Friday, July 22, 2011

Compliance Energy - A well diversified company

Compliance Energy (TSXV:CEC) is a Canadian company. They are based in British Columbia, with their flagship property being, the Raven Project.  Through the Comox Joint Venture (‘CJV’), CEC owns 60% of the Raven Underground Coal project and is the manager & operator of the CJV. The semi–soft coking coal resource is 43–101 compliant and consists of 97.5M tonnes of measured & indicated, as well as, 34.5M tonnes of inferred. Just 82km (50 miles) from a deep water port, the Raven project is a near term producer ideally situated near power and transportation corridors. Currently Compliance Energy has completed just over half of the required permitting process.
The public comment period on the draft AIR/EIS guidelines was conducted from May 18, 2011 until June 27, 2011 and  included three public meetings. After taking all public comments into consideration and ensuring responses are adequate, the CEAA and the BC EAO will finalize the AIR/EIS Guidelines and issue it. At that point the Comox Joint Venture can begin preparation of its applications for environmental certification and approval. At this time, Compliance Energy is currently tracking, tabling, and responding to all comments from this public comment period.

Compliance Energy has just released news of a planned drilling program at other properties that the company holds 100% ownership of.
 The Company acquired five properties in 2010 and performed early stage exploration which included geological mapping, soil and rock geochemistry, and airborne geophysical surveys totalling 927 kilometre.

The following is a list of the mineral properties that Compliance Energy owns and gives an indication of what resources may be potentially found.

Property   Approx. loc.   Size(Ha)     Exploration Objectives/Targets

Camp lakeCampbell River3,441 Magnetite skarn and porphyry copper deposits
HisnitTahsis1,294Porphyry and skarn deposits containing Copper, Molybdenum, and Gold
TowerSayward2,107Porphyry deposits containing Copper, Molybdenum, and Gold
NICPort Alice7,533Porphyry deposits containing Copper, Molybdenum, and Gold
CJDGold River1,042Porphyry deposits containing Copper

It is not difficult to see the advantages offered by a company that is this diversified, and even more so when the targeted resources are in a strong demand group. With current forecasts of strong demand of these resources, and to continue for some time to come yet, bodes well for Compliance Energy.

These properties all have good potential for copper, molybdenum, and gold, except for the CJD property which to-date has only shown potential for copper. Globally, copper saw an estimated deficit of approximately 250,000 metric tonnes of refined copper in 2010. This deficit is expected to grow to approximately 380,000 metric tonnes for 2011.
Currently copper prices are in the $4.35 range, and have been on an uptrend, no doubt in part because of the supply deficit.
With this deficit forecast to grow, it is not difficult to see the trend continue regarding the price of copper. Last year it was reported that Mexico experienced a reduction in the amount of copper being produced by approximately 19%. Another aspect that will have a major impact on copper is the fact that there are only a handful of new deposits coming on-line globally over the next couple of years.

Molybdenum is also facing growing demand. According to ASM, in an article from June 13, 2011 they report that Molybdenum demand has hit new highs.
Moly Investing News, in an article written by Michael Montgomery, reports that although molybdenum is being supplied at a rate which is satisfying global demand, there is an expected increase that will leave molybdenum production in a deficit. In the article it is stated, that demand is expected to rise to approximately 300 million pounds from the approximate 400 million pound consumption range we currently are experiencing. As with everything, if this deficit in supply is accurate, then we can expect molybdenum prices to obviously increase.

Gold is something that has been experiencing an uptrend that is unprecedented. To get a feel for what the future for gold may be, let's look at the amount of exploration being conducted at present for this elusive metal. To-date gold has continued to set new record highs.

Compliance Energy has not only proven there value in regards to the Raven Project Underground Coal Project, but the management has taken the strategic steps to acquire these other properties, and has positioned the company to display an inordinate amount of potential. This becomes even clearer when we consider that Compliance Energy has just over 76 million shares on a fully diluted basis. While we view all of these properties as exceptional in terms of potential for copper, molybdenum, and gold, it goes without saying, that the Raven Project is, at this point, truly the focus of Compliance Energy. The fact that Compliance Energy entered into the joint venture in 2009 with 2 stellar companies, namely I-Comox Coal Co. (100% sub of Itochu Corp. of Japan), and LG International Investments (Canada) Ltd. (100% sub of LG of Korea), speaks volumes about the management and their commitment to this company and shareholders alike. This joint venture leaves Compliance Energy owning 60% with both I-Comox and LG both owning 20% each respectively.

The fact that transportation costs are reduced, in comparison to many competitors, is due to the fact that Compliance Energys' properties are situated on Vancouver Island, with access to deep water port facilities. In the case of Raven Project, the majority of the coal if not all, will probably find its way to the Asian market, due to the nature of business that the joint venture partners are involved in. Itochu and LG are both International trading company's. Itochu's 2010 annual trading of energy metals and minerals accounted for US $35 billion. LG is Asia's largest coal trader.

After considering all this, it is my opinion, that Compliance Energy is not only a very attractive investment possibility, but also one of the best diversified company's. For anyone who finds Compliance Energy to be a company of interest, I would suggest doing your own due diligence. An excellent place to start would be the Compliance Energy website, which can be located at

For disclosure purposes I have not received any compensation of any kind for this post. I do own shares in Compliance Energy.

PropertyApproximate LocationSize (Hectares)Exploration Objectives/Targets

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