Energy & Tech Stocks

Aurvista Gold Corporation

I learned about Aurvista Gold Corporation (Aurvista) last fall when I was invited to speak at a wonderful

investment conference event in Kelowna, B.C. The conference was sponsored by the Norvista Group, which is one

of the largest shareholders of Aurvista. With a 43-101 resource of nearly 2 million open-pit ounces of gold in place,

with prospects of expanding that number significantly, and with the project located in the prolific eastern gold fields

of Canada where infrastructure problems are virtually non-existent, this was a “no brainer” recommendation.

Approximately six months later this stock is trading at more or less the same level as it traded when I first brought it

to your attention on September 30, 2011, which is not unusual by any means. Junior stocks have been in funk for

some time now and in my view, in many instances do not reflect their true intrinsic value in what I believe is and

shall remain for some time to come, the bull market of a lifetime. I believe Aurvista Gold Corp. could be ready for a

major breakout.

Aside from the influence of the markets, which is beyond the control of management, the recent appointment of

Rick Adams to head up the company may be the catalyst to bring this much undervalued company to the attention

of some new investors in this stock. Adams is a professional engineer who holds an MBA in finance. He is an

experienced mining executive with a proven international record in due diligence, finance, development,

construction, and operation. He is experienced in gold, nickel, copper, zinc, and diamond mining operations, and

has been employed by, or consultant to, most of the world’s largest resource companies, including Xstrata,

AngloGold, Barrick, Placer Dome, Votorantim, INCO, Falconbridge, Teck-Cominco, Hudson Bay Mining &

Smelting, DeBeers, and Rio Tinto. He has worked in executive, operational, and consulting roles for companies

with projects in North America, Central America, South America, Europe, Asia, and Africa. Recently, Mr. Adams

Gold

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was a founder and director of Castle Gold Corp., a Central American gold producer, which was successfully sold in

2010 for $110 million.

This company’s shares are very tightly held. Nearest I can tell, it seems that only about 10% of the outstanding

shares are in the float. Two shareholders, Vior Inc. with 44% and Norvista with 18%, own 62% of the company.

Management holds another 7%, which means management and two companies own 69% of the company. Another

21% is held by the following: Desjardins Securities (6%), MGI Securities (5%), Marquest (4%), Sidex (2.5%), CGE

Resources (2.0%), and Matrix (1.5%). That means that this stock has very little if any following among retail

investors. The “smart money” has gotten into this deal at or around the current share price. I suspect that is because

they see the potential for Aurvista to build a major gold deposit in a major gold camp where infrastructure needs are

fully met and in one of the best mining jurisdictions in the world, namely, Quebec.

The company’s flagship

property, known as the Douay

Project, is located on the Casa

Berardi Fault in Quebec, 120

kilometers southeast of the 30

+ million oz. Detour Lake

Project, 80 meters due east of

the Casa Berardi Mine, and 50

kilometers directly north of

the Sleeping Giant Mine. It’s

about a 2½-hour drive from

Val d’Or to the property.

Aurvista has the following

three separate targets on its

very large Douay Property:

•

•

•

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multimillion-oz. deposit from a super pit appears to be a distinct possibility if in fact a significant amount of gold

mineralization exists between those various zones outlined thus far. Of course that will depend on additional

drilling, but the trend of these zones clearly extends some 6 + kilometers from the North West Zone on the

northwest to the Main Zone on the southeast. And, to the south side of this mineralized trend, no fewer than four

zones have been identified to date. The distance between the southern and northern mineralized zones is on the

order of 1½ to 2 kilometers.

In fact, check out the various mineralized zones above. There would appear to be the potential to outline one major

super pit that could host many millions of ounces of gold with higher-grade underground mining remaining a

possibility for the future. Various higher-grade zones would add “sweeteners” to an overall deposit. Of course a lot

more data points between these existing zones will need to be obtained before it is possible to start determining the

economic viability of one super pit. But in the current environment, sub-one gram per tonne deposits are often very

profitable,

The upside would appear to be very large for this company’s project. In my view, the addition of an experienced

mining executive to head up this company not only makes it a more serious candidate to move the project forward,

but also gives the company the technical talent required to progress the Douay Project further and very possibly take

it into production on its own, depending on a number of factors such as the size and scope of the project. Major

mining companies are going to replace existing deposits that they are depleting on an ongoing basis. I watched

another early-stage deposit grow from around 1 million ounces to what is now over 30 million ounces of gold, and

the Douay looks similar in many ways to me. I’m talking of course of the Detour Lake Project, which was owned by

Pelangio, which I recommended at 8 cents. Pelangio became one of the largest winners this newsletter has had in its

31+ year history. I’m not saying anything that large will emerge at Douay, but then again, I’m not saying it won’t.

All I’m saying is that over time, assuming the company can retain its holding of this project without diluting

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existing shareholders into oblivion, the upside potential here appears to be enormous, compared to downside risks

for investors who buy these shares at or around the current $0.25 price.

The greatest risk for this company as well as any junior exploration company is that of potential dilution. Note that

this company’s working capital position is rather small (around $2 million), but equity prices for the mining

industry in general have not kept up with the price of gold and profits of senior mining companies. Of course there

are all the other obvious risks inherent in junior exploration, including the uncertainty of what future drill

campaigns will reveal. Another risk is one of illiquidity. As noted above, the stock is tightly held by institutions and

management. Another risk is “time,” meaning the time you will need to tie up your capital before the investment

pays off. These are all the normal risks involved with investing in highly speculative junior exploration stocks.

But the prospect of outlining something huge in one of the best places to mine in the world due to political,

infrastructure, and geological considerations, provides many advantages for this company’s project. And given my

view that we are in a bull market of a lifetime and that this bull market has another 10 to 15 years to run, I believe

the markets will not only price gold share in line with the multiples of other sectors, but will no doubt exceed other

levels as the bull approaches maturity.