Life in Perspective: Murray Pezim

by James Kwantes, World of Mining

“Murray Pezim lives somewhere beyond Outrageous. To get there, drive to Crazed, keep going toward Bonkers via Berserk, then slow at Around the Bend and look for signs.” Sports Illustrated’s Douglas S. Looney

Murray Pezim

The Pez and three fans (Alex Waterhouse-Hayward photo)

“Pezim had taken them on a ride to nowhere, but what fun they had had.” The Vancouver Sun’s David Baines

He was like a character out of a Tim Burton movie or a Bob Dylan song. And had The Pez caught wind of such a character, he likely would have upped the ante.

Murray Pezim promoted Vita Pez rejuvenation pills and helped put Hemlo and Eskay Creek, premier Canadian gold deposits, on the map. He flogged cassette greeting cards and backed Stampede Oil and Gas, which owned a piece of a huge Canadian gas field.

He made, then lost, fortunes – several times.

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Ross Beaty’s Lumina Copper Update

by James Kwantes

That thud you heard yesterday was Lumina Copper stock dropping a further 8.5% onnews that its strategic review process has yet to land a buyer for the company’s Taca Taca copper-gold-molybdenum deposit in Argentina – not the easiest place to do business. It wasn’t the NR expected by takeover-hungry investors, who took the stock down hard. Yesterday’s prevailing market funk didn’t help matters.

The price action is further proof – if any was needed – that investing in the junior mining sector is not for the faint of heart. Since I wrote up Lumina Copper one month ago, shares have risen as high as $11.87 and fallen as low as $8.60, yesterday’s low point.

However, nothing much has changed. Mining legend Ross Beaty remains at the helm with 23.7% of outstanding shares (he controls a further 3.3% of S.O. through Lumina Capital Limited Partnership). Taca Taca is still one of the world’s largest undeveloped copper deposits and the infrastructure is excellent, with easy access to power, water supply, a rail line and port facilities. Tuesday’s news, translated, is this: Ross Beaty didn’t get the price he wanted.

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Torex puts Guerrero back on the gold map

Torex Gold (TXG) put the Guerrero gold belt back on the map earlier this week with a monster $350-million bought deal financing underwritten by BMO Capital Markets and others. In a junior mining sector that has been on the ropes for much of the year, it’s an impressive cash pile.

Torex’s Morelos deposit has 5.4 million ounces of gold in all categories and is down the road from Goldcorp’s (G) Los Filos mine, which is projected to produce 345,000 ounces of gold in 2012. Torex would have already been a big pill to swallow for any gold producer, so the financing effectively moves the company out of the realm of takeover candidates.

That leaves Newstrike Capital (NES) and its Ana Paula deposit, which I wrote about here. Before the year ends, Newstrike is expected to publish a maiden NI 43-101 report outlining more than 3 million ounces of gold in a high-grade breccia and a lower-grade zone. It will be the culmination of 2 years of drilling that has produced impressive intercepts such as these, the most recent results, which included 76 metres of more than 10 g/t gold.

Vancouver Mining Richard Whittall

Newstrike CEO Richard Whittall

Newstrike CEO Richard Whittall was interviewed by Andrew Bell on BNN Wednesday and he was quick to establish that Newstrike doesn’t plan to join Torex on the production path: ”Our company is all about exploration. We’re not a production company.”

Another key difference between TXG and NES — not mentioned on BNN, but significant — is that Torex’s deposit is harder to get at and therefore more expensive to mine. Morelos is underneath a mountainside, while Ana Paula is on level ground and near-surface, which should lower the strip ratio.

I liked Whittall’s answer to Bell’s question about location risk in Guerrero, identified in reports such as this as one of the most dangerous provinces in the ongoing drug war between rival gangs. Whittall reiterated that key Newstrike managers have spent the past 18 years in Guerrero and noted that there was “no security at the project” — a comment that seemed to catch Bell off-guard.

It’s worth noting, however, that Goldcorp is building an airstrip at Los Filos so it won’t have to transport gold bars out by road.

Here’s the interview:

Disclosure: I own shares in Newstrike Capital. This is not investment advice, and all investors should do their own due diligence and consult a licensed investment advisor. Please read my disclaimer.

Life in Perspective: Norman Bell Keevil

Norman Bell Keevil (Canadian Mining Hall of Fame)

By James Kwantes, World of Mining

Second in a series (Read Part 1 here)

“Opportunity can go by in a day.”
Norman Bell Keevil, Sr.

Norman Bell Keevil was born on a Saskatchewan farm in 1910. In his first life, Keevil was an academic, studying math, chemistry and geology at the University of Saskatchewan before getting his PhD at Harvard. His pioneering work in uranium and thorium was of such quality that he got an invitation to work on the Manhattan Project.

That didn’t pan out. And in his second life, after he had made the switch from academia to the business world, few of the things he built blew up – even in the volatile world of mining exploration and mine-building. Keevil was president and CEO of Teck from 1963 to 1981, when he became chairman. By that time, the company was a mining powerhouse producing gold, copper, zinc, coal and molybdenum.

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Alvo von Alvensleben, Vancouver’s first stock promoter

Starting an investing blog covering the junior mining sector requires some preparation. So I trekked up Howe Street and east on West Georgia to the Vancouver public library, where I borrowed Fleecing the Lamb: The Inside Story of the Vancouver Stock Exchange, by David Cruise and Alison Griffiths.

Published by Douglas & McIntyre in 1987, two years before Forbes magazine dubbed Vancouver the “scam capital of the world,” the book’s pages are populated by hucksters, Houdinis and a species of wolf native to Howe Street. The Vancouver Stock Exchange existed, the authors argued, to serve itself and fleece investors, even if the occasional gold nugget turned up in the blizzard of paper blasted out by VSE issuers.

Vancouver Stock Exchange

Vancouver Stock Exchange

Twenty-five years later, much – and little – has changed. The VSE has been absorbed into the TSX Venture Exchange and regulation has improved. Vancouver has cleaned up its act and is recognized as a global centre of mineral exploration excellence. But every now and then, uncomfortable echoes of the past emerge: a gold junior proclaiming imaginary ounces, a geologist salting assays or the latest pump-and-dump scheme that has relocated south of the border.

And now, as then, Howe Street remains an address where smart speculators can profit handsomely.

Also featured in Fleecing the Lamb are prospecting and trading legends who still inspire awe, Vancouver power players who discovered mines and built fortunes.

With gold poised to continue its ascent as the hum of central bank printing presses gets louder, World of Mining will feature in coming days some of Howe Street’s more colourful characters. For if, as Mark Twain stated, history rhymes, it’s time to shine a light on a well-travelled street that’s about to get some more traffic.

Gustav Konstantin (Alvo) von Alvensleben

Born into German nobility, the leisure-loving von Alvensleben arrived in Vancouver in 1904 virtually penniless. But he found another gear in his new homeland, as well as a restless ambition and the ability to leverage his charisma into cash flow. He worked as a travelling merchant throughout the Fraser Valley, shot game that he sold to the Vancouver Club and high-end city restaurants, and bought a fishing boat in 1905, which he used to cash in on one of B.C.’s greatest salmon runs. Von Alvensleben married Edith Mary Westcott, a Ladner woman.

Gold brought him to Vancouver, but he soon discovered that the real gold mine was real estate. Von Alvensleben set up shop on Granville under the name Alvensleben Finance and General Investment Co. He then “marched into the office of the editor of the Vancouver Sun newspaper and imperiously demanded an open-ended account,” according to Fleecing the Lamb. “ ‘Credit?’ asked the bemused editor. ‘For how long, and to what limit?’ ‘Forever,’ Alvo shouted. ‘And no limit.’ “ (He got 90 days of credit).

Von Alvensleben was a mysterious, flamboyant addition to a sleepy Vancouver Stock Exchange when he bought one of the first seats on the fledgling exchange. Rumoured to be Kaiser Wilhelm’s man in North America, he turned his European charm into a flood of money from financiers in both Vancouver and Europe.

Man to Man

December 1910 ad in Man to Man magazine. Special Collections, VPL (via MichaelKluckner.com)

A pioneer on several fronts, von Alvensleben’s first promotion was a company drilling for oil in the Athabasca tar sands, and he was soon backing timber, fishing and coal mining companies. With impeccable timing, he made a fortune in Vancouver’s real estate boom between 1908 and 1912, by which time he’d built a fortune estimated as high as $25 million (the equivalent of $500 million in 2012 dollars).

Along the way, he financed the Dominion Trust building at Hastings and Cambie and the Wigwam Inn at Indian Arm, whose guests included John D. Rockefeller and John Jacob Astor. Von Alvensleben moved his family into a Kerrisdale estate on West 41st Avenue that is now Crofton House, a private girls’ school (there is no mention of Alvo on the school website’s History page).

But 1913 brought recession to Vancouver, and falling housing prices drove the leveraged tycoon overseas to raise more money. World War I broke out during one such trip to Europe, and von Alvensleben’s German connection worked against him. His Canadian properties were seized by the Custodian of Enemy Property and he retired to Seattle, where he dabbled in the stock market and property development.

Von Alvensleben later returned to B.C. to mine a small placer deposit in the north, but his fortune was gone. “We were always a very poor family,” Alvo’s son said of the family’s later years in the U.S.

Source: World of Mining

Robert Friedland and Steve Jobs: How one billionaire influenced another

Robert Friedland Mining Entrepreneur Robert Friedland returned to the mining spotlight with a vengeance this week on news of IPO plans for Ivanplats, his private company with copper and zinc projects in the Congo and platinum and nickel projects in South Africa. Friedland showed his Midas touch with the discoveries of Voisey’s Bay nickel deposit in Canada, purchased by Vale, and the Oyu Tolgoi copper-gold mine in Mongolia, now controlled by Rio Tinto.

As one money manager told Bloomberg, when it comes to finding and developing world-class mineral deposits, “I would never bet against him.”

Ivanplats is expected to raise about $300 million in the IPO, down from a planned $1 billion. Friedland’s plans are a bold gambit, even for him — the Democratic Republic of Congo seized copper assets from First Quantum Minerals and South Africa is in the grip of turmoil and clashes between miners and mining companies.

But the Ivanplats IPO was overshadowed this week by even bigger business news: Apple’s release of the much-hyped iPhone 5.

Steven Paul Jobs

Steve Jobs died almost a year ago, on Oct. 5, 2011. But his legacy, marketing flair and genius for innovation live on in the iGadgets that continue to pad Apple’s bottom line, making it the world’s most valuable public company.

One business visionary expert at identifying valuable mineral deposits in far-flung locations and making them mines.

The other, a genius at identifying — even creating — future technological trends and products.

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Quebec’s PQ election win and implications for mining

The Parti Quebecois’ narrow election victory yesterday gave the province’s long-suffering separatists something to cheer about – at least until deadly gunfire from a lunatic introduced tragedy as Pauline Marois celebrated her political party’s win.

The election outcome, not to mention the gunfire, likely put a bit of a scare into people – especially outside Canada – who weren’t paying attention. But even that was muted: despite the mix of gunplay, politics and separatism, by late-morning the story had been relegated to the bottom of nytimes.com‘s World page.

Charles de Gaulle

Charles de Gaulle

As watershed moments go, it hardly compares to Charles de Gaulle’s1967 declaration of “Vive le Quebec libre!” in Montreal (he cut short his visit and flew back to France two days later) or the 1995 referendum, which the sovereigntists came within a whisker of winning (with a vague, convoluted question).

What does the PQ’s minority government mean for miners and mining exploration projects in the province?

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Sandstorm Gold: An eventful week and plenty of dry powder

by James Kwantes

Lots of action this week for Sandstorm Gold (SSL), a gold streaming company I wrote about in my first blog post. On Monday, CEO Nolan Watson rang the opening bell as shares of Venture-listed Sandstorm opened on the New York Stock Exchange under the ticker SAND.

Shares had closed at $9.73 the previous Friday in Toronto and closed at $10.24 Monday before charging up to the $10.75 level Tuesday, where they stayed until the Wednesday close. That’s when Sandstorm announced a $75-million bought deal financing that was increased to $130 million the next morning. As the market digested the terms of the financing — units priced at $10, including one share and one-third of a warrant — the stock crashed down to the $9.60 level ($9.67 close today).

It may not have felt like it for shareholders this week, but the financing is great news. Combined with its $50M line of credit and $25M in cash, Sandstorm’s coffers are now bulging with more than $200M in dry powder that management will likely put to good use. (Perspective: By my calculations, the company’s entire market cap was about $200M in the summer of 2010.) The coming weeks could be interesting for news flow.

In my Monday post, I suggested it might be wise for existing shareholders to take some profits after this year’s 75% appreciation in the share price: Existing shareholders who have profited from SSL’s rise may want to take a page from Watson’s book and consider moving some capital over to SND, which is an earlier-stage, riskier play in the same streaming business. Sandstorm Gold shares are trading at 52-week highs, but the stock’s chart shows that pullbacks typically follow price spikes.

Shareholders who did that now have the opportunity to pick up shares at a $1 discount. And I suspect that new shareholders who bought in the $10s and have some patience will also be rewarded.

Below are links to a couple of TV interviews Nolan Watson did this week. I don’t think he’s building the company to flip it, but one detail from the BNN segment that I found quite interesting was that larger competitor Franco-Nevada owns shares of Sandstorm Gold. I also liked his reply to the question about a TSX listing (Take that, Toronto!).
On Fox Business
On BNN

Finally, the gold price went on a run this week after bouncing around between $1,550 and $1,650 since early May. The yellow metal closed at $1,671 US an ounce.

Disclosure: I own shares in Sandstorm Gold and Sandstorm Metals & Energy.

Shelter from the storm

by James Kwantes

Purple Lightning

Looks a bit like the TSX Venture lately …

“In a world of steel-eyed death and men
Who are fighting to be warm,
Come in, she said, I’ll give ya
Shelter from the storm.”

Bob Dylan, Blood on the Tracks (1975)

by James Kwantes

Steel-eyed death? Not quite, but speculative investors are bruised and bloodied.

And Venture investors are certainly fighting to keep their portfolios warm – ie. retaining a pulse – after a near-nuclear winter that has seen the TSX Venture Exchange drop about 27% from this year’s high-water mark and plunge more than 63% from 2007 highs.

Gold, meanwhile, has bounced around between $1550 and $1650 an ounce, confounding both goptics (gold skeptics) and gogs (gold bugs).

It’s a hell of a time to be running a company with the words “storm” and “gold” in its name, but Nolan Watson is doing just fine. Shares of Sandstorm Gold (SSL), the Venture-listed gold streaming company where he is president and CEO, are up about 65% year-to-date and began trading today on the New York Stock Exchange (SAND).

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