Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
As a general rule, the most successful man in life is the man who has the best information
Over the last few years some of the biggest wins in the market have come from gold plays in Africa. The one-time forgotten continent is now one of the hottest places in the junior mining world.
Recent success stories such as:
-Red Back Mining (TSX -RBI) $3.50 – $30.00 800% Gain
-Semafo (TSX – SMF) $2.00 – $9.00 450% Gain
-Keegan Resources (TSX – KGN) $1.00 – $5.00 500% Gain
-Canaco Resources (TSX.V – CAN) $0.10 – $2.00 2000% Gain
have the investment community ripe with confidence and excitement.
The Kinross acquisition ($7.1Bn deal) of Red Back Mining has cemented Western Africa in investor’s minds as a good place to be invested. Now Edgewater Exploration TSX.V – EDW is positioned to benefit from the excitement and they have the most important things I look for in a potentially successful company:
Management
President & CEO – George Salamis built Rusoro Mining into a company with a 17m oz gold reserve
Director – Patrick Soares took Brett Resources from a $0.10 company to over $5.00 in a recent Osisko buyout
Featherstone Capital – Edgewater’s financial advisors – put together Terrane Metals from scratch and Terrane just got purchased by Thompson Creek Minerals in a $650M deal.
Share Structure
– Only 26m out
– Red Back (now Kinross) has 7.5%
– 60% held between management, insiders and RBI
Of course, no company can enjoy real success if they don’t have the goods in the ground.
Projects
EDW’s advanced stage Spanish asset gives the company a solid base to build off of. The resource was recently updated to 1.2m oz (M&I + Inf.) @ 1.7 g/t average and is open along strike and at depth.
But the Spanish asset isn’t what caused a commentator on BNN to call them a “Red Back Mining Junior.” No, what has everyone talking about Edgewater’s potential is the Enchi Gold Project in Ghana – formerly Red Back Mining’s top exploration target. If the RBI buyout only validated one thing, it’s that they know Ghana and can pick the right properties to work on.
EDW is earning into Enchi for a 51% stake. The project is located within the Bibiani Shear Zone (over 40km of strike length) and is comprised of 16 separate mineralized zones. For those unfamiliar with gold mineralization in Ghana this is how many of the big mines are made up – Red Back’s Chirano Mine is comprised of 11 gold deposits spread along 9km of strike length.
The Boin Gold Zone (within Enchi) has itself seen over 80 drill holes return over 1 g/t Au, highlighted by:
-30m of 1.92 g/t Au
-33m of 2.1 g/t Au
-16m of 2.26 g/t Au
The Nyamebekyere Gold Zone is highlighted by:
-11m of 3.6 g/t Au
-16m of 1.83 g/t Au
Another zone, Eradi Central, assayed 37m of 1.47 g/t Au in trenches.
Overall, the company’s goal is to delineate a multi-million ounce deposit by Q1 2011. And it looks to this author as if Red Back really believed this will happen – after all, they own 5 million warrants in EDW that can only be exercised if EDW reports a 43-101 resource of at least 3m ounces.
Evidence of the excitement in the markets over EDW and gold mining in Ghana can be seen in the recent movement of its stock price – when RBI announced they were being bought by Kinross the stock ran up 50%.
Conclusion
Edgewater has everything that I look for in a company:
Ghana gold and Edgewater Exploration TSX.V – EDW should be on every investors radar screen.
Are they on yours?
Richard (Rick) Mills
[email protected]
www.aheadoftheherd.com
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Richard is host of aheadoftheherd.com and invests in the junior resource sector. His articles have been published on over 200 websites, including: Wall Street Journal, SafeHaven, Market Oracle, USAToday, National Post, Stockhouse, Casey Research, 24hgold, Vancouver Sun, SilverBearCafe, Infomine, Huffington Post, Mineweb, 321Gold, Kitco, Gold-Eagle, The Gold/Energy Reports, Calgary Herald, Resource Investor and Financial Sense.
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This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified; Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.
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