Copper and Gold on Sale
I was hoping I could come up with some really red-hot stock that would track what I believe would happen to the juniors. The juniors have all been hammered. I suspect now is an incredible buying opportunity.
I think I have the perfect stock. I visited the Philippines a few weeks ago and I saw one of the best-run companies I've seen in a long time with five hot projects. The company is absurdly cheap.
I was a buyer of the company in the $.18 to $.20 range when I came back and last week it plunged to $.13 a share, giving the company a market cap of about $15 million. I was buying all the way down. The company is the best deal I have seen since Southern Arc. It has twice the grade and similar tonnage of Southern Arc.
Cadan Resources (CNF-V) used to be called Sur American. There were some serious management issues. The competent people in the company staged a Coup d'état and ran the shaky management off. I totally approve. There should be far more blood letting in junior mining. Brett Taylor, the new President and CEO, changed both management and the name so everyone understood this was a new company, playing by new rules.
I followed the company a few years ago and the projects seemed good. However, nothing ever seemed to move forward. Brett has changed all that. Cadan raised just short of $5 million a few months back. Those shares came free trading on March 1. I'd say anyone who wanted to sell has sold.
I was on a trip to China and was coming back through the Philippines for a quick visit to a private company. While I was in Hong Kong, I got an email from Brett Taylor asking if it was possible for me to stop in and see them while I was in the Philippines. So I did. I also shared with them the horrible two-week flu that I caught from a woman behind me on the flight from LA to Hong Kong. I'm sure they really appreciated that.
I could only give Cadan one day for a visit so they took me to their most advanced project, the Tagpura copper-gold porphyry system. I saw the drill core from hole 15 and they released the results a day or two later. They have 162 meters of $72 rock. The economic rock starts near surface and continues for some distance. They have released other economic results since then.
Cadan refers to three separate, but giant in potential, copper-gold porphyries within the Comval project area. There is the Tagpura project, the Kalamatan project and the newly discovered Cadan project. The Tagpura area has a historic resource of 75.6 million tons at .44% copper, .5g/t gold and 4 g/t silver. That's $55 rock at current prices and over $3.8 billion dollars worth of metal in the ground.
Cadan has reinterpreted a 1974 IP survey at Tagpura and compared it with the 2.2 billion ton Tampakan copper-gold porphyry located nearby. Tampakan has an average grade of .6% copper and .2 g/t gold for contained metal of 12.8 million tons of copper and 15 million ounces of gold. Cadan's Tagpura and Kalamatan each are comparable in area and IP signature to Tampakan and are on the same fault structure.
The Cadan project shows a conceptual tonnage potential of 450 million tons of mineralization potential based on recently completed IP. Cadan is following up with regional mapping and trenching to better define drill targets at the Cadan project. The project is located at the intersection of the Philippine fault and major transverse structure. The 2.2 billion ton Tampakan deposit is located on the same transverse fault. At the very least Cadan is in elephant country.
Cadan is in the process of developing a 43-101 resource for the Tagpura porphyry and skarn deposit. The resource should be out in the 3rd quarter. Tagpura has a Philippine historic resource of some 17.3 million tonnes @ 0.68% Cu and 0.5g/t Au and 4 g/t Ag. That makes the rock worth about $74 a tonne in gross metal value. Look for the resource to make a giant increase in size as a result of all the drilling they have completed.
Within the Comval project area, Cadan also has a large gold target called the Batoto Gold zone with a historic Philippine resource of 39 million tonnes at 1.8g/t Au or 2.2 million ounces. Based on last week's gold price, you can buy gold for about $7 an ounce just based on this one project. Cadan intends to drill Batoto and bring the resource up to 43-101 standards.
In addition to Batoto, Cadan has another gold project further advanced called the T'Boli gold-silver deposit with an official 43-101 resource of 420,000 ounces of gold and 1.6 million ounces of silver. Cadan is in the process of conducting underground exploration and development intended to upgrade the size and grade of the deposit. The gold/silver ratio at the surface is about 1 ounce gold to 50 ounces silver but goes to 1:1 in the deepest holes. In addition, intersection widths are increasing with depth.
At T'Boli, Cadan identified large copper soil and co-incident ground magnetic anomalies indicative of bulk tonnage porphyry copper-gold potential. The size of the anomaly is some 1000 by 1000 meters. All good signs.
It's rare that I come across a company that is totally off the radar screen. But Cadan is so far below the radar screen that it's invisible. Brett Taylor has been so busy cleaning up the mess that he was left that he hasn't done anything in the way of promotion. And the web site sucks. But don't most juniors have websites that suck! I've put him in touch with someone who can hopefully change that.
Brett has remained focused on moving the company forward in very real ways. When the new 43-101 comes out, I think the market will wake up. And I can guarantee the Chinese have been paying attention to what is going on in their back yard. Like Mexico, the Philippines had some pretty stupid and destructive mining laws. Those have been changed and it's now possible to develop giant projects. They are there, I've seen them. And take my word; Cadan isn't a one-trick pony. They have a whole deck of aces up their sleeves.
Cadan is my favorite copper-gold story right now. Buying at $.13 is pretty much a slam-dunk. I am, however, biased. I've been on the property, met management and seen what they have. If you had seen it, you would be biased as well. Still, you owe it to yourself to conduct your own due diligence.
Cadan Resource Corp
May 23, 2008