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Msg  18933 of 60668  at  12/15/2011 1:08:34 PM  by

dcj

The following message was updated on 12/15/2011 1:57:42 PM.

Canaccord Report on Junior's trading at 50% cash to Market/Cap

BITTERSWEET

It’s been a tough year for many junior mining companies. Hot trends have turned chilly,like uranium, PGM, specialty metals (lithium, cobalt), and even many steadfast copperand gold explorers have succumbed to the risk aversion of the market.

We have tabled a group of companies whose cash position is at a minimum 50% of its current market cap value (basic outstanding) and whose year-to-date performance has been no better than a -50% return.

Our thoughts are as follows:

• Uranium, PGM, and speciality metal exposed companies top the list for the
biggest losses combined with the strongest balance sheets.

• Some management groups have initiated share buy backs as an attempt to
support their company’s weak share price.

• We would expect to see some companies take on new projects outside of their
original focus (i.e., gold project versus uranium), in order to create new
shareholder interest.

• Some companies are likely to conserve cash, hoping for renewed positive market sentiment.

Figure 3: Bottom fish selected mining companies (sorted by market capitalization)

Price C$ Mkt Cap. Cash W Cap. YTD Cash to MC

Name Ticker 11/25/11

1 Platmin Ltd. PPN $0.18 $163.9 $131.9 $148.6 -80 80% Platinum Group metals production program in South America

2 Canada Lithium Corp $0.52 $131.3 $112.9 $117.1 -74 86% Lithium developer in Quebec

3 Ryan Gold Corp RYG $0.79 $91.8 $52.6 $48.6 -65 57% Gold exploration in the Yukon

4 Formation Metals Inc $0.61 $55.4 $54.7 $59.8 -74 99% Cobalt exploration in Idaho

5 Talon Metals Corp TLO $0.53 $48.6 $26.0 $28.8 -70 53% Iron exploration in Brazil.

6 Macarthur Minerals Ltd$1.05 $47.1 $37.1 $35.1 -65 79% Iron, nickel exploration in Australia

7 Sunridge Gold Corp SGC$0.35 $41.1 $20.1 $18.2 -73 49% VMS development Eritrea

8 Hudson Resources Inc $0.41 $32.9 $13.5 $16.2 -75 41% Rare Earths exploration in Greenland

9 Seafield Resources $0.18 $30.3 $15.0 $15.3 -70 49% Gold exploration in Columbia

10 Magma Metals Ltd $0.10 $26.7 $16.0 $18.0 -82 60% Platinum group metals exploration in Canada.Gold exploration in Australia.

11 Concordia Res.Corp $0.43 $26.0 $30.9 $30.7 -59 119% Gold exploration in Africa.

12 Geovic Mining Corp $0.21 $22.9 $19.7 $18.5 -69 86% Cobalt development Cameroon.

13 Brilliant Resources$0.15 $22.4 $15.8 $17.0 -58 70% Gold exploration in Canada and Africa

14 Orsu Metals Corp $0.12 $18.9 $14.0 $14.5 -60 74% Precious, base metals in Kyrgyz & Kazakh republics.

15 Tournigan Energy $0.09 $17.4 $10.0 $12.4 -72 57% Uranium exploration Slovakia

16 Novadx Ventures $0.21 $16.6 $13.6 $17.9 -51 82% Coal developer in North America

17 Contl Precious $0.30 $15.5 $16.9 $18.3 -65 109% Uranium, vanadium exploration in Sweden. Share buyback program announced.

18 Bridgeport Ventures$0.29 $14.7 $12.0 $12.0 -68 82% Gold, copper exploration in Nevada and Chile

19 NWT Uranium Corp $0.11 $14.5 $17.2 $17.0 -53 118% Uranium exploration in Quebec, Niger and Vietnam

20 Inv Metals Inc $0.20 $14.1 $14.2 $14.0 -78 101% Copper Gold exploration in Namibia

21 Mundoro Capital Inc$0.32 $12.1 $6.7 $6.6 -52 56% Silver-gold exploration in Mexico and China. Share buyback program announced.

22 Corona Gold Corp $0.61 $11.9 $8.0 $8.5 -59 67% Gold exploration in Tasmania

23 Colorado Resources$0.32 $11.8 $15.9 $15.8 -57 135% Gold exploration in Yukon and BC

24 China MineralsCMV $0.06 $10.4 $7.7 $7.5 -65 73% Gold exploration in British Columbia

25 Silver PredatorSPD $0.32 $9.8 $5.7 $10.1 -73 58% Silver exploration in the Yukon and Nevada

26 Canalaska Uranium $0.40 $8.1 $8.1 $7.0 -74 100% Uranium exploration in Canada

27 Alturas Minerals $0.10 $7.2 $4.7 $4.3 -67 65% Gold and copper exploration in Peru

28 Altai Resources $0.12 $6.6 $5.6 $7.2 -55 85% Natural Gas and gold exploration in Quebec

29 Vaaldiam Mining $0.08 $6.1 $3.1 $4.0 -67 51% Gold, copper, titanium & diamonds exploration in South America & Canada

30 Xemplar Energy $0.05 $6.0 $6.3 $6.0 -75 106% Uranium exploration in Namibia

31 Rogue Resources $0.16 $5.9 $3.3 $2.9 -63 56% Nickel, iron exploration in Ontario

32 Newport Exploration$0.10 $5.5 $5.5 $6 .5 -55 100% Gold exploration in Kamloops, BC.

Does this list of companies represent an above-average speculative investment
opportunity? In our opinion, the only answer we are comfortable with is, maybe. Good management groups will take the opportunity to redeploy capital into new areas of interest. However, markets can have a way of turning a sweet cash position into a bitter investment decision. We like using a combination of criteria when making an investment decision in junior mining– stick with quality management first and use a large cash position as a secondary bonus.



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