-- Posted 31 October, 2005 | |

Pennaluna Prospector: Northwest Mining Stock News -- Coeur d’ Alene, Idaho --
October 28, 2005

We’re no great shakes at math out here.  But the handful of rounded off numbers below caught our attention. 

To us, they add up to a pretty important point about equity investing so far during the New Millennium.  Do the math yourself and see.

        Jan 1, 2000                           Oct 27, 2005

DOW                          11,497                                     10,230             down 11%

NASDAQ                   4069                                          2,064             down 49%

XAU                            68                                                106              up 56%

Meantime -- while we wait for the Great Pumpkin to arrive with presents for us -- here are some of the new developments in our neck of the woods.

* *   Hecla Mining (NYSE:HL) this week took a hit when it learned from press reports that Venezuela's tax agency will review its operations after a labor union claim of irregularities.  This will likely intensify jitters over Hecla’s status as the largest gold miner in Venezuela, where mercurial President Hugo Chavez has moved to tighten control over the industry.  Hecla said it would “fully respond” to any attempts to tarnish its reputation. 

Shortly before, HL had cut its gold production outlook for the year from 170,000 ounces to 145,000, citing higher material and energy costs, lower grade ore, and strength in Venezuela’s currency.  The 114-year old granddaddy of all our local miners, Hecla is now trading at about $3.20, way off a 52-week high of $7.30.

* *  Timberline Resources (PinkSheets:TBLC) reports it is drilling at the Snowstorm Project up near the Lucky Friday... a year ahead of the deadline for finishing Phase I exploration and earning at least a 49% interest from Hecla in the project, which produced copper and silver nearly a century ago.  Timberline also filed its initial Form 10K with the SEC, as it moves to become fully reporting.

The little Spokane outfit has also appointed John Swallow as chairman in the wake of some ownership changes.   The local entrepreneur and mining investor boosted his holdings to about a third of the roughly 7.3 million shares.  TBLC is trading now in the 45-cent range.

* *  Stillwater Mining (NYSE: SWC) over in Columbus, Montana, got a boost this week when JP Morgan it gave the stock an upgrade.  Many Silver Valley miners now work at the Stillwater, the only U.S. producer of palladium and platinum and the largest primary producer of PGM outside South Africa.

SWC dropped as low as $6 last May, but is looking better since then.  It’s trading now at about $9.55.

* *  Idaho General Mines (OTCBB: IGMI), which has retained Wachovia Securities as  financial advisor, this week said it exercised its option to lease the Mount Hope Molybdenum Project in Nevada, allowing it to go ahead with permitting, developing and mining.

The Spokane firm also outlined the operations plan for Mount Hope.  It calls for mining 920 million metric tonnes of mineralized material by open pit, producing about 1.3 billion pounds of recoverable molybdenum during a 53-year life.  IGMI now trades at about $1.35, up from a late summer low of around 85 cents.

* *  Coeur d'Alene Mines (NYSE:CDE/TSX:CDM) expects to meet this year’s target of 14 million ounces of silver production, CEO Dennis Wheeler told the Denver Gold Forum last month.  He also said Coeur expects to add 100,000 ounces of annual gold production starting in 2007.

In September, Coeur agreed to pay US$ 36 million in cash for the silver reserves and production of Australia’s fabled Broken Hill Mine.  CDE has a 52-week range of $2.70 and $5.25 and is trading lately around $3.70.

* *  New Jersey Mining Company (OTCBB:NJMC) reports good progress on mining operations at the 120 year-old Golden Chest Mine up near Murray, Idaho, which is now back in production after decades of idleness.  The firm says gold grades are encouraging, work on the Katie vein is advancing, and monthly concentrate shipments to Barrick’s Goldstrike Mine in Nevada are continuing. 

Shares of NJMC, piloted by the father and son mine engineering team of Fred and Grant Brackebusch, are trading recently a bit under 30 cents.

* *  Canyon Resources (Amex:CAU) announced it will spend $700,000 on exploratory drilling at its Briggs Mine in California, where it says there may be high-grade gold ore near the recently closed open-pit operations.  The Denver firm also agreed to reacquire the crushing plant and conveyor systems there.

Canyon’s efforts to develop the massive but cyanide-based McDonald gold project near Lincoln, Montana, have been strongly rebuffed both by judges and by voters.  Weighed down by these disappointments, shares that were as high as $3.00 in the past year have now slid to a shade below 80 cents.

* *  Mines Management (AMEX:MGN) last week reported it completed a $6.1 million private placement to institutional investors.  The Spokane firm says it will use the money to advance its massive Montanore silver and copper project through the engineering, final feasibility and permitting process, and for working capital. The Montanore (over near Libby, Montana) is estimated to hold up to 260 million ounces of silver and 2 billion pounds of copper. 

MGN shares moved to the AMEX last year and have held up pretty well in market down turns since then.  MGN briefly touched $8.00 intraday a couple of weeks ago and now trades around $6.30.

* *  Apollo Gold (AMEX:AGT/TSX:APG) this week said it has temporarily suspended operations at its open pit Montana Tunnels Mine over near Helena because of safety concerns about the pit wall.  It says evaluation of the problem could take two to four weeks.  The firm plans to use a small work force to mill stockpile material for lead and zinc concentrates and Dore gold for some of that time. 

Apollo stock – which traded at a buck around a year ago – has fallen to about 23 cents.

* *  Before the recent pull back in oil prices, Canadian oil and gas income trusts had attracted growing investor attention with an enticing duet of yield and capital gain, magnified as energy prices climbed higher.  Some produced annual total returns of 40% or more.  But recently there’s been a sharp correction. 

Despite the Canadian government’s grumbling about lost revenues from the beneficial tax treatment trusts receive, at these new lower price levels they may start turning heads again.  If you’ve been curious about Canadian trusts, we put together a short primer on them a while back.  You can find it here: http://www.pennaluna.com/prospector.htm?news_item=362

* *  Revett Minerals (TSX:RVM) says a Montana statewide poll conducted by Moore Information of Portland -- which also polled parts of North Idaho -- shows solid public support for development of its proposed Rock Creek project in Lincoln County, Montana. 

Rock Creek is a large silver and copper mine that ASARCO operated for over a decade; Revett says it produced about 44 million ounces of silver and almost 400 million pounds of copper before low metals prices closed it in 1993. Shares of the Spokane Valley company are trading lately at about CDN .51.

* *  Sterling Mining (PinkSheets:SRLM) reported this week it is re-establishing underground electric power for lights, fans, pumps and diamond drill equipment at the Sunshine Mine, as it builds a new 13,200-volt substation in the Silver Summit Shaft hoist room.  This is about a mile in from the portal .  The firm says it plans to renovate and modernize the hoist itself in 2006.

Shares have ranged as high as $6.40 in the past year.  They’re trading lately at about $2.40.

* *  Little Squaw Gold (OTCBB:LITS) said last week it closed a private placement of 1.2 million units of its securities at 25 cents each, netting it $300,000.

The Spokane outfit has 15 square miles of gold property in Alaska’s historic Chandalar District.  About 30 high-grade gold-bearing quartz veins and vein swarms have been identified there.  LITS is trading a hair above 20 cents.

* *  Minera Andes (TSX:MAI/OTCBB:MNEAF) this week reported results of a feasibility study on the Frea and Huevos Verdes veins of its San José project in southern Argentina’s Santa Cruz province.  One highlight: nearly 290,000 proven and probable ounces of gold and over 15 million ounces of silver. (The study didn’t include recent new drill discoveries there.)

Stock of the Spokane firm, which controls about 500,000 acres in Argentina, is trading now at around CDN .40.

 “ You have a choice between the natural stability of gold and the honesty and intelligence of the members of government. And with all due respect for those gentlemen, I advise you, as long as the capitalist system lasts, vote for gold.”

                                                                                    George Bernard Shaw

Editor: Tom Wobker

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