Christmas Comes Early

Three notes on companies I follow:

Bayhorse Silver (BHS.V) just announced the closing of the first tranche of its current private placement: $658,000 will pay for the helicopter-borne VTEM survey of the Bayhorse properties in Oregon and Idaho. Bayhorse has been trading millions of shares a day and has gone from $0.015 to $0.07 since I wrote about its “near death” experience back on October 20th.

The money in the Bayhorse bank will also pay for the underground drilling already planned at the Bayhorse mine to further delineate the silver endowment and plan for the resumption of mining when the final permits have, finally, been obtained. But the money will also pay for deeper drilling to explore any anomalies the VTEM turns up.

All this action was spurred by the tremendous interest the market has taken in Hercules Silver (BIG.V) which may be sitting on a blind copper porphyry 44 kilometres away from the Bayhorse Mine at a suture point between the Izee terrane and the Old Ferry terrane at Cuddy Mountain in Idaho. As I wrote November 10,

"At both the Hercules project and the Bayhorse Mine there have been tantalizing hints of copper. BHS’s silver concentrate is shot through with the stuff. But Bayhorse has never done the IP testing to see if there might be a similar blind copper porphyry underlying the Bayhorse Mine silver deposit.

The fact is that Graeme O’Neill, a pal and CEO of BHS, has never had the money or a reason to systematically look for copper on the Bayhorse property. Now he has both. When I wrote about the argument from similarity, BHS was trading at $0.04, now it’s at $0.07 and, in the past few days has led the volume on the Venture at least once.

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Hercules Silver (BIG.V) peaked back in November at $1.50 a share on the strength of a 23 million dollar investment by Barrick Gold. It dropped back to $1.05 in early December and I got in at $1.19.

There has been no news from BIG.V since November 1. However, the shares hit an all time high of $1.55 December 19. What’s that about?

Several things all at once. First, when a major takes a strategic position in a junior there is often an effective news blackout at the major’s geos take stock. Unlike juniors which need constant news flow to stay alive, a major can wait. Second, BIG held a very successful town hall and the well-respected Agentis Capital issued a very positive research note on the company. Third, there are a number of drill holes which have not been reported yet.

I wrote about Hercules last week and other than a gratifying rise in the share price very little has happened. It fell back a little today. This is very much a story which will depend on news. We know the next holes are due to report but it is not clear when.

The BIG board at CEO.CA is very active and awash with rumours and very interesting takes on the geology, drilling and IP. It’s all speculative but it gives a feel for what some pretty smart people think about BIG.

The fact that Barrick liked what it saw in the BIG core shack enough to invest a decent amount of money in the company is probably the most significant piece of hard news. It is not that majors never make mistakes, they often do; but with the Barrick millions BIG can afford to properly drill the Mt. Cuddy property. Plus, along with money, Barrick brings a lot of geological horsepower into play. While the holes to be reported were not guided by Barrick, the interpretation of those holes and planning the next drilling campaign will benefit from Barrick’s geos’ experience.

Realistically, I am not taking my $0.25/share paper profit because I really want to be part of what happens next.

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I spent a pleasant, if exhausting, 45 minutes doing an interview for Motherlodetv.net with Eloro (ELO.V) CEO, Tom Larsen. I’ve been chatting with Tom for years. I spoke with him after the market dumped all over the maiden Mineral Resource Estimate for Iska Iska back in August.

As I wrote in The CEO Dilemma, CEOs know far more than they can say. Part of that is the regulatory rule which requires all material facts to be disclosed publically. But an unspoken part is that CEOs have to avoid being “promotional”. At least where there is any chance their remarks might be published.

Tom walks these lines brilliantly and is very, very careful not to disclose or actively promote. But there are a lot of pieces of information which, while they are not concrete enough to be press released, are useful background and suggest directions Eloro might take.

After being hit hard for missing the timeline on the maiden MRE, Tom is especially careful not to set firm dates for the updated MRE, or the revised MRE which is likely going to follow. Nor will he speculate about the timing of the “starter pit” Preliminary Economic Analysis. But he did allow that all were in the pipeline.

He also spent some time discussing the “bulk sample” which was taken from what are referred to as “metallurgical” holes. These are larger diameter drill holes which yield a lot of rock for met testing and, in Eloro’s case, ore sorter testing. 10,000 kilos of rock which Tom sees as “more indicative” than the standard small bore holes. And the Eloro team is liking what it sees.

Larsen is a markets guy who came to the junior world via the brokerage business. We joke about the fact neither of us is all that good at “rock talk”. But Tom pays attention to details. The fact that ELO is able to drill 100 meters a day through the Iska Iska rock is an important detail. It indicates that the rock is relatively soft.

Tom noticed the fact that Chinese interests are collaborating with the Bolivian government to build two zinc processing facilities up a rail line which happens to be fairly near Iska Iska. The theory is that these plants will get their feedstock from the Bolivian small-scale miners in the mining co-operatives. It does not take much to connect the dots with the fact that the North side of the Iska Iska silver/polymetallic deposit is pretty much a silver/zinc domain.

As Francis Urquhart in the British version of House of Cards would have said, “You might very well think that; I couldn't possibly comment.”

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Merry Christmas to all!

Peter Bell of KLM.V fame and I may put together a podcast over the holiday. I’ll let you know.

[Disclosure: Graeme O’Neill is a friend. I own shares in Bayhorse Silver (BHS.V), a lot of shares, and may buy more or sell some or all at any time. I own a small position in Hercules Silver (BIG.V) and may buy or sell at any time. I own shares in Eloro (ELO.V) and may buy or sell at any time.

This is not investment advice. Do your own due diligence. Call the CEO. ]