PORTFOLIO ADDITIONS:
- Carpathian Gold, Inc. (CPN.Vancouver): Buy 4000 shares at market open in Canada and convert price to US$ for portfolio tracking purposes. The company's shares can be traded in the US via the OTC ticker CPNFF.
- Exmin Resources (EXM.Vancouver): Buy 10,000 shares at market open in Canada and convert price to US$ for portfolio tracking purposes. The company's shares can be traded in the US via the OTC ticker EXMIN.
Carpathian Gold is developing attractive properties in Romania. Investors have widely considered the shares risky due to the problems experienced by fellow Canadian mine developer Gabriel Resources. But it's unfair to paint both companies with the same brush. Carpathian will not use cyanide and to date, there has been no indication from the Romanian government or local constituents that Carpathian's plans are at risk. Gabriel Resources is a high profile situation given the size of the resource and the fact that the NGO community has sought to shut the company down. Gabriel Resources' problems offer an opportunity for investors to buy Carpathian at fire sale prices. Carpathian has established an initial 43-101 Canadian compliant resource estimate for it's Colnic and Rovina projects, showing an indicated 1.82 million ounces of gold equivalent and a total inferred equivalent of 3.69 million ounces. Geologists that have reviewed the property believe the company will be able to prove-up more ounces, perhaps well past five million. But even with back-of-napkin numbers, using 3 million ounces of gold equivalent, the stock trades at a valuation of less than US$37 per ounce of gold. (Assumptions: 147.6 million fully diluted share capital, a stock price of C$0.74 times 1.02 for a US$ $111,408,480 market cap, divided by 3 million ounces). Not all ounces are equal, of course! In Carpathian's case, political risk aside, they have what looks to be low cost, economically viable projects. While one can find Jr. mining companies with lower gold-based valuations, it's quite difficult to find companies with advanced stage resources proven to be both large and highly likely to be economically viable to mine. Were it not for the political situation, Carpathian would easily trade at prices between two and three times the current quote. This provides the patient investor an arbitrage opportunity. Over time, as Carpathian moves past milestones, the shares should advance strongly.
EXMIN Resources: I profiled EXMIN Resources in a previous post. Please see that write-up for more information. The shares have drifted lower once again on the back of tax loss selling and the current quote represents a fantastic entry point for patient investors. The news flow with joint venture partners will be strong over the coming months and the shares will respond, moving higher.
ESTABLISHED POSITIONS SUMMARY
Each order executed as planned. The portfolio now holds the following:
- 400 Agnico-Eagle Mines shares bought at $50.00
- 200 Petrobras shares bought at $100
- 350 Suntech Power Holdings shares bought at $63.75
- 2000 Pediment Exploration Shares, bought at C$3.07
The Pediment Explorations position will be carried at a cost basis of US$6,311.92. This is derived by multiplying the opening trade on Nov. 15th (C$3.07) by 2000 shares and then multiplying by the Canadian/Dollar exchange rate of 1.028, which was both the high and opening rate of exchange for that day (see chart below).
For each position, a flat rate commission of $10 will be subtracted from cash and added to the cost basis. The Investor Intelligentsia model portfolio will be as close to "real world" as this format permits.
November 15th Canadian/Dollar Exchange Rates (click graphic to enlarge):
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