Eric Coffin Pinpoints The Mining Companies With Resources That Are Right For Today's Market

TGR: Rockhaven raised $4.4M via a placement from Strategic Metals Ltd. (SMD:TSX.V). What did you make of that deal?

EC: Strategic Metals is the main holding company for the group that's backed by Archer Cathro, the premier exploration consultants in the Yukon. If somebody had shown up with a really good financing offer this spring, Rockhaven probably would have taken it. But it's my sense that the people behind Archer Cathro aren't willing to let this one go too cheaply. Doug Eaton, managing director of Archer Cathro and the second biggest shareholder of Rockhaven, was the person who convinced me to visit Klaza. Eaton has put a lot of his money into it and really believes in the project.

TGR: Are there any other stories you would like to share with our readers?

EC: One other company I've followed for a while is a company called Lion One Metals Ltd. (LIO:TSX.V). Lion One has a high-grade gold vein deposit in Fiji called Tuvatu. Tuvatu has about 800,000 oz but the grade is 9–10 g/t. It's open in just about every direction and there are many veins on the property that haven't been sufficiently tested. I'll be fairly surprised if at the end of the day that isn't a 2–3 Moz resource.

Lion One is run by Chairman and CEO Wally Berukoff, a well-known mining promoter who has had a lot of success. He helped found Miramar Mining, Northern Orion Resources and La Mancha Resources Inc.—all three of which sold for more than $500M. Berukoff is committed to getting Lion One into production. The cheapest financing it has done since it went public was CA$1/share. It's trading at around CA$0.45 with $5M in the bank. I'm expecting a PEA very soon from Lion One. Like some of the examples above, I think it will focus on high-grade ounces and should generate some impressive numbers. Importantly, Tuvatu has all required permits for mining in place.

TGR: Please give us one bulletproof call.

EC: Ha! Piece of cake! If you want something bigger and safer, I would look pretty hard at Nevsun Resources Ltd. (NSU:TSX; NSU:NYSE.MKT). You want to buy it on weakness, if you can, but it's a well-run and profitable company. Bisha's a fabulous deposit in Eritrea. Nevsun started production at Bisha when gold was near its all-time high and gold dominated production for almost two years. As gold prices started falling the copper grades were coming up and Bisha has been primarily a copper mine for the last two years, and will be for another 1.5. Then it will shift to being predominantly a zinc operation, which should be just about in time for a couple of large zinc mines to cease production and zinc prices to rise.

The company has over $500M in cash and is generating about $20M/quarter in cash flow. Nevsun is drilling to expand Bisha at depth but also drilling out a nearby deposit called Harena, where it recently had some really nice drill holes. It's one of those companies where either there is some kind of deal to become a multi-mine company or a bigger company is going to make a takeover bid. One of those two things will happen by the end of 2016.

TGR: On May 30 you'll be speaking at the Metals Investor Forum in Vancouver, Canada. The theme of the event is that after a four-year bear, mining markets are poised to rebound. What should attendees expect?

EC: There are four of us speaking: Gwen Preston, Brien Lundin, John Kaiser and myself. For my part, I'm going to focus on companies that are advancing, even in a difficult market. Those are the deals that I think will get the most attention when markets start to improve. There will be presentations by all of the companies in attendance including some of the companies we just talked about. It's a daylong event with a catered lunch break and couple of long coffee breaks. That will give attendees a chance to talk to management one-on-one and ask follow-up questions. Subscribers love it.

TGR: Thank you for your time and insights, Eric.


Eric Coffin is the editor of the HRA (Hard Rock Analyst) family of publications. Responsible for the "financial analysis" side of HRA, Coffin has a degree in corporate and investment finance. He has extensive experience in merger and acquisitions and small-company financing and promotion. For many years, he tracked the financial performance and funding of all exchange-listed Canadian mining companies and has helped with the formation of several successful exploration ventures. Coffin was one of the first analysts to point out the disastrous effects of gold hedging and gold loan-capital financing in 1997. He also predicted the start of the current secular bull market in commodities based on the movement of the U.S. dollar in 2001 and the acceleration of growth in Asia and India. Coffin can be reached at hra@publishers-mgmt.com or the website www.hraadvisory.com.

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Disclosure: Brian Sylvester conducted this interview for Streetwise Reports LLC, publisher of more

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