We got our first double of 2010 with Donner Metals back in January and since then we reloaded to hopefully take advantage of another run up which could be happening later this month.
To recap, last fall Donner (DON, TSXV) announced that their blue chip joint venture partner Xstrata Zinc would be fast tracking the Bracemac-McLeod discovery in Quebec to "full feasibility" by June of 2010 thus foregoing pre-feasibility.
Donner has the option to earn a 50% participating joint venture interest in the Matagami Project by incurring a total of $25 million of expenditures on exploration and related work on or before May 31, 2011. Donner has about $2 million more to spend.
If the feasibility study looks good the next step is mine development followed by production in 2012.
So why has Xstrata been pushing to get a full feasibility done?
Xstrata has an operating mine at the Matagami mining camp that is running out of ore and is scheduled to be closed in 2012. Just 6 km away they also have their Perseverance Mill which they spent $130 million refurbishing not long ago. So with ore running out at Perseverance, everyone involved including you and me would love to see the Bracemac-McLeod deposit get the green light for mine construction and future production.
Assuming the feasibility study is a go, the next step will be to build a ramp down to the deposit from an existing open pit next door. That would start this summer and take about 12 months to complete. After that they will have enough time to prepare for actual mining and production starting in 2012.
On Thursday Donner issued a news release basically telling everyone that the feasibility study is nearing completion and the definition drilling Xstrata has done to support the study was finished in April.
Our current speculation is that if Xstrata moves forward they may either buyout Donner's share of the joint venture or Donner could participate in any future cash flow derived from the production of this mine. If Xstrata does not move forward in building a mine at Bracemac-McLeod then there are numerous other joint venture opportunities available to Donner at the Matagami camp.
Nothing is ever a slam dunk in the mining business but this speculation offers an attractive upside with a minimal downside risk.
We continue to hold.
Hathor Exploration (HAT,TSXV)
On Wednesday, Hathor announced the second set of assays from the 2010 winter drill program from the Roughrider uranium deposit in Saskatchewan. Drilling found new high-grade mineralization adjacent to, outside and below the initial resource zone.
From last year's data, a resource model done by one analyst suggested that the Roughrider zone could contain 49 million pounds of uranium. The model also suggests that Hathor's deposit could be an open pit mine capable of a 200 tonne a day production.
With uranium so far out of favor with investor's right at the moment, these new zones of mineralization discovered at Roughrider aren't exactly lighting up the stock.
However uranium will become the flavor of the month again at some point and when it is, we want to be positioned in the best stock to take advantage of bullish sentiment.
There are currently 55 new reactors under construction in the world right now which should put some upward pressure on the uranium price at some future date. Once this happens, shares will look attractive again. Meanwhile Hathor will expand its resource and hopefully make some new discoveries elsewhere in the Athabasca.
Also Hathor could very well discover a whole new discovery area at anyone of Hathor's other properties.
Hathor continues to be one of the world's best developing junior uranium companies.
Hold or bottom fish for future gains.
Petromanas Energy (PMI, TSXV)
Another investment dealer jumped on the PMI bandwagon this week. GMP Securities (Griffiths McBurney) came out with an initial buy recommendation on Tuesday giving the stock a price target of 80 cents.
GMP stated that they believe PMI is well funded with approximately $73.5 million of cash on hand relative to just $22 million of capital commitments through 2012. With drilling starting in Q1 of 2011 they say PMI is committed to drill at least 3 exploration wells, one for each of the three Production Sharing Contracts they have with the Albanian government.
"Results from this program should be the biggest driver to the stock, but upcoming seismic acquisition leading to an updated NI51-101 report will be a near term catalyst."
PMI is our lead speculative pick in the oil sector.
Hold.
James Winston is Editor of "Winston's Growth Stock Report," a source of high potential stocks.
