41% copper over 27 feet!
Silver Stock Report
by Jason Hommel, November 30th, 2006
Shares fully diluted, after the 2 for 1 split: 24,196,648
(share information from sedar.com--Oct. 30th financial statements)
@ $.89 Cdn/share x .88Cdn/USD = $.78 USD
(share price from Yahoo! Finance)
Market Capitalization: $19 million U.S.
Disclaimer: I own 875,200 shares of Coronado, and 400,000 warrants at $.90 Cdn/share that expire in June, 2007. And Coronado has not paid me to write this email. I have 207,500 shares of Coronado for sale at $.87/share U.S.
In January 2006, Coronado's drills in Montana hit core that assayed 41% copper over 27 feet! Not surprisingly, the stock price exploded, increasing nearly 400% on the news release from about $.20 to $1.00/share. I waited patiently for a few months, and then started to accumulate stock around April and May, in the price dip.
What is 41% copper worth? At $3.15/lb., that's worth $2800/tonne. (information from kitcocasey.com, "What's that rock worth?")
A very high grade mine typically has rock worth $200/tonne.
Coronado has continued to drill up and assay very impressive results all this fall, yet, surprisingly, the stock has dipped significantly after the share split. Personally, I think share splits can be perceived as gimmicky, and I strongly advised the company not to do the share split, as it can be confusing for investors, especially if they don't get the news. See http://en.wikipedia.org/wiki/Stock_split for details.
Coronado has not yet been marketed very well. Coronado has not yet started to attend the trade shows, and Coronado's news releases don't seem to show up anywhere except on their own web site. See all the great news here:
November 30, 2006 - EASTERN ZONE CUTS 15 FEET OF 21.5 GRAMS OF GOLD
(That's nearly 2/3 of an oz. of gold, over 15 feet!)
November 2, 2006 - TWO HOLES WITH OVER 16 GRAMS OF GOLD PER TON
(That's 1/2 oz. of gold over 15 feet!)
October 16, 2006 - CORONADO STARTS DECLINE (RAMP)!
(For further drilling & bulk sampling, or test mining.)
September 28, 2006 - TWO INTERCEPTS 19% COPPER CONTINUE ON STRIKE
(19% copper over 8 and 9 feet, that's a gold-equivalent grade of just over 2 ounces per tonne.)
September 25, 2006 - 1.339 OZ/TON GOLD OVER NINE FEET
September 13, 2006 - NOTICE OF SHARE SPLIT
August 17, 2006 - DRILLING UPDATE-MINING PERMIT SECURED PROPOSED FORWARD STOCK SPLIT
February 15 , 2006 - COPPER RESULTS FOR RESOURCE CALCULATION
(27 feet of 41% copper, including 13.5 feet of 60% copper!)
Coronado is building a ramp decline to access the high grade zones. They have a permit, and power is nearby, so I expect they will start mining extremely high grade copper and gold within about 6 months.
Enough drilling has now been done to provide for a 43-101 resource calculation, which I expect in a few months. But really, when the grades are that high, the miners typically just follow the money, I mean, vein.
Coronado has about $3 million cash in the bank, and the decline ramp is costing them about $1 million.
What may put downward pressure on the stock is that there are about 1 million warrants issued at about $.11, from long before the January discovery, but these expire in November, 2007. Further, the company needs to start telling the world more effectively about what they have discovered.
I am about 95% sure that Coronado has the highest grade copper (60%) of any mining project in the world.
Perhaps an interesting comparison is the recent discovery on Nov. 20th, made by Esperanza and Silver Standard, joint partners on a discovery of up to 7 ounces of gold equivalent. But consider the comparable cost to buy the Esperanza deal.
Esperanza, the smaller partner, has a market cap already of
44.6 million shares fully diluted
@ $4.10/share Cdn x .88 Cdn/USD = $3.60
Silver Standard, the larger partner, with a market cap of $1.9 billion, can buy in and take the project to production leaving Esperanza with about 20 or 25% of the project if my memory serves. This means that if you buy Esperanza, and you end up with 25%, it will cost you the equivalent of 4 times Esperanza's market cap to get a bite of this other one, which is $644 million.
In contrast, the market cap of Coronado is a mere $19 million.
To buy shares of a Canadian stock, I typically do the following process.
First, I go to Yahoo! Finance, and click on "symbol lookup" and type in the company name at Yahoo! Finance, and get both the Canadian, and the pink sheets symbol for trading in the U.S. These are CRD.V, and CRDAF.PK. These only work at Yahoo! Finance. Price quotes for the pink sheet symbol are typically delayed by 1 day, so I don't use the pink sheet quote, but I need the symbol to place my order. Price quotes for CRD.V are delayed by 15 minutes, and are fairly accurate.
Next, I go to kitco.com. There is an exchange rate chart at the bottom of the page. I note that the exchange rate to exchange Canadian Dollars to U.S dollars is ".8768". So, I take the accurate price quote for the bid and ask prices for CRD.V, and I multiply by the exchange rate, and add a penny. If I'm patient, and think the stock might move down in the short term, I'll place an order to buy just above or below the bid. If I'm in a hurry, I'll try to buy at or above the ask. I usually buy at the ask, since it takes me quite a few days to establish a position anyway, and I typically move the price a bit. If, after placing my order, I don't get filled in about 1/2 hour, I'll raise the bid to help make sure I get shares.
My last analysis of Coronado was on May 31, 2006, and I also discussed the copper market.
I own 654,700 shares of Coronado purchased both on the open market and in the private placement (PP) in June, 2006.
From the PP, I also own 400,000 warrants at $.90 Cdn that expire in June, 2007.
If I exercise those warrants, I'll own just over 4% of this company.
I also own 207,500 shares of Coronado that I bought at an average of $.71/share U.S. over the last two days, since the stock price was well below my warrant price.
I have those 207,500 shares of Coronado for sale at $.87/share U.S., (about 10% above the warrant price) to help create a more orderly market for this stock after this email goes out.
I feel this full disclosure of my trading positions is the most honest solution to the problem of the stocks I write about moving up by 30-35% in the day after writing about them.