Cashing in on Cash
I'm just now back from another two week jaunt all over Western Canada and Alaska. I managed to make it to Vancouver, Winnipeg, Ontario, back to Vancouver, up to Fairbanks, down to Anchorage, back to Fairbanks, over to Dawson, across to Mayo, down to Whitehorse, down further to Atlin, up to Whitehorse, over to the Ross River, back to Whitehorse, down to Vancouver, across to Toronto and back to Miami. Only to be greeted by a statement showing how many more air miles I have earned. Don't the airlines get it, the airport Nazis have made air travel a horror story. I used to love flying. Now I hate it.
But last month I saw a continuing story, one I began last fall. Back in November the handsome Basil Botha, President and CEO of Cash, the indomitable Doug Eaton, geo master of the Yukon and I went to see Cash Minerals' Lumina uranium property. Cash was just in the process of flying in supplies and fuel in the hopes of getting in a short drill program. Alas, the weather gods didn't cooperate and by the time they had a drill set up, winter cast a chilly glaze over the Yukon.
So when Basil called a while back and asked if I wanted to join a tour in the comfort of the summer with Dr Richard Appel and some important stockbrokers and analysts, I leapt at the opportunity. I like the business model of Cash and I like the management.
Cash Minerals is one of those companies with so much going on that it can be confusing. Cash is an energy exploration and development company primarily aiming at operations in the Yukon. On the coal side they have a 43-101 resource of 51.5 million tons of coal at the Division Mountain project in the Yukon. Cash is currently preparing a feasibility study on the project.
And Cash recently signed an MOU ( Memorandum of Understanding) with a leading state-owned mining company and the Municipal Government of Manzhouli in China for the foundation of a JV proposing the development of a coal mine to supply coal for a coal-to-liquids plant producing 50,000 barrels per day of liquid fuel. The full report can be found here.
But the bedrock of the company and the primary aim is uranium. Cash has entered into a joint venture with Twenty-Seven Capital Corporation on several uranium properties in the Yukon and in the midst of conducting a major drill program this year with encouraging results. We visited two of these projects in July.
The first project we saw was the Lumina project where Cash planned a minimum of 3500 meters of drilling for 2006 but results from early drilling encouraged them to mobilize a second drill rig. We saw drill core that pegged the scintillator but due to the radioactive nature of the ore, it has to go to a special government lab in Saskatoon. That and the backlog of samples from other companies has caused a giant backlog. In any case, it's the end of August and results should be forthcoming shortly.
The Lumina project is a structurally controlled high grade uranium project similar to that of the Athabasca Basin Model.
After seeing the Lumina project, we hopped into the helicopter for a 30 minute ride over to the Igor property. All I can say about the flight is that the Yukon is magnificent in the summer. Cold in winter, true, but magnificent in the summer.
The Igor project is an IOCG (Iron Oxide, Copper and Gold) of similar age rocks to that of the Olympic Dam mine in Australia, ca. 1595 Ma. The age of the rocks is interesting because 1.6 billion years ago, Australia was connected to Alaska and what is now North America. Cash plans a $2.7 million dollar drill program this year with a total of 5000 meters of drilling. We saw the recently drilled core and I can tell you Cash may have to rethink their model. The core we saw was riddled with high grade chalcopyrite, a copper ore. I think you may well see some intersections of 15-20% copper. At today's prices, 1% copper contains $75 worth of copper. Be prepared for some eye popping drill results when they come out.
When I wrote up Cash last winter, the shares were $.42. We owned some but felt like we had all the time in the world to buy more at a cheap price. I did pick up some more when I came back from the Yukon a month ago but again I thought I had all the time in the world to buy cheap. But James Dines just recommended them to his clients and the stock shot up to a new high of $1.77. It's just my opinion but I am impressed beyond belief with the progress Doug Eaton of Archer Cathro has made this summer in a short 6 weeks.
I will never forget Doug. He saved me from the clutches of a 400 pound fat lady on a plane last year and how could you even thank anyone enough? Doug, I appreciate it and Barbara appreciates it. I could have been squished to the size of a sheet of paper and you stepped in at the last possible moment to snatch victory from the jaws of defeat.
Cash is sitting on at least three major energy projects. The coal property at Division Mountain works all by itself. Since it's 100% owned by Cash it probably would make sense to spin it off into an entirely new coal company. The MOU on the Coal-To-Liquid project in China has unlimited potential. I am a believer in Peak Oil, in fact, I believe we will soon realize it's already past. Coal is nasty stuff to burn, causing all kinds of damage to the environment. But CTL or Coal-To-Liquid makes a whole world of sense.
Either of the uranium properties I saw has company making potential. Doug Eaton believes he is on the edge of a major new unsuspected IOCG target at the Igor project and I happen to agree. The copper intersections at Igor are so big that if he can connect the dots, he may have made a major copper and uranium discovery this summer. So I don't know what the real cap of Cash should be, but I think it is a better buy at $1.75 than at $.42. They have made some giant steps and the company has 5-10 bagger potential with any luck at all.
Cash has not paid us for this
piece. They are advertisers on both 321gold and 321energy. We
own a modest number of shares and on any pullback would be buying
with both hands. We are both biased and prejudiced, we like the
company, the management and owe Doug Eaton a debt which we can
never repay. Any investment decisions you make are your responsibility,
we are not investment advisors.