ANALYSTS WITH VISION ARE BEGINNING TO LOOK AT CALLINAN
Callinan Mines Ltd. is one of the oldest mining companies listed on the TSX exchange. In recent years, the management team, under the leadership of Mike Muzylowski one of Canada’s leading geologists, has made some strategic moves which have caught the attention of very astute and perceptive mining analysts with vision.
On January 12, 2007, Mr. Jim Dartnel, Senior Mining Analyst at Wolverton Securities, published a RESOURCE REVIEW, in which he recognized the quality of management, the potential of the company’s mineral properties as well as the value of the 6 2/3% royalty interest in the 777 and Callinan Mine, operated by HudBay. Callinan shares were trading at $1.60 Cdn. Mr Dartnell was particularly interested in the Fox River nickel property since the seismic survey revealed an ‘ovoid footprint’ similar to the fabulous nickel discovery at Voisey Bay.
Incidentally, he was one of the first analysts to write a research report on Voisey Bay in the spring of 1995. When the discovery holes were first reported, Diamond Field’s stock was $8.00. By the time the report was finished, it was $38.00. As investors began to recognize the value of the company, the share price climbed as high as $180.00 per share. The deposit was finally sold to INCO for over $3 Billion.
He envisioned the importance of Callinan’s 6 2/3% and the $.25 / Ton royalty. In his analysis of the 777 production and consequent cash flow, he predicted that Callinan would soon be receiving money from the 6 2/3% royalty in “2007”. He was right on mark. He concluded that, “This stock might have considerable price appreciation in the near future”.
Brian Hill wrote an article in Equities Magazine, May 2008, entitled “Callinan Mines Ltd. – Growth Through Discovery” in which he attributes Callinan’s potential success to the growing world demand for base metals and nickel, particularly by the BRIC countries. He acknowledged Manitoba’s copper potential, where Mike has spent most of his mining career. He comments on the Fox River nickel claims as well as the Pine and Phillips nickel properties located in the Thompson Nickel Belt. He brings to the reader’s attention, Callinan’s 100% owned War Baby claims whose drill-inferred copper/zinc values are believed to be the downward extension of the lucrative, profit-generating 777 Mine.
He quoted a Callinan company spokesman, who emphasizes the importance of the current and continuing revenue in the form of the 6 2/3% NPI and $.25 / Ton royalty from the HudBay operated 777 Mine. One can readily conclude that Callinan has, and will continue to have, ample funds to finance its excellent exploration projects. This gives the investor the often spectacular upside profit potential of exploration while mitigating any downside risk.
On July 15, 2008, James P.W. Darcel, CFA, published a ‘detailed’ analysis of Callinan in which he states that Callinan Mines is a “STRONG BUY”. Without taking into consideration any value from Callinan’s current lawsuit against HudBay, while recognizing that the Manitoba court has ordered a reluctant HudBay to “disclose all”, he believes that Callinan should be trading between $4.47 to $4.96 per share . I will not attempt to duplicate Mr. Darcel’s very detailed 21 page analysis, since it is available on www.illions.ca . However, I will quote his synopsis on Page 1 of The Darcel Report re. The importance of the Royalty income to Callinan and its shareholders.
- This royalty cash flow provides Callinan’s unique advantages compared to similar companies: Significant future cash flow for exploration and development.
- Minimal stock dilution risk
- A cash-equivalent asset that could be used to fund property or joint venture acquisitions.
In the final analysis, after the diamond drills have supplied all the missing pieces to the mosaic, or have drawn a clear picture, volumes will be written about Callinan in hindsight. Currently, we have an opportunity to view the early brush strokes of those analysts with vision.
Trading symbol: TSX V: CAA; OTC: CCNMP.PK
