20 Canadian Junior Mining Companies

Leaders in Corporate Research
20 Canadian Mining Juniors to Watch A Diverse Selection For Every Taste

As those with mining stocks in their portfolios know all too well junior mining is a high risk/high reward game. In our regular reviews of the main junior mining markets in Australia, Canada and London, Hardman & Co comes across companies of every size and shape from small, high grade gold explorers in proven terrains to companies hoping to open whole new mining districts or to develop new technologies and techniques to drive down the total cost of production. There are over 2,170 resource stocks on the ASX, TSX-V and AIM combined, so it is a thankless task for the uninitiated to sift through them to find the companies that fit their own portfolios and strategies. In these two papers we present some of the stocks that we currently regard as having the best potential in the mining sectors of the Australian and Canadian exchanges, with a very brief description and investment rationale. In this, the second of the two papers, we examine interesting Canadian resource stocks.
29 March 2010
Canadian Indices 3 Months

6% 4% 2% 0% % -2% -4% -6% -8% -10%
TSX TSX Venture Composite
TSX Gold
TSX Base Metals
Canadian Indices 6 Months

25% 20% 15% 10% % 5% 0% -5% -10%
TSX
TSX Venture
TSX Gold
TSX Base
Composite Metals We chose these stocks without reference to past performance, but on a twelve month horizon the growth in share prices of these companies has been phenomenal. Of the 20, 11 have more than doubled over the past year. Only two have fallen. By comparison the performance of the various S&P/TSX Indices has been somewhat pedestrian, especially over the past six months. This illustrates how important it is, from the investment point of view, to capture the early weeks of a bull run rather than wait to be certain that a market recover has become properly established.
While all are covered by the label junior, they are not all tiny by any means. Two of the companies have a market cap of over CAD$100m, and two further companies have a market cap between CAD$50m and CAD$100m.
Hardman & Co is a corporate research house whose revenue is partly derived from quoted companies paying to be included in its research lists. It also undertakes research commissions from investment houses and other organisations. It does not trade in shares and is not a stockbroker or a financial adviser. Suggestions of quality companies to add to the research list, or enquiries for research commissions, are welcomed from regulated organisations. None of the companies in this selection are clients of Hardman & Co.
Hardman & Co. Leaders in Corporate Research

Tel: +44(0)20 7929 3399
1
www.hardmanandco.com
20 Canadian Miners 2010
29 March 2010
The companies are a diverse bunch something for every taste. Their primary resources lie in 11 different countries, from Argentina and Botswana through to Tanzania and Peru. Between them the 20 companies have 11 different metals as their primary resource, with chromite lithium and molybdenum featuring as well as the usual suspects. One company even has a hydro power play that we suspect may turn out to be more important than its exploration positions.
Our methodology has been simple, qualitative and based on an arms length analysis of company websites and more general market conditions. We consider the current and upcoming market for the resource, the strength of the management and technical teams involved, the political economics of the resource & location, and the geology of resource itself. We also consider innovation to be of considerable value, whether it be in the development and use of new exploration techniques, the early and continued consideration of social licence as a driver of value in the development cycle, the consideration and uptake of low energy extraction and processing technologies or an innovative and forward looking business strategy. Primarily though, we are looking for the next generation of mines to come into production as we expect resource demand to rise in line with world population and urbanisation trends. We have not included metals recycling here, though it is a sector that we believe will grow in response to price signals and legislation. Nor do we include possible rival technologies for some metals sub-sectors such as organic polymers, advanced ceramics and carbon nano-structures as these are manufactured goods rather than mined natural resources. However, both recycling and substitution will come into play in coming years where certain metals are concerned and metals mining shouldnt be considered safe from disruptive technologies by any means. That said, here are 20 stocks listed on the Canadian exchange that we think are worth a closer look. We are not including companies that we have been in recent close contact with such as Saturn Minerals (TSX-V:SMI) or Swift Resources (TSX-VSWR), promising though they are, since we would not be considering them on a like-for-like basis. Companies are in alphabetical order.

Tel: +44(0)20 7929 3399
2
29 March 2010
AMAZON MINING HOLDINGS plc (TSX-V:AMZ)
Share Price: CAD$2.03 Market Cap: CAD$34m No. of Shares in Issue: 16.7m Resource potash Location Brazil Website www.amazonplc.com
With a technical partnership with the Brazilian Ministry of Science and Technology through the Centre for Mineral technology and a strong local board, Amazon seems well placed to take advantage of Brazils agribusiness powerhouse. Very tightly held until recently, but showing signs of opening up to a larger investor base since the announcement of its first NI 43-101 compliant potash resource. Subsidiary projects suggest a wider ambition for this home-grown company.

Tel: +44(0)20 7929 3399
3
29 March 2010
APELLA RESOURCES Inc (TSX-V:APA)
Share Price: CAD$0.14 Market Cap: CAD$15m No. of Shares in Issue: 107.2m Resource iron, titanium, vanadium Location Canada (Quebec) Website www.appellaresources.com
Vanadium specialists are not common. Vanadium specialists outside South Africa are downright rare. Apella seem to have two layered igneous intrusions, both analogous to the Bushveldt Complex (except in size) and both in Quebec. We consider vanadium to be the next molybdenum as utility-scale electrical storage systems known as vanadium flow batteries are now reaching commercialisation creating a potential demand over and above the elements traditional use as a steel additive.

Tel: +44(0)20 7929 3399
4
29 March 2010
APOQUIDO MINERALS Inc (TSX-V:AQM)
Share Price: CAD$0.83 Market Cap: CAD$41m No. of Shares in Issue: 49.9m Resource copper, gold Location Peru, Chile Website www.apoquindominerals.com
Apoquindo Minerals has a very strong board with great local knowledge. The company has just raised $33.5m towards development of its ~40Mt heap leachable copper-oxide resource. Judging by the geology of that resource, we would expect 40Mt to be a baseline. However the bulk of the capital will go towards aggressive development of its two Chilean copper-gold porphyries. These are potential company makers with the Zafranal project showing regular intersections of 100m at just under 1% copper.

Tel: +44(0)20 7929 3399
5
29 March 2010
BARD VENTURES Ltd (TSX-V:CBS)
Share Price: CAD$0.095 Market Cap: CAD$8m No. of Shares in Issue: 88.0m Resource molybdenum Location Canada (BC) Website www.bardventures.com
Regular readers will know that Hardman & Co like molybdenum as a resource and will know that British Columbia is one of the best addresses for juniors to find it. Bard ventures has a 151Mt resources grading 0.07% Mo (not MoS2 as is often reported) in the mining friendly province. Not only that but the resource is next to both mains gas and a hydro-electric substation.

Tel: +44(0)20 7929 3399
6
29 March 2010
BEAR CREEK MINING CORP (TSX-V:BCM)
Share Price: CAD$3.92 Market Cap: CAD$224m No. of Shares in Issue: 57m Resource silver, lead, zinc Location Peru Website www.bearcreekmining.com
Since Kennecots exploration team was spun out as BCM in 2002 they have focussed on Peru and now have a combined pre-production resource book of over 500Moz of silver. Its primary project, Corani, passed pre-feasibility in 2009 with a 27-year mine life producing around 6.5Moz of silver per year at a cash cost under $3/oz and CAPEX of $339M. The second and third projects are successively less developed but have promise.

Tel: +44(0)20 7929 3399
7
29 March 2010
CMC METALS Ltd (TSX-V:CMB)
Share Price: CAD$0.17 Market Cap: CAD$5m No. of Shares in Issue: 32.6m Resource silver, metals Location Canada (BC/Yukon) Website www.cmcmetals.com
Silver is always the bridesmaid it seems, so we think that, even more than most metals, production is key. CMC Metals have an advanced brownfield project with excellent grades. It has a problem too because the old core cannot be brought into 43-101 compliant resource estimations meaning that it would have to re-drill most of the resource. CMC is doing its level best to get the mine back into production by being supertransparent with the technical data, but at present the best route may be to take the project private. With grades in the kilograms of silver per tonne an experienced narrow-vein miner should be able to turn a profit here

Tel: +44(0)20 7929 3399
8
29 March 2010
CONSTANTINE METAL RESOURCES Ltd (TSX-V:CEM)
Share Price: CAD$0.21 Market Cap: CAD$16m No. of Shares in Issue: 78.1m Resource copper, zinc, gold Location USA (Alaska) Website www.constantinemetals.com
VMS (Volcano-genic Massive Sulphides) are a prime mining target. They are usually high grade and relatively simple mineralogically, so CAPEX/tonne metal produced tends to be lower than many deposit types. But they can be structurally complex and are usually present in discrete pods rather than single large ore bodies. The palmer project looks interesting as an early-stage VMS deposit but, as with any VMS system, drilling is the only real way to tell the potential value. Constantines initial resource estimate of 4.75Mt at 1.8% Cu, 4.6% Zn, .3g/t Au and 29g/t Ag is a good start for a first season of drilling and with a young, tech-savvy exploration team we hope to see progress continue in the same vein.

Tel: +44(0)20 7929 3399
9
29 March 2010
CONTINENTAL NICKEL Ltd (TSX-V:CNI)
Share Price: CAD$0.75 Market Cap: CAD$12m No. of Shares in Issue: 16.3m Resource nickel Location Tanzania Website www.continentalnickel.com
Continental is exploring a new high grade nickel-copper sulphide province in SE Tanzania and is finding some excellent grades. High grade nickel sulphides are usually difficult to find and prove up, but when found they can be very profitable. A low cost environment and shallow resources may be conducive to quick development of multiple open pits.

Tel: +44(0)20 7929 3399
10
29 March 2010
EMPIRE MINING CORP (TSX-V:EPC)
Share Price: CAD$0.125 Market Cap: CAD$3m No. of Shares in Issue: 24.7m Resource chromite Location Albania Website www.empireminingcorp.com
Albanias chromite deposits were world class and the country is known to be enthusiastic about bringing its mines up to western standards as it works towards entry into the EU. Empire is using local knowledge to best effect and has developed new geological interpretations of the existing data. Local government is likely to smile on quick development so long as it is carried out to European standards. Hardman & Co know the Balkans well and are certain that local ambitions will be achieved in time, albeit with a local flavour.

Tel: +44(0)20 7929 3399
11
29 March 2010
ENCATO POTASH CORP (TSX-V:EPO)
Share Price: CAD$0.175 Market Cap: CAD$21m No. of Shares in Issue: 120.4m Resource potash Location Canada (Sask) Website www.encatopotash.com
Potash in Saskatchewan is not a new story, however after several decades of steady production the province is being re-explored by junior exploration companies. This burst of activity of being spurred by global population and the seeming inability of the majors to operate the old potash mines at sustainable profit. Finding potash in the Western Canadian Sedimentary Basin is not a major issue. The province currently produces a third of the worlds supply. What is more tricky is finding large enough and rich enough deposits to sustain this bulk underground industry. Encato seem to be the best of the bunch at present with their focus on developing stakeholder relations and excellent management team.

Tel: +44(0)20 7929 3399
12
29 March 2010
HANA MINING LTD (TSX-V:HMG)
Share Price: CAD$1.60 Market Cap: CAD$97m No. of Shares in Issue: 60.5m Resource copper, silver Location Botswana Website www.hanamining.com
This is a property with a long history. Exploration has been carried out by various companies since the 1960s. The potential is in the size and the mineralogy as it shares characterisitics with both Polands Kuperschiefer and the Zambian Copper Belt.
There are potentially significant credits from molybdenum & rhenium as well as the silver by-product. The challenge will be to prove up a large enough resource to
do the geology justice and a sufficiently robust project plant to be able ride issues such as energy and water availability in this stable southern African state.

Tel: +44(0)20 7929 3399
13
29 March 2010
LARGO RESOURCES Ltd (TSX-V:LGO)
Share Price: CAD$0.23 Market Cap: CAD$51m No. of Shares in Issue: 219.8m Resource vanadium, moly, tungsten Location Brazil, Canada Website www.largoresources.com
Our second vanadium-focussed company, Largo has a project that has gone through DFS with a 23-year mine life and an IRR of 34.9%. It is very high grade for vanadium, but being in Brazil may be weighing on its risk profile. While it waits for the vanadium property to win friends and funding, Largo is pressing on with development of its giant tungsten-moly porphyry, Northern Dancer, on the Yukon/BC border.

Tel: +44(0)20 7929 3399
14
29 March 2010
LITHIC RESOURCES Ltd (TSX-V:LTH)
Share Price: CAD$0.27 Market Cap: CAD$10m No. of Shares in Issue: 36.4m Resource silver, zinc, indium Location USA (Utah) Website www.lithicresources.com
Lithic is a specialist play. The geology is technical, the defining resource is not openly traded and the market for that swing metal, indium, is heavily dependent on current technology. Nevertheless as one of the only indium-rich deposits that is held in a small traded company it is worth looking at for several reasons. Indium is a core component of CIGS thin film solar panels and is required to manufacture some forms of nuclear fuel rod, so is part of the new energy renaissance. It is also used optical coatings for high specification glass and optical fibres, and around 65% of current production is used in LCD screens, so it is firmly in the high-tech bracket. But Lithics main advantage is that the USA military identifies indium as a critical metal for its use in infra-red sensitive equipment and there are no current primary sources of this metal in the US. For those interested in strategic and critical metals Minerals, Critical Minerals and the US Economy from the National Academies Press is a must-read.

Tel: +44(0)20 7929 3399
15
29 March 2010
LITHIUM ONE Inc (TSX-V:LI)
Share Price: CAD$1.25 Market Cap: CAD$47m No. of Shares in Issue: 35.7m Resource lithium Location Argentina, Canada (Quebec) Website www.lithium1.com
Lithium has been one of the biggest movers in new energy infrastructure. Concerns over supply shocks, primarily due to rapid uptake of electric vehicles, may be overstated but there is little doubt that new primary production capacity does need to come on-stream while recycling streams are populated. Lithium One has a high quality board and is exploring both the hard-rock (pegmatite) and soft-rock (salar/brine) sources of this newly popular metal.

Tel: +44(0)20 7929 3399
16
29 March 2010
PELE MOUNTAIN RESOURCES Inc (TSX-V:GEM)
Share Price: CAD$0.19 Market Cap: CAD$20m No. of Shares in Issue: 101.6m Resource uranium, REE Location Canada (Ontario) Website pelemountain.com
A uranium developer with a different story, Pele Mountain is resurrecting underground bio-leaching of uranium at a mine where it was carried out during the 1980s. The current uranium resource is not large, but may have a REE by-product that makes all the difference to the economics. The company is working with Laurentian University, Sudbury to make the mine site 100% reclaimable and have a very low surface environmental impact including designing processing so that no surface tailings storage will be necessary.

Tel: +44(0)20 7929 3399
17
29 March 2010
RESERVOIR CAPITAL Corp (TSX-V:REO)
Share Price: CAD$0.98 Market Cap: CAD$20m No. of Shares in Issue: 20.0m Resource metals, hydro-electricity, geothermal Location Serbia Website www.reservoircapitalcorp.com
REO is a country play, rather than a resource-focussed one. As the Balkans continue to re-construct and are at various stages to the entry process into the EU, primary industries are at the heart of their push for economic development. Hardman & Co met with the Serbian Minister for Mines and his delegation in 2008. We were impressed by his governments commitment to supporting primary industries as a core part of its development strategy. Reservoirs portfolio seems a good fit for Serbias ambitions and capabilities.

Tel: +44(0)20 7929 3399
18
29 March 2010
TERRANE METALS Corp (TSX-V:TRX)
Share Price: CAD$1.22 Market Cap: CAD$156m No. of Shares in Issue: 128.0m Resource copper, gold Location Canada (BC) Website www.terranemetals.com
Goldcorp has just passed on full JV participation in Terranes 2.8bn lb, 6Moz Mount Milligan copper-gold porphyry, so opening the door to suitors. Mt Milligans CAPEX is $915m, so looking slightly on the high side, but with a 22-year mine life and a strip ratio of under 1:1 there should be some room for manoeuvre. Terranes other project, Berg, is a decent support act, with over 500Mt @ 0.3% copper plus moly and silver credits.

Tel: +44(0)20 7929 3399
19
29 March 2010
TIREX RESOURCES Ltd (TSX-V:TXX)
Share Price: CAD$0.33 Market Cap: CAD$11m No. of Shares in Issue: 33.3m Resource metals Location Albania Website www.touringan.com
A third Balkans-based explorer should help convice any doubters how serious
we are about the potential for mining on Europes edges. We are seeing increasing signs of government awareness of what Asias development could mean in terms of long term access to metals as well as mid-term economic development potential of primary industry as a political stabiliser. We have been watching Tirex since its entry and been impressed at its progress and its ability to gain political and financial support at a European level.

Tel: +44(0)20 7929 3399
20
29 March 2010
TOURNIGAN ENERGY Ltd (TSX-V:TVC)
Share Price: CAD$0.245 Market Cap: CAD$30m No. of Shares in Issue: 122.7m Resource uranium Location Slovakia Website www.touringan.com
A reborn Tournigan that is 100% focussed on its Slovakian uranium project. It has some cash in its treasury to advance development and we understand significant local support. The political economics of this project stretch across Europe, since Slovakia as an existing nuclear power generator could be in a position to defuse tensions over gas imports to eastern Europe from Russia via the wobbly Ukraine. There are objectors, as there are to all mining projects in Europe, so progress may be slow, but the case for development is, we feel, overwhelming. Of course, having excellent grades in this historic mining district should do no harm to the project economics.

Tel: +44(0)20 7929 3399
21
29 March 2010
WEALTH MINERALS Ltd (TSX-V:WML)
Share Price: CAD$0.55 Market Cap: CAD$16m No. of Shares in Issue: 29.9m Resource uranium Location Argentina, Peru Website www.wealthminerals.com
A team with experience, both in the locality and the resource is usually a good sign in exploration. A positive attitude to local engagement is another. Wealths management seem to be demonstrating how it should be done when working as guests in another country. With Jeff Pontius (a well-known Canadian mining entrepreneur) and Maurice Strong (a former advisor to both the World Bank and the UN Secretary General) on the board we would expect no less. Hardman & Co like Argentina as a destination for mineral exploration and think that it has been under-explored for uranium, as well as many other metals.

Tel: +44(0)20 7929 3399
22
29 March 2010

Tel: +44(0)20 7929 3399
23

Disclaimer
29 March 2010
The conclusions and opinions expressed in the investment research accurately reflect the views of the first named analyst. Hardman & Co provides professional independent research services and the companies researched pay a set fee in order for this research to be made available. While the information in the research is believed to be correct, this cannot be guaranteed. There are no other conflicts of interest. Neither Hardman & Co nor the analysts responsible for this research own shares in the companies analysed in this research note. Neither do they hold any other securities or derivatives (including options and warrants) in the companies concerned. Hardman & Co does not transact corporate finance and therefore does not earn corporate finance fees. It does not buy or sell shares, and does not undertake investment business either in the UK or elsewhere. Hardman & Co does not make recommendations. Accordingly we do not publish records of our past recommendations. Where a Fair Value price is given in a research note this is the theoretical result of a study of a range of possible outcomes, and not a forecast of a likely share price. Our research is issued in good faith but without legal responsibility and is subject to change or withdrawal without notice. Members of the professional investment community are encouraged to contact the analyst concerned. This research is provided for the use of the professional investment community, market counterparties and sophisticated and high net worth investors as defined in the rules of the regulatory bodies. It is not intended to be made available to unsophisticated individuals. In the UK, any such individual who comes into possession of this research should consult their properly authorized professional adviser, or undertake one of the self certified sophisticated investor tests that are available. This research is not an offer to buy or sell any security. Past performance is not necessarily a guide to the future and the price of shares, and the income derived from them, may fall as well as rise and the amount realised may be less than the original sum invested. For AIM and PLUS shares, it is the opinion of the regulator that risks are higher. Furthermore the marketability of these shares is often restricted. This document must not be accessed or used in any way that would be illegal in any jurisdiction. In some cases research is only issued electronically and in some cases printed research will be received by those on our distribution lists later than those receiving research electronically. The report may be reproduced either whole or in part on condition that attribution is given to Hardman & Co, and on condition that Hardman & Co accepts no liability whatsoever for the actions of third parties in this respect. Hardman & Co is not regulated by the Financial Services Authority (FSA). Hardman & Co.

Tel: +44(0)20 7929 3399
24

20 Canadian Junior Mining Companies

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

20 Canadian Junior Mining Companies

Uploaded by

Copyright:

Available Formats

Leaders in Corporate Research

20 Canadian Mining Juniors to Watch A Diverse Selection For Every Taste

Canadian Indices 3 Months

TSX TSX Venture Composite

TSX Base Metals

Canadian Indices 6 Months

Hardman & Co. Leaders in Corporate Research

Leaders in Corporate Research

20 Canadian Miners 2010

Hardman & Co. Leaders in Corporate Research

Leaders in Corporate Research

20 Canadian Miners 2010

AMAZON MINING HOLDINGS plc (TSX-V:AMZ)

Hardman & Co. Leaders in Corporate Research

Leaders in Corporate Research

20 Canadian Miners 2010

APELLA RESOURCES Inc (TSX-V:APA)

Hardman & Co. Leaders in Corporate Research

Leaders in Corporate Research

20 Canadian Miners 2010

APOQUIDO MINERALS Inc (TSX-V:AQM)

Hardman & Co. Leaders in Corporate Research

Leaders in Corporate Research

20 Canadian Miners 2010

BARD VENTURES Ltd (TSX-V:CBS)

Hardman & Co. Leaders in Corporate Research

Leaders in Corporate Research

20 Canadian Miners 2010

BEAR CREEK MINING CORP (TSX-V:BCM)

Hardman & Co. Leaders in Corporate Research

Leaders in Corporate Research

20 Canadian Miners 2010

CMC METALS Ltd (TSX-V:CMB)

Hardman & Co. Leaders in Corporate Research

Leaders in Corporate Research

20 Canadian Miners 2010

CONSTANTINE METAL RESOURCES Ltd (TSX-V:CEM)

Hardman & Co. Leaders in Corporate Research

Leaders in Corporate Research

20 Canadian Miners 2010

CONTINENTAL NICKEL Ltd (TSX-V:CNI)

Hardman & Co. Leaders in Corporate Research

Leaders in Corporate Research

20 Canadian Miners 2010

EMPIRE MINING CORP (TSX-V:EPC)

Hardman & Co. Leaders in Corporate Research

Leaders in Corporate Research

20 Canadian Miners 2010

ENCATO POTASH CORP (TSX-V:EPO)

Hardman & Co. Leaders in Corporate Research

Leaders in Corporate Research

20 Canadian Miners 2010

HANA MINING LTD (TSX-V:HMG)

Hardman & Co. Leaders in Corporate Research

Leaders in Corporate Research

20 Canadian Miners 2010

LARGO RESOURCES Ltd (TSX-V:LGO)

Hardman & Co. Leaders in Corporate Research

Leaders in Corporate Research

20 Canadian Miners 2010

LITHIC RESOURCES Ltd (TSX-V:LTH)

Hardman & Co. Leaders in Corporate Research

Leaders in Corporate Research

20 Canadian Miners 2010