I thought I would put a quick blog post up regarding a stock I bought today – Midnight Sun Mining, MMA on the TSX Venture. When I saw the news pre-market I was sure the stock would spike based on the information presented in the press release. I decided to wait and see what happens. When I saw the share price initially go down I had one of those moments I have every now and then when I ask myself – am I the crazy one or is everyone else crazy? Why aren’t investors not paying attention to the news? Has everyone already sold in May and gone away? Does everyone hate copper and cobalt?
I’ve often said 95% of investors in the Canadian junior sector are headline readers only and the headline of “MIDNIGHT SUN COMMENCES DRILLING THE MITU COPPER-COBALT DISCOVERY” isn’t the greatest promotional headline ever written but if anyone read the press release I was sure they would act on it and buy the stock. Instead it sold off. I froze. Are the sellers right? Is this really not a big deal? I did a little more research and bought the stock along with two or three other buyers today. Here’s why:
Midnight had already made a copper/cobalt discovery in Zambia that was announced in January. The initial drilling hit copper and cobalt of over 1% copper equivalent near surface over widths of 10 meters and over .5% copper equivalent over widths of 30 meters. This drilling occurred over about 350 meters on surface. The mineralization is found in what is called ore-shale, which is the dominant form of copper-cobalt deposition in the Zambia/Congo copper belt, the largest single copper-cobalt production area in the world.
In February Midnight Mining announced the start of a geophysical survey. The NSAMT survey was done on the Mitu area of the Solwezi properties, where the extent of the favorable ore-shale trend had yet to be tested. The results from this survey would determine the scope and collar locations for future drill programs.
The press release today announced the results of the survey which showed a very large banana-shaped anomaly running south of the initial discovery area on the western flank of the Solwezi dome. This favorable contact zone along the western flank of the Solwezi dome extends for over 17 kilometers on the company’s optioned properties. Ok ….interesting enough but does the ore-shale exist along this entire 17 kilometer stretch? The company also stated that…”Midnight Sun is currently conducting air core drilling to confirm the presence of the ore-shale unit closest to surface as indicated by the NSAMT survey. To date, this shallow drilling (approximately 60 metres in depth) supports the NSAMT interpretation which indicates the ore shale potentially continuing along the full 17 km contact zone.” So it looks like the entire 17 kilometer stretch may have the ore-shale unit.
Now the company needs to do diamond drilling to determine the extent of mineralization. The President, Robert Sibthorpe, who founded Roxgold and the Yaramoko deposit, stated…”We are at a transformative time for the company,”. “This drill program at the Mitu area should give us the big picture — whether Mitu has the strike and dip extent to potentially develop into a world-class deposit.”. The NSAMT survey shows the ore-shale to be three to four kilometers at a 20-degree angle from surface.
Infrstructure you may ask? The Kansanshi copper/gold deposit (First QuantumMinerals) is Africa’s largest copper mine with resources greater than 1 billion tonnes grading 0.8% Cu and containing 4 million oz. gold. This mine is only 20 kilometers away. Kansanshi produces cathode copper from its SX/EW plant from oxide ore. Grades and reserves have been diminishing and additional feed sources are being sought. Sulfide copper is treated at the recently Commissioned $1 billion+ smelting facility producing sulfuric acid used in the SXEW process.
The company’s share price has declined from $.50 in early April to $.36 – $.38 today as a $.10 PP became free trading (along with $.20 warrants).
The company is now drilling to see if they have a potential world class discovery. That’s why I bought the stock today.