SRI - Sipa Resources

[AussiePaul72]

Well guys with the recent drop in LME stocks for Zinc/Lead approaching critically low levels. Zinc now at 16 year lows below 70,000 tonnes and Lead trading at all time price highs. I have been searching for an undiscovered gem that covers both metals, and I certainly have found a little beauty here in Sipa Resources (SRI)

With tight supply starting to drive prices forward, (both metals spot prices up 3.5% overnight) SRI looks good.

Now for a look at Sipa Resources (SRI)


Shares 297,865,090

Share Price 13.5c

Market Cap $40 million

Cash $8.4 million


Reasons to Buy into the SRI Story

- Exposure to Zinc/Lead with fundamental for both metals very strong
- JV's with market heavyweights Newmont/Newcrest/CBH
- Royalty Payments from CBH's upcoming Sulphur Springs Mine($350k on decision to mine and $2 a tonne of ore mined up to $3.7 million)
- Large Cash Reserves
- Upcoming Drilling Results (results from 3 prospects within a couple of weeks)
- Upcoming Resource Upgrade (huge upside due to recent exploration success)
- Free Carried to mine decision on Panorama Exploration Project Targets (CBH)
- Huge exploration upside (will discuss below)
- Already begun re-rating due to upcoming development of Kangaroo Caves Mine (to be treated at Sulphur Springs treatment plant 6km south)
- Very high grade zinc deposit, very robust profit margin
- Strong cashflows once mining begins at Kangaroo Caves/Bernts deposits
- SRI story very similar to that of SMY/THX (follow the SP benefit to THX once the Copernicus Nickel mine was announced)


Now A Closer Look at its Projects

Panorama Exploration Project (CBH 60%,SRI 40%)

The Panorama project contains several JORC classified deposits that will be used as open cut ore feed for the Sulphur Springs treatment plant which will be operational late 2008.

The Panorama Joint Venture covers a mineralized Archean volcanic horizon that extends for 25km south along strike from CBH's planned Panorama base metal mine which is located 160km by road southeast of Port Hedland, in Western Australia's Pilbara region. The project is regarded as one of the best base metal exploration properties in Australia, with a number of known base metal occurrences and the demonstrated potential to host large deposits with >30Mt of mineralization.



Kangaroo Caves

Jorc current resource of 1.7 mt @ 9.8% zinc and 0.6% copper with lead credits

Kangaroo Caves has around the same tonnage as that of the Jaguar Mine for JML(although slightly lower grades), and is the subject of a resource upgrade to include the recent high grade exploration hits, and the potential to substantially increase the resource.

Recent Drilling Results include some spectacular hits

-56m @6.8%zn and 1%cu
- 9m @13.3%zn and 1.9%pb
-15m @11.6%zn and 0.3%cu
-20m @13.7%zn and 0.2%cu
-13m @7.6%zn and 0.8%cu
-6m @12.2%zn and 1.6%cu


Bernts Prospect

Jorc Resource of 0.6 mt @ 7.8% zinc 1.7% pb 0.3%

Another mine ready resource to be use as ore feed to the Sulphur Springs treatment plant.


Also included in the Panorama Exploration Projects are the following very exciting prospects that are in varying stages of exploration

-Jamesons (drilled awaiting assays)
-Breakers (drilled awaiting assays)
-Anaomaly 45 (drilling commencing in september)
-Man O' War (drilling commencing in september)
-Nambucca (drilling commencing in september)
-Roadmaster (drilling commencing in september)


ASHBURTON GOLD PROJECTS

Newcrest Operations Limited (Newcrest) 80% - Sipa 20% carried; including four participation Joint Ventures where Newcrest/Sipa is earning an interest with third parties.

CONCEPT

The Ashburton Gold Province (see figures below) is a relatively newly recognized region of gold mineralisation in which Sipa’s Paraburdoo Gold Project mined the Mount Olympus, Zeus, Peake and Waugh oxide gold deposits between 1998 and 2004, for a total production of about 350,000 ounces of gold.

The Ashburton may be compared to the ‘Carlin Trend’ of Nevada - host to more than 110 million ounces of gold production and resources. This style of mineralisation is characterized by bulk-mineable sediment-hosted gold deposits, with very distinctive types of alteration and trace element signatures, whose location is controlled by combined stratigraphic and structural features.

Sipa’s judgment is that the Ashburton has a very high potential for discovery of very large gold deposits. Clearly if anything approaching a similar potential to the Carlin Trend can be realized in the Ashburton, the commanding tenement position enjoyed by Sipa and its Joint Venture partner Newcrest in the district would be highly advantageous.


Woodline Gold/Base Metals (Newmont 70%/Sipa30%)

The Woodline Project is located near the southeastern margin of the Yilgarn Block about 150 kilometres southeast of Kalgoorlie in Western Australia. The Project covers a large area of Archaean greenstone belt rocks considered by Sipa to be prospective for typically Archaean large gold and basemetals deposits, like the Golden Mile and the Golden Grove deposits respectively. The Archaean greenstones and the Archaean ”” Albany Fraser Orogen boundary within Woodline are generally obscured by thin sand deposits There are few indications of historic prospecting activity within the tenement package with very little previous drilling.

Woodline in part sits astride about 70 kilometres of the same northeast trending structural position as AngloGold Ashanti-Independence Group’s Tropicana Project, which is one of the most exciting new greenfields discoveries in Australia in the last decade. Tropicana is situated about 300 kilometres northeast of Woodline, but a more recently announced prospect ”” Beachcomber ”” where 4 metres at 45.5g/t gold was intercepted in a similar geological setting, is only about 70 kilometres northeast of Woodline. AngloGold Ashanti took out a large ground holding contiguous to, and to the southwest, of Woodline at about the same time as the Independence Group’s announcement of Beachcomber. Tropicana and Beachcomber are both situated on, or close to, the boundary between Archaean-aged rocks and the Proterozoic Albany-Fraser Orogen.

Highlights of the Farm-in and Joint Venture

Newmont will reimburse about $500,000 of Sipa’s exploration expenditure incurred up to December 2006
Newmont may earn a 70% interest in Sipa’s tenements and a 51% interest in each of the Comet and Image tenement blocks by exploration expenditure of a further $4 million
During the initial period of 18 months Newmont will spend $1 million. In order to remain in the Farm-in and to progress beyond the initial 18 months Newmont will also subscribe for $450,000 worth of Sipa shares, at a 10% premium to market. If the initial period of expenditure is extended, Newmont will continue to subscribe annually for a further $450,000 worth of Sipa shares at a 5% premium to market to remain in the Farm-in
Upon the $4 million expenditure being completed, a 30% Sipa ”” 70% Newmont Joint Venture will be formed and Sipa will then be free carried to commencement of a Bankable Feasibility Study (Discovery JV)
Sipa will be then be carried by Newmont through to production in the Discovery JV by way of loans which will be paid back out of 80% of positive cashflow to Sipa from its share of production, whilst continuing being free carried for exploration outside the Discovery JV
At Decision to Mine Sipa may elect to participate, or sell its 30% share to Newmont
After 3 years, Sipa may elect to sole-risk non-precious metals exploration within the Project
Sipa technical personnel will be seconded to the Project, including Chief Geologist Leigh Bettenay who will be Project Manager
Exploration Completed and Planned by Sipa

Geological mapping and regional and detailed soil sampling by Sipa over the last year has discovered significant outcropping gold mineralisation, with assays as high as 7 g/t gold, associated with shear zones at several localities within the Sipa 100% ground.

More than 20 gossans, which represent oxidised massive sulphides, and which have strong multi element geochemistry indicative of basemetals mineralisation, have been discovered throughout an area of poor outcrop of at least 4 kilometres by 3 kilometres in extent which is surrounded by sand cover. These gossans are associated with strongly altered volcanic and intrusive rocks with widespread oxidised disseminated sulphides.

A helicopter-borne electromagnetic survey, comprising 1450 line kilometres and covering 270 square kilometres centred on the Socrates prospect, was completed in January 2007. Results are awaited.

All new data generated at Woodline is being collated and interpreted and drilling will commence in the first half of 2007.


All in All a very exciting time for SRI with the continuing draw down in Zinc/Lead LME stocks prices are set to run much higher, with SRI to benefit greatly from the Royalty from Sulphur Springs and the development of deposits in the Panorama Exploration Projects.

Also has extremely good short term value given the impending release of drilling results from Kangaroo Caves,Jamesons and Breakers Prospects which have the potential to significantly move the shareprice(as has been proven by recent releases)

Mick, I gained a lot of insight into SRI from your very informative post. Thanks for the research. I haven't jumped in mainly because of no available funds at present. Hope i don't miss the boat! How far away does anyone think the announcements are? I'm thinking there must be something any day now? What are peoples thoughts?
Cheers
Paul

 

[alphman]

I'm not much of a chartist, but looks like 0.13 could be the bottom this time around, although 0.125 may have a chance considering the poor performance on os markets overnight. This is going by the upward trend on the end of day chart, which is crossing around 0.1275 for me.

On the same chart, I've noticed the sp jump around the start/end of each month since May. If the planets are aligned for this, we could see run #4 occur next week which coincides with their quarterly report (which could possibly contain the remaining drill results).

My buy was partially executed yesterday at 0.13. Yes, that was me.

 

[lioness]

This will be a great long term stock as they are due to announce Newmont JV starts drilling in next 2 weeks also. A lot is happening and I expect to have another go at 17 resistance soon. Aussie Paul if you wait another 2 weeks it may be too late.

 

[AussiePaul72]

This will be a great long term stock as they are due to announce Newmont JV starts drilling in next 2 weeks also. A lot is happening and I expect to have another go at 17 resistance soon. Aussie Paul if you wait another 2 weeks it may be too late.

Thanks for the heads up Lioness .... much appreciated!! I agree that it looks like a good long term hold. I would dearly like to get on the SRI train before it makes another run. I'm figuring its good value at the moment after the last few days trading. It will all depend whether i can free up some finance. I chose to get on RAU last Friday instead. Holding SDL, GBG & ADY aswell at present. Like the look of SRI and FNT to go with my portfolio if i can get in early enough......

 

[lioness]

I am expecting it to move up to next resistance of 15 cents by end of week.

Quarterly report due out this week.

 

[justincase]

I am expecting it to move up to next resistance of 15 cents by end of week.

Quarterly report due out this week.

Lioness, you like to talk up this stock, my feeling is you have a large holding and are trying to ramp up the price. Where is your t/a? You have even talked it up on the CBH thread. If it's such a good buy why arn't you buying more at this lower price?
My

 

[lioness]

Justin,

I have already discussed t/a refer to previous thread. I am just making others aware of an undervalued junior. If you disagree, just ignore me.

There are others here seeing the value and yes I bought more at 12.5 on Friday and will buy more on Monday also.

Please provide your t/a opinion so we can communicate appropriately.

 

[Uncle Festivus]

There is a fine line between ramping and being enthusiastic about a stocks prospects. All the fundamentals have been displayed in post 41 (excellent work), numerous charts abound. I hold a position in this one because of the above positives.
Negatives include the current general market correction & ??

 

[lioness]

Uncle,

Any thoughts here given SRI has gone back the SPP price?? Does it have any chance given the short term tredn line has been broken.

Resource estimate update on Kangaroo Caves due out next week might just save it.

 

[UPKA]

Uncle,

Any thoughts here given SRI has gone back the SPP price?? Does it have any chance given the short term tredn line has been broken.

Resource estimate update on Kangaroo Caves due out next week might just save it.

the whole mkt has gone crazy, ppl r selling off ! even ones that has no relation to subprime. so lots or bargains around, SRI COULD be one of them. overall, if u r holding for long term, short term volatility shouldnt worry u at all.

 

[Sean K]

the whole mkt has gone crazy, ppl r selling off ! even ones that has no relation to subprime. so lots or bargains around, SRI COULD be one of them. overall, if u r holding for long term, short term volatility shouldnt worry u at all.

I'm not turing into an uber bear right now, but sub prime flow on (if severe enough) could effect everything in the market, especially spec stocks with only enough cash just to get through the next FY. When they next go to market, and no one wants to cough up, they disappear. Simple as that. I am NOT saying that this will happen, but it is a risk to be considered in this current state of affairs. Just playing the devils advocate to keep some balance!

 

[Uncle Festivus]

Uncle,

Any thoughts here given SRI has gone back the SPP price?? Does it have any chance given the short term tredn line has been broken.

Resource estimate update on Kangaroo Caves due out next week might just save it.

Any chance? Save it? It's not finished yet is it?

Yes, it's been hammered with the rest, but what makes SRI a bit different is the partnerships it has entered into, namely Newmont. It is virtually the exploration arm of NEM in Australia. I'm not overly concerned with any technical analysis of trendlines, supports etc when the external forces at work on SRI share price (panic selling by the weak hands?) have really nothing to do with the underlying fundamentals now emerging, both in SRI's exploration prospects & the gold price. Who knows where the market route is going to end, but my money is still in gold, and prospectinve juniors with big backers.

 

[lioness]

Any chance? Save it? It's not finished yet is it?

Yes, it's been hammered with the rest, but what makes SRI a bit different is the partnerships it has entered into, namely Newmont. It is virtually the exploration arm of NEM in Australia. I'm not overly concerned with any technical analysis of trendlines, supports etc when the external forces at work on SRI share price (panic selling by the weak hands?) have really nothing to do with the underlying fundamentals now emerging, both in SRI's exploration prospects & the gold price. Who knows where the market route is going to end, but my money is still in gold, and prospectinve juniors with big backers.

You are correct, after researching the Tropicana area they have with NEM next door to Anglo who found the biggest gold discovery in Australia's history, we may sit back and laugh at 11 cents for SRI in 6 months time.

However, given the market is about to be hammered again next week we may fall further although longer term this is great for SRI as there is obviously still weak hands in here, but on Friday it looks like they are almost out.

 

[purple]

Any chance? Save it? It's not finished yet is it?

Yes, it's been hammered with the rest, but what makes SRI a bit different is the partnerships it has entered into, namely Newmont. It is virtually the exploration arm of NEM in Australia. I'm not overly concerned with any technical analysis of trendlines, supports etc when the external forces at work on SRI share price (panic selling by the weak hands?) have really nothing to do with the underlying fundamentals now emerging, both in SRI's exploration prospects & the gold price. Who knows where the market route is going to end, but my money is still in gold, and prospectinve juniors with big backers.

looks like SRI's partner is very bullish on the gold price :


http://compareshares.com.au/show_news.php?id=406498
Commodities boom 'to go on for 20 years'
06/08/2007 11:58am

Newmont Mining Corp vice-chairman Pierre Lassonde says China and India are likely to power the commodities boom for a further 20 years.

"This bull market in natural resources will last a whole generation. That's 20 years," Mr Lassonde told the Diggers and Dealers forum in Kalgoorlie.

Mr Lassonde said China and India would experience hiccups along the way but it wouldn't disrupt the boom's strong path.

He said gold, platinum and oil prices still had a lot of upside but copper and molybdenum prices had hit their peak.

"The gold price will go a heck of a lot higher," Mr Lassonde said.

Mr Lassonde is vice chairman of the world's second largest gold producer, Newmont, and chairman of the World Gold Council.

 

[explod]

You are correct, after researching the Tropicana area they have with NEM next door to Anglo who found the biggest gold discovery in Australia's history, we may sit back and laugh at 11 cents for SRI in 6 months time.

However, given the market is about to be hammered again next week we may fall further although longer term this is great for SRI as there is obviously still weak hands in here, but on Friday it looks like they are almost out.

Good post from yourself and Uncle F. Sellers began to lose interest Friday and seems to have gained support today, larger buyers appearing at .10cents. With US dollar close to all time low would not be suprprised to see move on the gold price sooner than many expect. In fact the US fed would have to uptick interest rates to stop the fall now and that is appearing very unlikely IMHO

 

[lioness]

Good post from yourself and Uncle F. Sellers began to lose interest Friday and seems to have gained support today, larger buyers appearing at .10cents. With US dollar close to all time low would not be suprprised to see move on the gold price sooner than many expect. In fact the US fed would have to uptick interest rates to stop the fall now and that is appearing very unlikely IMHO

Thanks Explod,

For your and everyone's information SRI just got a good write up in the latest Resource Stocks magazine as "trading at a strangely affordable price", based upon JV's with all the big boys, such as Newmont, Newcrest, CBH.

Well worth a read.

 

[lioness]

I'm not turing into an uber bear right now, but sub prime flow on (if severe enough) could effect everything in the market, especially spec stocks with only enough cash just to get through the next FY. When they next go to market, and no one wants to cough up, they disappear. Simple as that. I am NOT saying that this will happen, but it is a risk to be considered in this current state of affairs. Just playing the devils advocate to keep some balance!

SRI will not disappear Kennas, they are free carried on every project now with 8.5 mill cash at bank so no need to raise for a long time. Just thought I should make that point of free carry. cheers

 

[Sean K]

SRI will not disappear Kennas, they are free carried on every project now with 8.5 mill cash at bank so no need to raise for a long time. Just thought I should make that point of free carry. cheers

Very good point Lioness. Those who have recently gone to market, or in JVs free carried, must be better looking in the short term. But also depends a great deal on how far and deep this correction/consolidation/crash extends perhaps. Very good that it's consolidating above 10 cents. Failing here, and it's not looking great chart wise.

 

[spottygoose]

Thanks Explod,

For your and everyone's information SRI just got a good write up in the latest Resource Stocks magazine as "trading at a strangely affordable price", based upon JV's with all the big boys, such as Newmont, Newcrest, CBH.

Well worth a read.

Thanks to Deltra from HC who provided a bit more insight into the articleon SRI from the latest copy of the Resource Magazine. Deltra wrote:

It explains that many of their current projects are company makers.

It states and I direct quote from it "Sydney based brokerage Stock Resource was glowing in its assessment of the deal(Newmont) and immediately rated the stock as a Buy for its clients".

In relation to its zinc deposits at Kangaroo caves it states "Sipa's 40% interest in any satellite deposits at Panorama could be worth a lot to the company".

It is 2 pages long so too much to write down here.

It states besides having production experience and several big partners it is trading at a strangely affordable price.

 

[lioness]

Spotty goose,

You still in SRI?? It has collapsed obviously but won't take much volume to push this back to 13 cents with good news.

Are you staying in or jumping ship after the markets recent fall??