of the Yerington “District” at $500 million to $1 billion if and when developed and in production.



If their value estimates are anywhere near the mark, you can understand the potential value of the Yerington, MacArthur and the Bear deposits for shareholders. Quaterra has about 175 million shares outstanding.

 

There are two other QMM assets that may be ready for development or monetization. The Nieves silver project has a 43-101 resource of 85 million ounces of mostly open-pittable silver (cutoff 15 grams) and about 141,000 ounces of ~.1 gram goldi. This property in Zacatecas in the Faja de Plata, could be worth $100 to $200 million. Quaterra owns 50% of the property...

...In addition, Quaterra has valuable strategic relationships with Freeport McMoran on two properties (Tintic Copper and West Texas Moly) and a significant and funded exploration relationship with Goldcorp in Mexico. To some extent Quaterra has become Goldcorp’s exploration arm in Mexico.

I won’t try to estimate a value on QMM’s shares. Suffice it to say that I believe that shares, given the above asset acquisitions and discoveries, are worth more than $0.52, a lot more.
Either investors don’t know the story or they don’t believe it. I am, however, certain that the asset values are significant. We need Quaterra to get the word out in the form of an action plan that these assets can be monetized and that production, especially from Yerington, will be forthcoming – soon.

One danger, of course, is that with its currently depressed share price these assets could be taken away from investors who have been in the stock for years. – including yours truly.
At present investors are making their decisions based on worry, angst and anger. This is understandable. It is evidence of what Nobel Laureate Daniel Kahneman calls our brain’s System 1 knee jerk reaction in his excellent book, “Thinking: Fast and Slow,” a must read.
In the near future the company has indicated that several 43-101 / PEA’s will be forthcoming perhaps in the April time frame. Given the progress at Yerington, Nieves and Herbert Glacier, these announcements should increase the resource sizes and the category in each case.
If the market believes these announcements then they should support the stock.

We think Quaterra management must now come out aggressively and address the market’s current concerns and change its perspective of the company. This will require a bold move by management to perhaps monetize or announce near term (2 year?) production at Yerington.

In his analysis of the Yerington project after a site visit last September, analyst Christopher Ecclestone placed an NAV on all Quaterra’s assets of $1.43 about 3 times today’s price."

--- Dr. Michael Berry

 

A very favorable Margin of Safety Pattern?
Johnston-Sequoia Commentary:

During the financial meltdown of 2008 (at the tender age of 27) I began accumulating what is now our single largest position (many of our readers would be correct in guessing Terraco Gold) at $0.05.  Coming from a very conservative medical family in the Maritimes of Canada any one I would have discussed my investment philosophy with at the time likely walked away thinking I had taken one too many frozen pucks to the head over the years.  In reality - I was accumulating a meaningful share position when everyone else was running for the hills.  Then along comes September 2010 - the LIT.V team (led by Presdient & CEO Todd Hilditch) had just completed the merger of Salares Lithium (TSX.V: LIT) & Talison Lithium (TSX: TLH), creating the world's largest producing Lithium company in a $350,000,000 merger.  More importantly, for shareholders - transformed a $0.23 stock (November 2009) into a $7.50 stock (November 2010) in one year.  During this same time Terraco catapulted from a $0.07 stock to at $0.51 stock seemingly without a breath.  All of the sudden - the very same investment philosophy didn't appear to be quite so foolish to those same individuals.  Now, since the dark days of 2008 - I've been fortunate enough to have a lot a great conversations with an awful lot of folks & my only regret, (literally) was not accumulating Quaterra at $0.50.  As they say - never make the same mistake twice. 

Quaterra's geological management team (led by Dr. Tom Patton) has one of the strongest discovery track records we've seen in this space (we encourage a debate on this perspective).  Discoveries include: 
  • GoldCorp's Penasquito Mine: The largest open-pit mine ever constructed in Mexico (18,170,000 ounces of gold, 1,068,000,000 ounces of silver & 17,575,000,000 lbs of Zinc)  
  • Quaterra's MacArthur Copper Deposit: Contains an expanding measured plus indicated and inferred resource of 2,277,300,000 lbs of copper 
  • Quaterra/Blackberry's Nieves Silver Project: Contains an NI 43-101 measured plus indicated and inferred resource of 85,000,000 ounces of silver
  • Quaterra/Singatse Peak Yerington Copper Deposit: Contains 696,000,000 lbs of copper in the original open-pit with and additional 136,000,000 lbs of copper adjacent to the pit 
  • GoldCorp/Quaterra's Strategic Alliance: The Investment Framework Agreement signed by the companies provides Goldcorp with an option to acquire an interest in any mining properties held by or acquired by Quaterra in central Mexico (except the Nieves silver project) in return for funding a two year generative exploration program through a private placement investment of US$10 million in the Company.  
  • Freeport-McMoRan Copper and Moly Joint Ventures: Cave Peak is considered one of the best and highest grade, undeveloped molybdenum prospects in the U.S. Last year Quaterra signed an earn-in agreement with Freeport-McMoRan Mineral Properties Inc. ("FMMP") of Phoenix, Arizona, in respect of Cave Peak.  In the terms of the agreement, FMMP has the exclusive right and option to acquire a 70% ownership interest in the Cave Peak project by paying 2011 land holding costs on behalf of the Company and by subsequently spending US$5 million on exploration over four years ending in 2015. 

We own shares in Quaterra Resources - As always please do your own due diligence.

]]> Tue, 27 Mar 2012 09:02:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/1008/in-the-middle-of-every-difficulty-lies-opportunity--1008.html Am I Part of the Cure? http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/971/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,flowers, vegetables 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."

 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

"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."
Senesco Adds Additional Clinical Site to Evaluate SNS01-T in Multiple Myeloma
"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." 
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."

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."
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.

 

]]> Mon, 19 Mar 2012 12:22:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/971/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/930/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."

“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

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
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;
  • December 5th, 2011 - Rye Patch announced the staking mining Claims on the Coeur d'Alene Rochester Mine (One of the largest producing silver mines in North America over the past 20 years);
  • December 6th, 2011 - Spring Valley Gold Project advances to Barrick's Development and Mine Site Exploration Group & finally;
  • December 21st, 2011 - Terraco Gold Announces Acquisition of Royalty Option on the Barrick Gold / Midway Gold Spring Valley Gold Deposit, Nevada.  

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

]]> Mon, 12 Mar 2012 15:36:00 -0400 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/930/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/906/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.”


         

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.

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.”



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?
]]> Mon, 05 Mar 2012 12:19:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/906/technological-ascendancy-in-an-age-old-search--0906.html A Tool Belt for the Value Investor http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/866/a-tool-belt-for-the-value-investor-0866.html " Discovery Investing Scoreboard (DiS) employs an investment discipline pioneered and published by Dr. Michael Berry. The philosophy behind DiS is that substantial wealth creation through investment gains is possible by identifying companies with significant potential for capitalizing on major "discoveries", such as new and valuable natural resources, unique technology, or revolutionary products.

The main problem encountered by investors in identifying discovery potential is that traditional tools of fundamental and technical analysis are inapplicable. Most candidate companies are far short of achieving a stable status with predictable performance that lends itself to traditional fundamental analysis. In the majority of cases, companies with discovery potential have little or no revenue and no near-term prospects for revenues.

Even in cases where the company is a mature business with predictable fiscal performance, it may harbor discovery potential in a new product whose impact on the company is unpredictable (e.g., the Apple i-products). Such uncertainty renders most analytical methods useless. Furthermore, the market liquidity of many discovery companies is so low that technical analysis tools provide little insight.

DiS offers a solution to this problem revolving around evaluating a "10-point grid" of criteria, which acts as the cornerstone of the DiS discipline. These criteria represent subjective evaluation dimensions of a company's status, prospects, and potential. As a customer, you input simple word evaluations of these criteria, which allow us to capture and account for the inherent imprecision in human decision-making. Then, our advanced computation engine produces a total score for your company.

Don't know what to score for a particular category? Feel like your data is not trustworthy? Then take advantage of our crowd-sourcing engine, a new feature unique to DiS. Users can "appeal to the crowd" for evaluation of any of the criteria, so you will never have to feel like your evaluation is incomplete. Users also can review the top-level crowd scores for any company.

The DiS model is a thorough approach to company evaluation. With 10 independent criteria, the unique DiS system will change the way you evaluate companies, and give you a powerful new tool for ranking your investment prospects. Don't waste any more time on guesswork; discover the difference that DiS will make in your investment choices."
--- The Discovery Investing Scoreboard
www.discoveryboard.com


Dr. Michael Berry's Bio:

Dr. Berry formerly taught at the Darden School University of Virginia and was a Chaired Professor at James Madison University. He managed money for Heartland Advisors in the Value Investing class before developing the discipline of Discovery Investing. He is a frequent lecturer at the federal reserve and has testified to Congress on natural resource issues in the US and globally. His current research is focused on Value Chain Analysis for industrial infrastructure development.

Dr. Berry publishes Morning Notes by Michael Berry, Ph.D. daily. This publication is distributed to clients worldwide to identify current market opportunities and behavioral anomalies.

I believe the Discovery Investing Scoreboard is currently available on a complementary trial basis:
https://www.discoveryboard.com/register


Value Investing
Value Investing: Investopedia

"  The strategy of selecting stocks that trade for less than their intrinsic values. Value investors actively seek stocks of companies that they believe the market has undervalued. They believe the market overreacts to good and bad news, resulting in stock price movements that do not correspond with the company's long-term fundamentals. The result is an opportunity for value investors to profit by buying when the price is deflated.


Typically, value investors select stocks with lower-than-average price-to-book or price-to-earnings ratios and/or high dividend yields.

The big problem for value investing is estimating intrinsic value. Remember, there is no "correct" intrinsic value. Two investors can be given the exact same information and place a different value on a company. For this reason, another central concept to value investing is that of "margin of safety". This just means that you buy at a big enough discount to allow some room for error in your estimation of value.

Also keep in mind that the very definition of value investing is subjective. Some value investors only look at present assets/earnings and don't place any value on future growth. Other value investors base strategies completely around the estimation of future growth and cash flows. Despite the different methodologies, it all comes back to trying to buy something for less than it is worth." 
--- Value Investing
Value Investing: Investopedia    

Margin of Safety: Value Investing
April 12, 2011
" Buying a stock at a significant discount to its intrinsic value allows the investor to have a “margin of safety...”
...Warren Buffet describes this succinctly, “Price is what you pay. Value is what you get.” The value investor looks to pay a price much less than the value received – and that difference is the margin of safety. In other words, value investing is about buying a dollar for fifty cents – therein lies the margin of safety.
Why is a margin of safety important?
Buying a stock with a significant margin of safety reduces both the likelihood and severity of potential losses...
How do we get a margin of safety?
In order for the gap to narrow, the investor must try to first understand why the discount exists and second, whether there are any catalysts that will help the stock rise to reflect the true underlying value..."
--- Margin of Safety: Value Investing
April 12, 2011

Johnston-Sequoia Commentary:

The purpose for including the definition's for both Value Investing and Margin of Safety is that the Discovery Investing Scoreboard (DiS) can serve as a tool belt for assessing intrinsic value of a company - by employing the "wisdom of the crowd".  DiS is the first advanced mathematical social network of its kind anywhere in the world.
Dr. Michael Berry introduces the concept of utilizing crowdsourcing (the act of sourcing tasks traditionally performed by specific individuals to a group of people or community (crowd) through an open call) in an individuals investment discipline cross referenced with the concept that he has pioneered over the past 10 years known as Discovery Investing.

The DiS is currently available on a complimentary basis  (see weblink below):
https://www.discoveryboard.com/register

The concept of Discovery Investing and Value Investing (along with the study of longwave cycles) lies at the very foundation of our research model. 

"Someone is sitting in the shade today because someone planted a tree a long time ago."
--- Warren Buffett

As always please do your own due diligence.
Overheated?
]]> Mon, 27 Feb 2012 13:23:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/866/a-tool-belt-for-the-value-investor-0866.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/829/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

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.
---IFC – Wikipedia page (http://en.wikipedia.org/wiki/International_Finance_Corporation )

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.
]]> Thu, 16 Feb 2012 12:27:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/829/international-finance-corporation-world-bank-group-invests-in-cte-divoires-mining-sector-for-the-first-time--0829.html Alf Field: New Elliott Wave Silver Discovery http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/794/alf-field-new-elliott-wave-silver-discovery--0794.html New Elliott Wave Silver Discovery
--- Alf Field
Wednesday February 1st, 2012

"I have received numerous emails asking about silver. This article was prompted by a question enquiring what the silver price might be if my gold forecast of $4,500 proved to be correct. The question caused me to take a closer look at silver.

The reason why I have written very little about silver in the past was because the beautiful Elliott Wave (EW) symmetry and predictable relationships visible in gold were not to be found in silver. This article reveals a new EW discovery that proves that EW is alive and well and living in silver.

I first wrote about silver in December 2003 in an article titled “US Dollar Implosion – Part II”.The link to this article is at: http://www.gold-eagle.com/editorials_03/field120503.html. The brief piece on silver was tacked onto the end of that article. In view of its brevity, the 2003 silver piece is reproduced in full below:

SILVER

“In past crises, the wealthy protected themselves by purchasing gold and gold related assets. Ordinary people, by far the greater number, could rarely afford to buy gold. Being far cheaper, they previously had to buy silver. This metal became the poor man’s choice as an asset to protect their savings. Silver has so far lagged gold in the early stages of this bull market, but that situation seems about to change.”

“Throughout recorded history the average relationship between silver and gold has been 15oz silver to 1oz gold. The ratio at present is a far higher 75:1 ($400/$5.30). This is massively out of line. If gold were to double to $800 per oz, it would not be unreasonable to expect the silver/gold ratio to decline sharply, possibly as low as 40:1. With gold at $800, this would position silver at $20.

Thus a 100% increase in the price of gold could possibly be accompanied by a simultaneous 400% increase (perhaps more) in the price of silver. This offers significant opportunities both in silver bullion and silver mining shares.

The above graph of the price of silver has been borrowed from an excellent recent article by Dan Norcini entitled "A Technical Look at Silver – Update". What is quite clear from the graph is that silver’s 22-year bear market down trend has come to an end. As Dan Norcini says, a new bull market in silver has been born. It is difficult to argue against this contention and I have no intention of doing so. A silver price above $6.80 would complete a fabulous head-and-shoulders base formation. With this as a foundation, it would be possible to project a very large rise in the price of silver for the future.” – end of the December 2003 quotation.

Silver did reach $20.68 in March 2008 at the same time that gold peaked at $1003. The silver to gold ratio was thus 48.5 in March 2008. The lowest this ratio has reached SINCE 2001 is about 32, achieved at the end of April 2011 when gold was around $1570 and silver peaked in the $49 area. At that point gold had experienced a 6-fold increase from its bull market starting point of $255 while the silver price rose 12-fold from its starting point of $4 in November 2001. 

The quick answer to the question of what the silver price will be when gold gets to $4,500 is to pick your favorite silver/gold ratio and divide it into $4500. The current ratio incidentally is about 51. If you choose the lowest ratio achieved since 2001 of 32 that would produce a silver price of around $140 ($4500 divided by 32). 

This is not a satisfactory answer, so I decided to approach the Elliott Wave analysis of silver from a different angle. Instead of working upwards using the analysis of the minor waves, which was the technique used in the gold calculations, what if we worked backwards in silver starting with the larger waves?

Gold and silver tend to move in tandem, not in an exact synchronization, but enough to suggest that the Major waves of both metals should coincide from a time perspective. We know that in gold the Major ONE wave peaked in March 2008 at $1003 and that Major TWO declined to $680 in November 2008. 

Silver also had a peak in March 2008 at $20.68 and declined to an important low of $8.77 in November 2008. If we assumed that the peak at $20.68 in March 2008 was the end of Major ONE and the decline to $8.77 the end of Major TWO, how would the various percentages work out? When I did these calculations I was astonished at the relationships and wave counts that emerged.

The chart below is the monthly spot silver price shown in log scale so that the percentage changes are visible. The bull market started in November 2001 at a price of $4.02. From that point to the suggested peak of Major ONE at $20.68 there are five clear waves visible, marked 1-2-3-4-5. The prices at the various turning points are also displayed.


The analysis of the suggested Major ONE wave is set out in the body of the chart. The typical impulse wave relationships are immediately apparent. Both corrective waves 2 and 4 are similar (-33.7% and -35.9%). Whenever two corrective waves are similar it is a signal that they are part of the same larger wave structure. On its own, this fact would confirm that the 5 wave move from $4.02 to $20.68 was a complete wave of larger degree.

There is further corroborating evidence. Waves 1 and 5 are similar at +106% and +115%, a usual EW feature. Wave 3 should be the longest wave, and it is at +171%. In addition, if one multiplies the gain in wave 1 of +106% by 1.618 it produces 171.5%, exactly the gain in wave 3. These relationships are evidence that the rise from $4.02 to $20.68 is a completed impulse wave and that we can call it Major ONE.

Having completed this 5 wave up move, the next correction in Major TWO would be expected to be one degree larger than the two corrections of 33.7% and 35.9% in Major ONE. As shown on the chart, Major TWO declined from $20.68 to $8.77, a loss of -57.6%. The two corrections of 33.7% and 35.9% are close to the Fibonacci 34. The next higher number in the sequence is 55, close to the actual decline of 57.6% in major TWO. Incidentally, if we take the 35.9% decline and multiply it by 1.618, it gives a figure of 58%, very close to the actual decline of 57.6%.

These relationships suggest that silver has completed the same shaped bull market as gold has and that it is at the same stage in its development. Thus silver has probably also completed the first intermediate up wave of Major THREE, in this case from $8.77 to $49.52, a gain of +$40.75 or +464% and has also completed intermediate wave 2 of Major THREE, being the decline from $49.52 to $26.39 or -47%.

How does this decline of -47% measure up in terms of EW relationships? As with gold, where the corrections in Major THREE were shown to be larger than the corrections in Major ONE, the same applies to silver. The corrections in Major ONE shown in the chart above were close to -34%. If we multiply 34% by another Fibonacci relationship of 1.382 we get 47%! 

This is mind-blowing stuff for an analyst who did not believe that EW applied to silver!
We can now attempt to make some price forecasts. Silver, as with gold, is starting intermediate wave 3 of Major THREE, which should be the longest and strongest wave in the bull market. It should certainly be longer than intermediate wave 1 which was the gain from $8.77 to $49.52, or +464%, as shown above. 

Thus the gain in wave 3 of Major THREE should be larger than +464%. It should be a gain of at least 500%. Starting from the $26.39 low, a gain of 500% would produce a target price of $158.34 for silver. That is the number which equates with the $4500 price forecast for gold and produces a silver to gold ratio of 28.4 ($4500 divided by 158.34).

The gain in gold was forecast to be 200% for this move while the forecast rise in the silver price is 500%. Silver is again predicted to perform better than gold based on these EW calculations.

A word of caution is appropriate at this stage. All EW studies are based on probabilities. While the wave counts may provide a high degree of confidence in the forecasts, one cannot be 100% certain of any forecast. It is necessary to have a point at which it is obvious that the forecasts are wrong. In the case of this silver study, the line in the sand is at $26.00. If the silver price drops below $26.00 the odds are that the above calculations will not work out. 

A further word of caution: silver is not for the faint hearted. Silver is considerably more volatile than gold and the corrections are much larger. Silver corrections can and do happen quickly. They are emotionally gut-wrenching and it is easy to get shaken out of one’s position near the bottom of a large correction."

--- Alf Field
Wednesday February 1st, 2012 

 Johnston-Sequoia Commentary:

Alf Field leverages John Steuernol's Law's of Influence (Scarcity & Knowledge Supremacy) masterfully, as he rarely speaks publicly and when he does he has been right on the mark every time since 2001. 

Question; "If Sprott is correct about silver being the "investment of this decade" - why is it the investment of choice?"

We would like to begin to answer that question by asking one of our own - who has been the most affected by the economic downturn?  

The answer is of course - ordinary people and that is because (as quoted above) “In past crises, the wealthy protected themselves by purchasing gold and gold related assets. Ordinary people, by far the greater number, could rarely afford to buy gold. Being far cheaper, they previously had to buy silver. This metal became the poor man’s choice as an asset to protect their savings. Silver has so far lagged gold in the early stages of this bull market, but that situation seems about to change.”  

The fact of the matter is, as Jack Johnson has said in his song Sleep through the Static - "We've gone beyond where we should have gone".  Printing/borrowing money that we don't have (i.e has not been created with real thing's or innovation's) for years has a clear and unavoidable consequence - it doesn't exist.  Therefore we need to heal our monetary system and that begin's by insuring that the currency we utilize (and more importantly trust) is backed by real thing's.  As always please do your own due diligence.

Please see clip below as precious metals may begin to attract the attention of mainstream media in 2012:

 

]]> Thu, 02 Feb 2012 09:01:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/794/alf-field-new-elliott-wave-silver-discovery--0794.html Kootenay Gold’s Greatest Hits http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/793/kootenay-golds-greatest-hits-0793.html Kootenay Hit’s 471 gpt Silver, 9.42% Lead+Zinc over 18 Meters in NE Zone and 118 gpt Silver, 0.76% Lead+Zinc Over 17 Meters in SW Zone at Promontorio

Kootenay Gold 2012-02-01 Press Release

Kootenay Gold Inc. (TSX.V: KTN | US: KOOYF) announced significant assay results today from 6 drill holes on its Promontorio Silver Project in Sonora, Mexico.

“The Company reports the multi-rig diamond drilling program continues to yield high-grade results, while demonstrating continuity of silver mineralization in the top priority Southwest and Northeast zones across the property’s central 1km mineralized corridor.”
--- Kootenay Gold 2012-02-01 Press Release

Highlights of  Northeast (NE) Zone drilling include:
  • DH 110 in the Northeast Zone hits 18 meters of 471 gpt Silver, 9.42% Lead+Zinc within 71 meters of 149 gpt Silver, 3.46% Lead+Zinc 
  • The high-grade intercept in DH 110 included 4.5 meters of 646 gpt Silver, 11.67% Lead+Zinc and a separate 4 meter interval of 667 gpt Silver, 9.21% Lead+Zinc          
Highlights of Southwest Zone drilling include:
  • DH 106 hits 535 gpt Silver, 3.29% Lead+Zinc over 4 meters 
  • DH 105 hits 17 meters of 118 gpt Silver, 0.76% Lead+Zinc In the Southwest Zon
  • DH 105 included two higher grade intervals of 310 gpt Silver, 1.91% Lead+Zinc over 4 meters and 287 gpt Silver and 1.48% Lead+Zinc over 2 meters 
To view map of drill hole locations please visit:
http://www.kootenaygold.ca/i/projects/Promontorio/drillresultsmap.pdf

“We continue to encounter multiple high-grade silver intercepts in the Northeast Zone and the Southwest Zone which once again underscores the strength and large upside potential of Promontorio’s diatreme breccia hosted mineral system. We could not be more enthused and optimistic with results from the current multi-phase program. Approximately 4000 meters of drilling remain to be completed in the 25,000 meter drill program, following which time geologic modeling and a NI 43-101 resource update will be completed.” 
--- James McDonald, President & CEO 
 
Johnston-Sequoia Commentary:

If we can for a moment reflect on the dark days of 2008 (most would include 2011 as well) we find a company that has consistently found a way to systematically grow the companies 100% controlled lead asset - Promontorio.  KTN has rewarded shareholders with a 286% return since its last major correction back in August of 2010.  As you can see from the chart above Kootenay not only consolidated its shareholder base in 2011 but also outperformed essentially every silver explorer in Mexico.  On December 22, 2010 KTN added Sprott Asset Management (5,960,000 shares) to its shareholder list (representing 13% its 45,400,000 shares issued and outstanding) and has not looked back since. Please see Sprott's take on silver below: 

 



As many of our readers know, Kootenay Gold is our top overall silver pick.  As always please do your own due diligence.  We are advisors to Kootenay Gold.
]]> Wed, 01 Feb 2012 08:58:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/793/kootenay-golds-greatest-hits-0793.html Terraco Gold Reports Final Results of 2011 Drilling Campaign at Almaden http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/774/terraco-gold-reports-final-results-of-2011-drilling-campaign-at-almaden-0774.html
After a Successful 2011 Drill Program at the Almaden Project Terraco Plans for Exploration Advancement in 2012
January 18th, 2012  
Terraco Gold Corp Press Release  

 

Terraco Gold Corp. (TSX.V: TEN | US: TCEGF) announced assay results from the last 6 core holes of the 2011 drill program completed at its Almaden Project in Washington County, Idaho. Core drilling at Almaden for these and other holes in the 2011 season continued to encounter significant gold mineralization from surface to 91 metres (300 feet), including drill holes in the main resource area that showed improvement over the average gold grade of the Almaden deposit.
Highlights Include:
  • Hole TAL-763C intersected 54.9 metres (“m”) averaging 0.778 grams per tonne (“gpt”) gold from 15.2 m to 70.1 m (180 feet averaging 0.023 Troy ounces per short ton (“opt”) gold from 50 to 230 feet), including 21.3 m averaging 1.068 gpt gold to 38.1 m (70 feet of 0.031 opt gold to 125 feet).
  • Hole TAL-765C intersected 22.9 m averaging 0.936 gpt gold from surface (75 feet of 0.027 opt gold), including: 7.6 m averaging 1.586 gpt gold to 16.8 m (25 feet of 0.046 opt gold to 55 feet).
    •   
  • Hole TAL-761C intersected 33.5 m averaging 0.786 gpt gold from 27.4 m to 60.9 m (110 feet of 0.023 opt gold from 90 to 200 feet), including: 7.6 m averaging 1.161 gpt gold to 53.3 m (25 feet of 0.034 opt gold to 175 feet).
  • Hole TAL-762C intersected 35.1 m averaging 0.797 gpt gold from 3.0 to 38.1 m (115 ft of 0.023 opt from 10 to 125 feet) including 1.5 m of 1.250 gpt gold to 4.6 m (5 feet of 0.036 opt to 15 ft).
2011 Drill Highlights and Program Summary
  • Hole TAL-751C intersected 53.3 m averaging 1.083 gpt gold from surface (175 feet averaging 0.032 opt gold). This intercept includes the following: 27.4 m averaging 1.595 gpt gold to 33.5 m (90 feet of 0.047 opt gold to 110 feet); and 12.2 m averaging 2.225 gpt gold to 19.8 m (40 feet of 0.065 opt gold to 65 feet).
    •   
  • Hole TAL-752C intersected 85.4 m averaging 0.840 gpt gold from 9.1 m to 94.5 m (280 feet of 0.025 opt gold from 30 to 310 feet).
    •   
  • Hole TAL-759C intersected 50.9 m averaging 1.09 gpt gold from 10.7 m to 61.6 m (167 feet averaging 0.032 opt gold from 35 to 202 feet), including:4.6 m averaging 1.824 gpt gold to 61.6 m (15 feet of 0.053 opt gold to 202 feet); 10.7 m averaging 1.163 gpt gold to 30.5 m (35 feet of 0.034 opt gold to 100 feet), with 4.6 m averaging 2.198 gpt gold to 30.5 m (15 feet of 0.064 opt gold to 100 feet); 13.7 m averaging 1.118 gpt gold to 50.3 m (45 feet of 0.033 opt gold to 165 feet); 8.3 m averaging 1.954 gpt gold to 61.6 m (27 feet of 0.057 opt gold to 202feet), with 1.5 m averaging 5.27 gpt gold to 56.4 m (5 feet of .0154 opt gold to 185 feet).
Map of drilling collars to date are contained in the link below:


Almaden Gold Resource

The National Instrument 43-101 compliant resource for Almaden is summarized below.
  • Measured resource of 239,000 ounces of gold (10,810,000 tons grading 0.022 opt);
  • Indicated resource of 625,000 ounces of gold (32,240,000 tons grading 0.019 opt);
  • Inferred resource of 84,000 ounces of gold (5,270,000 tons grading 0.016 opt); and
  • Total gold resource of 948,000 ounces (48,320,000 tons grading 0.020 opt).
Johnston-Sequoia Commentary:

Terraco's geological management team led by Charlie Sulfrian, Ken Snyder and Bill Snoddy continue to deliver on their objectives at the Almaden Project.  This $37 million market cap company hosts a geological roster which includes; Charlie Sulfrian's wealth of experience at Barrick's flagship mine (as Chief Chemist & Chief Geologist during his 19 years at Goldstrike),  Ken Snyder's experience with Franco-Nevada & Newmont at the Ken Snyder "Midas" Mine (which also happens to be similar type geological system to the Almaden Project) and Bill Snoddy's experience with Phelp's Dodge. Terraco may hold the top geological management team in the junior gold exploration space (we welcome & encourage a debate on this statement).
            
The 2011 exploration program was a successful one. Utilizing exclusively core drilling at the Almaden Project has proven valuable as the grade has continued to improve in holes proximal to historic drilling.  Terraco is now taking the appropriate steps to bring the Almaden Project into a production decision.  In addition, Terraco tacked on a non-dilutive $5 million cash infusion as part of their blockbuster deal on the royalty option at Spring Valley.  Furthermore, the deal included a first right of refusal (by the private equity firm) on financing the Alamden Project to commercial production.

The Terraco project portfolio out the gate in 2012 includes:
  • An NI 43-101 measured plus indicated and inferred resource of 948,000 ounces of gold within 91 m of surface at the Almaden Project (before 2011 drilling has been incorporated).
  • An option to purchase up to 2.5% net smelter royalty on Spring Valley  (a Barrick Gold led gold project) in Nevada - which grew by 186% in 2011 to 3,450,000 ounces of gold (still open to the north towards Terraco's Moonlight Project and at depth).
  • The Moonlight Project which has returned assay's up to 211 gpt silver on a project that has previously never been tested. Moonlight remains the last untested area along the "string of pearls" contained in the Humboldt range just off of the I-80 in Northwestern Nevada.  2012 will begin to reveal what exists north of Spring Valley.  
Drill Rig test's a Target along the Black-ridge Fault
Terraco's Chief, Todd Hilditch has put together one of the strongest combination's of management and asset's we have seen in the gold exploration space. As always - please do your own due diligence. We are advisor's of Terraco and own share's in the company.

]]> Thu, 19 Jan 2012 09:49:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/774/terraco-gold-reports-final-results-of-2011-drilling-campaign-at-almaden-0774.html President Ron Paul? http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/756/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
http://politicalticker.blogs.cnn.com/2011/05/05/cnn-poll-still-no-front-runner-in-the-battle-for-the-gop-nomination/ 


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. 

]]> Thu, 12 Jan 2012 16:25:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/756/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/704/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. (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 dilution.  Furthermore, 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

"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


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. 

 

]]> Thu, 22 Dec 2011 15:02:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/704/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/698/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. 

]]> Tue, 06 Dec 2011 09:20:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/698/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/697/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.

 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.

]]> Mon, 05 Dec 2011 09:15:00 -0500 http://www.proactiveinvestors.com/columns/johnston-sequoia-capital-corp/697/rye-patch-expands-oreana-trend-holdings-stakes-mining-claims-on-existing-gold-and-silver-resources--0697.html