-- Posted 8 July, 2005 | |

Pennaluna Prospector: Northwest Mining Stock News -- Coeur d’ Alene, Idaho --
July 4, 2005

Buoyed by decent metals prices, Northwest miners are busier this summer than they’ve been in a month of Sundays. 

Yet there is all the excitement of drying paint in the slow downward drift of many of the stocks. 

Some commentators say this is a normal consolidation after the first leg of a metals bull market.  They expect the bull to run some more, and we tend to agree.  The big question is when.  Guesses range from any day now, to year-end or later.

Whatever the timing, most mining stocks won’t rise dramatically until new money shows up.  Dyed-in-the-wool hard asset fans are already fully invested.  Thus, cash to fuel a broad rise must come from people, funds and institutions that haven’t participated yet… or that hopped in and out of the sector earlier but haven’t participated recently.

We think this process could start later this year, as the consequences of globalization and emerging markets, debt, terror, energy and the move toward tangible assets become clearer -- and the “hot money” picks up the scent of a sector ready to roll again. 

We expect a trickle of new money to grow into a moderate, though not enormous, stream.  Since the mining sector is so tiny compared to the overall market, even a modest tide of new investment could quickly lift most mining ships, as it has periodically over the past three or four years. 

If we’re right, today’s doldrums offer a choice buying opportunity.  (But remember: “to err is human.”)

While we wait for the tide to come in, here’s some of the news up in our neck of the woods:

* *  Coeur d'Alene Mines (NYSE:CDE) recently received the final permit for its Kensington gold mine in Alaska and says it will start construction in July.  The firm is already working on the $135 million San Bartolome silver project in Bolivia, and has appointed Jim Duff to honcho it as president of its Bolivian subsidiary.  Jim’s been around mining for nearly 40 years and involved with San Bartolome since 1999.  

CDE has traded lately at around $3.43, down from a 52-week high of $5.25.

* *  Timberline Resources (PinkSheets:TBLC) of Spokane recently reported favorable results from dump sampling at the Snowstorm Project up in the Silver Valley, where it boosted its land position by over 75 acres.  The firm can earn up to a 49% interest from Hecla in the silver and copper Snowstorm. 

Timberline also updated its gold exploration activities at the Olympic Mine on the Walker Lane Mineral Belt of Nevada, where it has expanded its holdings.  Though not yet SEC reporting, TBLC posts audited financial statements on its website at http://www.timberline-resources.com.  Shares are trading lately at about a buck.

* *  Sterling Mining (PinkSheets:SRLM), which controls the grand old Sunshine Mine, reported recent news that included: management changes... surface exploration on the Merger Mines ground that lies between the Sunshine and the Galena Mine... and exploration on its Link Claim property by Coeur Silver Valley, the subsidiary of Coeur d’Alene Mines.

Shares of the Wallace-based outfit are trading lately at about $3.30.

* *  Stillwater Mining (NYSE: SWC) over in Columbus, Montana, has reached tentative agreement with the United Steelworkers on a new labor pact at the East Boulder Mine.  Earlier in June, SWC reported a “goodwill gesture” from Norilsk Nickel, the Russian giant that controls it -- a $1 million gift to build a brown bear exhibit at ZooMontana in Billings, apparently a pet project of Montana politicos. 

Stillwater, where many Silver Valley miners now pull a paycheck, is the only U.S. producer of palladium and platinum, and the largest primary producer of PGM outside South Africa.  SWC has traded lately at about $ 7.30, well off a 52-week high above $16.

* *  New Jersey Mining Company (OTCBB:NJMC) is mining at the Golden Chest Mine up near Murray, Idaho.  It says gold ore will be processed at its Kellogg mill and concentrate will go this month to Barrick Gold’s Goldstrike Mine in Nevada, as did a March shipment. 

New Jersey also says environmentalists are appealing a recent Forest Service decision to allow it to mine at its Silver Strand Mine outside Coeur d’Alene.  Shares of NJMC, piloted by the father and son mine engineering team of Fred and Grant Brackebusch, are trading lately a shade above 40 cents.

* *  Little Squaw Gold (OTCBB:LITS) reports the state of Alaska has filed a quiet title suit against the feds for the right-of-way of the historic Coldfoot-Chandalar Lake Trail.  This is a first step toward possible construction of an all-weather road to Little Squaw’s 15-square-mile gold property in the Chandalar District.  The Spokane firm reported finding six new gold veins and several dozen new potential drill targets there last fall.  LITS is trading now at about 30 cents.

* *   Hecla Mining (NYSE:HL) in early June settled a strike at its San Sebastian Mill in Durango, Mexico.  Later in the month, it reported buying the mineral rights to Triumph Gold Corporation’s concessions in Venezuela’s Guariche gold district. 

Hecla, the 114-year old granddaddy of all our local miners, also holds property in the El Callao and El Dorado gold districts of Venezuela.  The firm says it is now that country’s largest gold producer.  HL is trading at about $4.40.

* *  Canyon Resources (Amex:CAU), which controls the big McDonald gold project over near Lincoln, Montana, took another body blow in early June, when the Montana Supreme Court rebuffed its appeal and upheld anti-mining initiative I-137.  The firm still has a similar case pending in federal court. 

Although CAU holds projects in other states, its stock plunged last fall after Big Sky voters turned down pro-mining initiative I-147, which was important to the McDonald development.  Shares are now trading a little below 70 cents.

* *  Mines Management (AMEX:MGN) of Spokane cut its first-quarter loss to 11 cents a share from 17 cents a year ago, and also received a mention on Forbes.com.  MGN is re-permitting the massive Montanore silver and copper project near Libby, Montana, estimated to hold up to 260 million ounces of silver and 2 billion pounds of copper. 

MGN has said it’s not concerned about last fall’s defeat of Montana’s pro-mining initiative I-147.  Unlike Canyon Resources’ project, the Montanore would not be an open pit mine nor use cyanide, two major points of the initiative.  MGN shares moved to the AMEX last year and have suffered less than others in the general downturn.  They trade now around $5.35, off a 52-week high of $6.60.

* *  Canadian income trusts are catching investor attention.  Many oil and gas royalty trusts have posted double-digit yields and big capital gains as energy prices climb higher.  Funds in other industries have been winners too.  We’ve received favorable comments about the March Pennaluna Prospector, which covered the basics of Canadian trusts.  You can still read it here: http://www.pennaluna.com/prospector.htm?news_item=362

* *  Atlas Mining (OTCBB:ALMI) of Osburn has turned heads with the pure white halloysite clay it mines at the Dragon Mine in Utah, said to be the only commercial source of that clay outside New Zealand.  ALMI now reports it is working with Ginn Mineral Laboratories to develop a process to clean up the iron-stained halloysite that’s also found at the Dragon. 

The stock has had a wild ride over the past year, with a low of 17 cents and a high of $1.15.  It’s trading lately around $1.11.

* *  Trend Mining (OTCBB:TRDM), a long-time CDA firm that moved to Denver, reports it has inked an option to buy the Andacollo Gold Mine in northern Chile from Pacific Rim Mining Corporation (AMEX:PMU) for $5.4 million.  Trend says it hopes to start production there by year-end, and initially aims to produce 80 to 90,000 ounces of gold annually at a cash cost of about $315 an ounce.

The company is now headed by Thomas Loucks, a seasoned mining veteran with a geology degree from Dartmouth... an MBA from Stanford... and a resume that includes the turn-around of Royal Gold (NASDAQ:RGLD), a $20 stock.  TRDM is trading at about a quarter.

* * Mark your calendar.  The Silver Valley Mining Association throws its third annual Silver Summit Investment Conference on September 22 - 24 at Templin’s Red Lion Resort in Post Falls.  Templin’s is on the banks of the Spokane River about 10 miles from downtown CDA.

This year’s get-together should be a treat: entertaining and informative speakers, plenty of mining company exhibits, mine tours, excursions to Wallace, and other activities.  Ross Beaty, Chairman of Pan American Silver, calls it “The best investors’ forum on silver anywhere in the world.”  For details visit http://www.thesilversummit.com

* *  WGI Heavy Minerals (TSX:WG), the Coeur d’Alene miner and marketer of industrial minerals, terminated its president and replaced him “temporarily” with Chairman Covell Brown.  WG traded above CDN $8 in the past year, but has been plagued recently by declining sales and growing losses associated with a new operation in India.  Shares have skidded down to around CDN $2.20.

           "Bravery is being the only one who knows you're afraid."
                                Col. David “Hack” Hackworth (1931 – 2005) RIP

Editor: Tom Wobker