MINING MARKETS & INVESTMENT NEWS — INVESTMENT COMMENTARY — Market downturn won’t deter aggressive junior companies

With positive exploration results greeted more often with a selloff on the generation of liquidity than with an appreciation in share price, Canadian exploration juniors are battling a negative market sentiment that has left many near or at historic lows.

Retail analysts Doug Leishman and Art Ettlinger of Yorkton Securities believe it will take either a sharp increase in commodity prices or a major mineral discovery to shake the junior sector out of its current depression. In a report titled Exploration Matters: What to Own When the World Wakes Up, they highlight five companies that have the prospects and the managerial talent required to generate near-term exploration success.

“Each of these companies will be involved with aggressive exploration programs this fall despite the general tendency for junior companies to slow down and conserve cash at the present time,” the analysts state. “Cash may still be king, but only drilling will yield a discovery.”

* Atna Resources (ATN-T), with $16 million in cash and 20.2 million shares outstanding, is recommended at a price of 52 cents. The company is focused on pure volcanogenic massive sulphides (VMS), and its multiple assets include a 40% interest in the Wolverine deposit in southeastern Yukon. The company is contesting the sale of Boliden’s (BOL-T) 60% interest in Wolverine to Expatriate Resources (EXR-V), with the court dates scheduled for Nov. 25-26.

Atna has entered into an option agreement with Energold Mining (EGD-V) to earn a significant interest in the San Antonio concession in the Dominican Republic. The target is a precious-metals-rich VMS prospect.

Atna recently walked away from an option to earn a half-interest from Rubicon Minerals (RMX-V) in the Palmer base metal property in Alaska, after funding a US$500,000 exploration program that included limited drilling of four holes.

The company has been trading in the 62-69 cents range.

* The Yorkton report recommends Energold Mining (EGD-V) at 40 cents. The company has $2.2 million in cash and holds varying interests in a large portfolio of mineral properties in the Dominican Republic. Energold has developed a large prospective drilling target on the Longyear concession, adjacent to the Pueblo Veijo gold deposit. Geophysics, geology and geochemical work point to both epithermal and VMS-type potential. Eldorado Gold (ELD-T) can earn a 51% interest in the property by funding all exploration costs.

Energold has 14.3 million shares outstanding and $2.2 million in cash, and has been quietly trading in the range of 40-49 cents.

* Montello Resources (MEO-A), which just discovered two kimberlite bodies on its joint-ventured Legend property in northeastern Alberta, is recommended at 26 cents. The issue has recently been trading between 40 cents and 47 cents. Kennecott Canada can earn a 60% interest in the property and is drill-testing up to 10 geophysical targets. At present, ownership is split 70-30 between Montello and Redwood Resources (RDW-A).

Montello has about $350,000 cash on hand and 37.6 million shares outstanding.

* International Northair Mines (INM-V) is recommended at 35 cents. With 5.1 million shares outstanding and $1.25 million in cash, the company holds a 100% interest in the promising Venturina gold-silver property in the Mexican state of Chihuahua. Surface sampling shows widespread and potentially economic bulk-tonnage gold values.

The Venturina zone, one of five gold-silver targets outlined on the property, has been traced over a strike length of 1,300 metres, with widths of up to 100 metres. A total of 337 chip and channel samples has yielded an average grade of 1.53 grams gold and 39 grams silver per tonne.

An aggressive exploration program involving mechanical trenching and underground rehabilitation of old workings is under way, to be followed by a first phase of drilling before year-end.

Northair is trading around 50 cents.

* The analysts like Donner Minerals (DML-V) at 41 cents. The company holds varying interests in the South Voisey’s Bay area of Labrador. Teck (TEK-T) can earn half of Donner’s interest in the area, and, as project manager, is drilling in the northern gabbro area on ground joint-ventured with Northern Abitibi Mining (NAI-A) and Major General Resources (MGJ-V).

Narrow intervals of disseminated and semi-massive sulphides were intersected at the Sarah Lake property of Major General.

Pulse-electromagnetic geophysical surveys are being used to identify sulphides in what is described as a difficult graphite-rich environment.

Donner is sitting on $5.5 million in cash and was recently trading in the 30-34 cents range. The company has 31.7 million shares outstanding.