The deal is done. In last week’s newsletter, we talked about the significance of October 6, 2009 – a date marking the final signing of an agreement that will begin the process of opening up one of the world’s largest undeveloped copper-gold resources.
Ivanhoe Mines and Rio Tinto has now officially signed with the Mongolian government to begin the Oyu Tolgoi copper-gold project, a project with a fully operational expected production of 450,000 tonnes of copper per year and 330,000 ounces of gold and an estimated resource with an astounding 45.2 million ounces of gold and 78.9 billion pounds of copper.
That’s not a misprint.
It’s no wonder why Ivanhoe’s share price is almost back to its two year high, climbing from its 52-week low of just over CDN$2, to this past Friday’s close of CDN$13 even.
Let’s put that into perspective. In less than a year, Ivanhoe went from a company worth around $756 million to a whopping powerhouse now worth over $4.9 billion!
Ivanhoe isn’t the only company that made substantial gains since the March lows of this year’s slump.
Let’s not forget Teck Resources.
Teck was trading at under CDN$3 per share in March with a market cap of just over CDN$1.7 billion but now has a share value of over CDN$32 per share with a market cap of over CDN$19 billion!
There’s no doubt that our markets are still in turbulent times. The rally we have been experiencing far exceeds any real market data numbers and analysts are calling for yet another bubble burst. But let’s be real…when has the stock market ever reflected real market numbers?
If you look at history and think toward the future, commodities and the stock market will always be at the forefront of our economic growth. Not only do we need commodities to grow, we need commodities to survive and we need the stock market to fund those opportunities.
Despite the incredible market rebound we have experienced, there are still many opportunities in the market – especially in the small cap junior plays. Don’t forget that an insurmountable of funds were raised in the mining sector even when our stock market was at its lowest point this year and investors were scrambling to turn paper into cash.
Let’s use gold as an example. If it continues to climb, as many predict, Gold bugs will be flocking toward gold juniors for their multiplier gains.
Many predict gold to be over $1500/ounce within a few years. If that’s the case, many of the near-term or advanced stage gold juniors will be greatly positioned to take advantage of those prices. Many of their projects are not only feasible but highly profitable with gold at those price points.
But how do you know what projects are good enough for your investment?
We’re not all geologists and for us to completely interpret or understand NI 43-101’s and mining numbers is difficult. Next week, we’ll discuss some basic fundamentals of mining and go through some of the terminology used in these reports to help us make a more informed decision.
Until next week…
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