Monday, May 2, 2011

With an apparent maket pullback these stocks become attractive

With the market seemingly going through a correction phase, there are some very attractive deals as of late.
Baja Mining Corp. (TSX:BAJ; OTCQX:BAJFF) is a Canadian mine development company with a 70% interest in the Boleo copper-cobalt-zinc-manganese project located near Santa Rosalia, Baja California Sur, Mexico. Boleo is fully permitted, fully funded, currently under construction and targeted for copper production in early 2013.

Boleo is a copper-cobalt-zinc-manganese project located near the town of Santa Rosalia in Baja California Sur, Mexico. Boleo is fully permitted and fully funded. Construction at Boleo re-commenced in November 2010. Copper production is targeted for early 2013.
Boleo was staked in 1992 and since then, as part of a Definitive Feasibility Study (DFS), two test mining programs, two process pilot campaigns, and a +38,000 metre in-fill drill program have been carried out. The DFS was completed in 2007 followed by a Technical Report update issued in March 2010.

BOLEO SNAPSHOT
Ownership: 70% Baja Mining, 30% Korean Consortium
Resource: Measured+Indicated 265Mt (of which P+P=85Mt)
Inferred 160Mt
Deposit: 7 flat-lying soft rock ore beds
Products: Copper and cobalt metals, zinc sulphate and possibly manganese
Mining: Underground (10,000 wt/d) + Open Cut
Access: On the ocean and main highway from USA
Water: All process (except electrowinning) to run on sea water
Power: 42MW acid plant, 20M heavy fuel oil plant


Boleo Economics(1)

Capex US $889M
Mine Life 23 years
Net Cash Costs Negative US$ 0.29/lb of Cu
After Tax NPV (8%) US $1.3 Billion
After Tax IRR 25.60%

Y1-Y6

Copper Grade Above 2.00%
Avg Yr Production Cu 125Mlb, Co 3.7Mlb,
Zn 55.8 Mlb
Cu 56.7kt, Co 1.7kt,
Zn 25.4kt
After Tax Yr Avg
Cash Flow
US$ 300 M

LIFE of MINE

Copper Grade 1.33%
Avg Yr Production Cu 84Mlb, Co 3.6Mlb,
Zn 65.0Mlb
Cu 38.1kt, Co 1.6kt,
Zn 29.5kt
Revenue Distribution Cu 66%, Co 25%, Zn 9%
(1) Based on March 2010 Technical Report - Cu US $2.91/lb, Co US $26.85/lb. Zn US $0.53/lb


The company has a website that can be accessed at www.bajamining.com.


There is another company that I view as a decent value at present. This company is called Nevada Copper (TSX:NCU).
Nevada Copper owns 100% of the Pumpkin Hollow Copper Development Property in the Walker Lane mineralized belt of Western Nevada.

Pumpkin Hollow is an advanced stage copper property and as at March 2011 contains:
  • Measured and Indicated Resources totalling 5.9 Billion pounds of Copper plus additional Inferred Resources of 3.7 Billion pounds of Copper (all using a 0.2% copper cutoff grade);
  • 1.6 million ounces of gold in Measured and Indicated Resources plus 716,000 ounces in Inferred resources;
  • 42 million ounces of silver in Measured and Indicated Resources plus 21.8 million ounces in Inferred resources.
  • 111 million tons of contained iron in 341 million tons at an average grade of 33% iron at a 20% iron cutoff in the Measured and Indicated Category.
Preliminary Economic Assessment (PEA) results were announced on March, 17, 2008, and updated December 1, 2009 to incorporate a High Grade Case. The initial PEA demonstrated that at a US$1.75 long term copper price, the Pumpkin Hollow Copper Project has a US$784 Million NPV at an 8% discount, with an IRR of 24%. At a US$2.50 copper price the project's discounted NPV at an 8% discount increases to US$1.1 Billion.
The updated PEA assuming a High Grade Case demonstrated that at a US$2.50 copper price, The Pumpkin Hollow Copper Project has a US$498 Million NPV at an 8% discount with an IRR of 44% and Capex of $192 Million. At a US$3.00 copper price the project's discounted NPV at an 8% discount increases to US$ 784 Million. The NI43-101 compliant technical report highlighted several additional areas that have the potential to further improve the already solid economic base. The detailed PEA can be accessed at http://www.nevadacopper.com/i/pdf/PumpkinPEA-01-13-10Rev-Final.pdf.
  • Pumpkin Hollow is a high grade IOCG deposit within a district rich in porphyry copper deposits where the district mineral inventory is over 24 billion pounds of copper.

  • Pumpkin Hollow supports a positive economic profile, representing a US$784M, NPV at an 8% discount and US$1.75 long term copper price as reported in a 2008, 43-101 compliant Preliminary Economic Assessment.

  • Pro-mining location with excellent local infrastructure.

  • Pumpkin Hollow contains significant resource upside with deposits remaining open in multiple directions.

  • Feasibility Study due by Q3 2011


  • The link to the company's website is www.nevadacopper.com and everyone who is interested should start their due diligence there. For disclosure I have received no compensation of any kind for this post. I do not own either of these stocks at present but I do plan to purchase some shares of NCU in the near future.

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