This recommendation is another stock that I bought awhile back, at lower prices. So keep that in mind as you read this review and recommendation.
As I said, stocks I already own have a higher bar to clear before I can recommend them to Gold Newsletter readers. And, as you're about to see, there are a number of solid reasons why Svit Gold (soon to be renamed "Catalyst Copper") has earned my recommendation.
But one of the reasons why I'm recommending this company now is because you can get in this play early - before its story is fully told to the market.
How early? The company doesn't even have website yet. And when I met with management about a week ago, they didn't even have a PowerPoint presentation yet completed. You can't get in much earlier than pre-PowerPoint.
In all seriousness, this company controls a copper project with demonstrated value, and the chance to buy its stock before the market recognizes that value is the key to the first stage of profits that I think Catalyst Copper can deliver. The second stage involves drilling to prove up - and perhaps dramatically expand - that value.
Allow me to explain further....
Svit/Catalyst has optioned the La Verde copper porphyry project from a subsidiary of Teck Resources. Located in west-central Mexico, approximately 320 kilometers west of Mexico City, La Verde hosts an historical, but NI 43-101 non-compliant, resource of 72.6 million tonnes at 0.7% copper. Some companies that have previously worked on the project estimate the resource at closer to 100 million tonnes at lower average grades of around 0.6% copper.
So this isn't a discovery story- there's already a substantial copper target in place. And the company is getting it for a fairly cheap price: Catalyst can earn a 60% interest by advancing US$6 million to Teck's Mexican subsidiary, and by spending US$10 million in exploration by Dec. 31, 2012.
At that point, Teck may elect to increase its interest to 60% by spending two times the amount spent by Catalyst, to a maximum of US$20 million. If Teck elects not to exercise this option, Catalyst can acquire a 100% interest by paying Teck a further US$20 million. In short, Teck comes back in for 60% if this turns out to be a monster copper deposit, and Catalyst can control the whole project if it falls short of Teck's world-class standards.
In either case, Catalyst comes out a winner, because the project is very likely economic and developable even at its current size.
Consider that the current resource at La Verde was outlined through drilling totaling about 80,000 meters by three different operators since the 1960s. The property consists of two concessions totaling about 16,900 hectares, and mineralization is hosted within an intrusive complex approximately 5.5 kilometers long, one kilometer wide and up to 750 meters above mean sea level.
The previous drill programs identified two large mineralized zones known as the East Hill andWest Hill deposits, and the resource is currently constrained within these deposits. Over the years, 296 core holes and 289 percussion holes yielded some eye-popping intersections, including 1.38% copper over 56 meters, 0.495 copper over 440 meters, 1.01% copper over 182 meters, and 1.18% copper over 115 meters.
Can you imagine the market reaction if a junior were to announce drill holes like that today?
But there is exciting potential to grow the resource beyond the current bounds. Consider a recently completed independent technical report, which notes that "Although the La Verde property has been explored aggressively over many years, there are several geochemical and geophysical anomalies that have not been adequately tested. These anomalies, plus geological features such as an abundance of mineralized intrusive breccias, alteration styles and sulphide mineral assemblages, suggest that the
Sierra del Marques intrusive complex may represent the upper portion of a much larger porphyry system."
Catalyst will be run by a very experienced and capable management team, led by president John Greenslade. I've known John for years as he's led Baja Mining's rejuvenation of the massive Boleo copper project, and can vouch for his expertise. Also involved is Terry Hodson, Baja's General Manager-Geology, who previously worked for many years valuing projects, including La Verde, for Teck.
As early as March, Catalyst will begin drilling at La Verde in two phases:
- Phase One: Drill twins to previous holes, and in-fill where necessary, to confirm the previous work and produce a new, 43-101-compliant resource estimate. This confirmation drilling is estimated to comprise about 5,000 meters.
- Phase Two: About 25,000 meters of drilling, including step-out holes to test numerous geophysical and geochemical anomalies with the goal of significantly expanding the resource.
Thus, these two phases outline the two stages of profits that I think this company can provide to us. First, the company already has proven value. By proving it again - to current industry standards - the company could justify a market cap several times larger than where it stands today.
Second, the company will explore the project's exciting upside potential. The East Hill deposit is open to the northeast, southeast, northwest and at depth, while the West Hill deposit needs further work to determine where and if the resource can expand.
More importantly, both the East and West Hill deposits appear to be parts of a much larger system that is open in all directions. Geophysical surveys are frustratingly incomplete due to limited rock exposure, but work to date has teased geologists with indications of an extensive, structurally controlled magnetic-low corridor.
In short, there is the opportunity here for a significant, even world-class discovery- which is why Teck is keeping a foot in the door.
At this point, the share price isn't far from where I bought it, around C$0.10, before I learned about the La Verde project's remarkable value and potential. I'm not ecstatic over the share structure- there's a ton of stock out in this deal. But at current share price levels, the market cap is still small compared to the value that is already evident in this project.
Thus, Svit Gold/Catalyst Copper is a buy now. PowerPoint to come later.
Svit Gold Corp/Catalyst Copper
Recent Share Price:.........C$0.19
Shares Outstanding:........110.2 million
Market Cap: ...................C$20.9 million
Shares Outstanding
Fully Diluted:...................210.2 million
Market Cap
Fully Diluted:...................C$39.9 million
