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Low-Key Ontario Copper/Nickel/PGM Developer Cadillac Ventures Underappreciated By the Market
By James West
MidasLetter.com
Thursday, February 11, 2010
Cadillac CEO Norman Brewster is carrying a strong portfolio of projects, has superb experience for exploring and developing the projects and has the deep-pocket backing of Trafigura AG, one of the largest players in this sector.
It’s amazing to me that Cadillac Ventures Inc. (TSXV: CDC) is trading below C$0.30/share, and it probably won’t be for long. Granted, it’s come together very quickly, and many investors just don’t recognize the company yet. Let’s take a closer look and I think you’ll agree: At anything less than $0.80/share, Cadillac is a very sweet deal!
First, three weeks ago, Cadillac announced completion of the acquisition of Richview Resources Inc., and its 75%-controlling interest in the prior-producing Thierry Copper-Nickel-PGM Mine in northern Ontario. For a team with the experience and the backing of Cadillac, the Thierry could well be a turn-key producer. Effectively, this acquisition escalates Cadillac to a position of advanced-stage and perhaps near-term copper producer.
Copper Developer in Ontario
The Thierry Mine comes with complete infrastructure, a three-compartment shaft, a decline to a depth of 550 meters and 22 km of underground workings. The historic independent NI 43-101 resource statement from 2006 already demonstrates nearly 9 million tonnes grading 1.7% Cu, or more than 335 million lbs. of copper (including measured, indicated and inferred categories), plus significant nickel, silver, gold, platinum and palladium resources. More on Cadillac’s Thierry Mine in a minute.
Second, Cadillac is completing Phase I drilling consisting of 3,500 meters at 3 of its 14 properties in southern Spain in the prolific Iberian Pyrite Belt, one of the world’s largest mineralized systems. First drill results at the Chapirita Project were just announced and the company has a strong discovery at Chapirita with hole #3 hitting 18.1 meters grading 1.50% copper, 2.57% zinc and 8.18 g/t silver at a starting depth of 161.7 meters. I address the meaning of this hole shortly – and there is meaning because this is serious elephant country.
Copper/Zinc Discovery in Spain
Third, Cadillac controls the prior-producing New Alger Gold Project, a few hundred meters south of Agnico Eagle’s flagship La Ronde Mine, one of Canada’s largest gold mines. Renforth Resources is earning into 51% of New Alger by spending C$2.5 million in exploration and issuing 2-1/2 million shares to Cadillac.
Fourth, Cadillac is in a 51%-49% joint venture with Noront Resources on the Burnt Hill Tungsten Project in New Brunswick, earlier in prefeasibility in the 1980s, and likely to be in prefeasibility again soon.
In short, very soon, Cadillac will be issuing lots of news on all four of these fronts, and investors will see for themselves the substantial values the company is building. The smart action is to move ahead of the crowd here!
Value Driver
The key determinants of value in the marketplace for Cadillac are 1) most immediately, ongoing drill results from Spain, and 2) making the market aware of the massive potential of its old Thierry Mine, and making steady development progress toward production there.
We’ll address Cadillac’s Spain properties first, simply because drill results are coming immediately there. Then we’ll address the company’s development plans at its flagship Thierry Mine. But first…
Regarding Trafigura
Trafigura AG, the parent company of Trafigura Beheer BV, is one of the largest private companies, and is the second-largest privately-held commodities sourcing and trading company in the world. It is based in Lucerne, Switzerland, and was formed in 1993 by ex-Glencore oil traders.
Trafigura sources and sells oil, oil products, metals, metal ores and concentrates to industrial customers. The company gains much of its advantage by integrating vertically -- by owning and/or leasing on a long-term basis storage facilities, ships, mines and smelters, and by owning portions of mining companies. The company has offices in 37 countries with 1700 employees. It had turnover of more than $70 billion in 2008.
Like Glencore’s relationship with Xstrata – in which Glencore owns 40% and the chairman of Xstrata is a principal of Glencore – Trafigura controls 45% of Iberian Minerals Corp. -- a copper, nickel and zinc producing miner -- and now is developing a mining exploration and development arm with 25% interest in Cadillac.
A good example of the benefit that can come from having a relationship with a company like Trafigura was the 2008 hedging program of Iberian’s, in which Iberian was able to finance approx. $250 million – through gains from smart hedging. This kind of transaction can make a big difference!
Because of Trafigura’s 25% interest in Cadillac, the company’s largest shareholder, Cadillac is a completely unique global minerals exploration company and is well positioned to find and advance potentially large-scale development-focused exploration projects.
Cadillac’s JV with Iberian in Spain
In December 2008, Cadillac announced a joint venture agreement with Minas de Aguas Tenidas SA (‘MATSA’), a wholly owned subsidiary of Iberian Minerals Corp., encompassing 14 properties totaling approx. 232 squ. km. in the prolific Iberian Pyrite Belt of southern Spain. Iberian’s Aguas Tenidas Mine, now in ramp-up to full commercial production, is centrally located relative to the 14 properties in the JV.
Under the JV, Cadillac can earn a 90%-interest by incurring $3 million in expenditures over two years. Cadillac is the operator and has been drilling the first three projects – Chapirita, Angelita and La Majada -- and the first drill results from Chapirita were just announced.
It should be noted that Cadillac’s CEO, Norman Brewster, has five years experience exploring the Iberian Pyrite Belt, having earlier served as the CEO, and today as non-executive chairman, of Iberian Minerals. Because of the proximity of partner Iberian’s Aguas Tenidas Mine, Cadillac would not need to construct a mill to start production. Economic mineralization, if identified, will be shipped directly for processing at the Aguas Tenidas Mine. This is another exceptional advantage that Cadillac is working from in Spain.
We will take a moment to describe the Iberian Pyrite Belt, a key to understanding Cadillac’s large-scale potential.
Iberian Pyrite Belt
The Iberian Pyrite Belt is one of the world’s largest mineralized systems, and one of the most historic. This major zone of volcanogenic massive sulfide (VMS) ore bodies, that are generally more than 50% sulphides, extends over a region that’s 250 km. long and 30 km. wide in southwestern Spain and southern Portugal. This is the source area of Rio Tinto, or the Red River, from which Rio Tinto, the mining company, derived its name, and its early global growth in the last quarter of the 1800’s.
Early indications of mining in the region date to the third millennium B.C. The Phoenicians mined silver here, supplying wealth and distributing it throughout the Mediterranean as the medium for trade. Geologists estimate that about 5 million tonnes of pyrites had been mined from the Rio Tinto area by the time Carthage fell in 146 B.C.
The Romans initiated mining of copper and silver here on a larger scale and mined the region through the 4th century A.D. Historical geological estimates are that the Romans mined approx. 25 million tonnes of copper mineralization. Global demand for copper brought miners back into the region in the mid-19th century, and this was the start for Rio Tinto PLC, the international mining company that is today the world’s second-largest mining company.
The area includes eight giant (as defined in geological literature, greater than 100-million tonnes) massive sulphide deposits, approx. 44 ore bodies greater than 1 million tonnes and hundreds of major prospects.
The chance that there are probably several more company-maker-scale mines to be found in the Iberian Pyrite Belt should not come as a surprise. With 14 shots at the brass ring, we like Cadillac’s chances.
First Drill Results at Chapirita
Right out of the drilling block, Cadillac hit a strong discovery hole at Chapirita including 18.1 meters grading 1.50% copper, 2.57% zinc and 8.18 g/t silver starting at a depth of 161.7 meters. The Chapirita Project is centered on an historical open cut remaining from former mining activities carried on intermittently between 1855 and 1909. The project is located approx. 4 km.. ENE from the former Rio Tinto Mine, and approx. 24 km ESE of the Aguas Tenidas Mine owned by partner Iberian Minerals Corp. Non NI 43-101 compliant historical records available indicate that 70,000 tonnes of material grading between 2% and 12% copper were extracted. Massive sulphide mineralization up to several meters wide is visible on the pit wall.
Cadillac has conducted downhole electromagnetic surveys here to identify possible continuation of the mineralized horizon through conductivity, which it did successfully identify. More drilling at Chapirita is imminent.
Cadillac’s Old Thierry Mine
The Thierry Mine was in production by Union Miniere Explorations and Mining Corporation (UMEX), a Belgium-based company, between 1976 and 1982. Infrastructure is intact. The nearby town of Pickle Lake has a trained and experienced workforce with power, paved roads, airport, housing, hospital and a school.
There is considerable underground development including a three-compartment shaft and a decline to a depth of 550 meters. In total, there are approx. 22 km. of underground tunnels which simply require dewatering for moving back into action. Cadillac has all the permits and licenses in place to commence dewatering.
Prior owners established an historic independently estimated NI 43-101 resource, completed in 2006, as follows:
It should be noted that some of the strongest drill results to date on the project have come after completion of the independent resource statement. Cadillac’s next actions are confirmation and expansion drilling, an updated independent resource statement and dewatering. Informal scoping studies indicate very positive economics at Thierry, and management believes it is technically feasible using standard underground mining methods and normal flotation concentration methods to recover all metals: copper, nickel, silver, gold, platinum and palladium.
Management
Cadillac’s president and CEO is Norman Brewster. Mr. Brewster is a highly experienced exploration geologist and mine developer. He was a founder of PGM Ventures Ltd., which became Iberian Minerals Corp. (TSX: IZN), where he served as chairman and is currently a director. Iberian’s largest shareholder is also Trafigura, with a 45% interest. Iberian is mining copper concentrates in Peru and is ramping up production of copper, lead and zinc concentrates in Spain. Trafigura purchases all Iberian production at benchmark prices with long-term offtake agreements.
During the months that Cadillac was in formation, Mr. Brewster was spanning the globe and performing due diligence. So today, the company has just been listed on the TSX Venture Exchange for eight months and already has strong exploration and development-stage prospects as discussed here.
Outlook
Cadillac appears to have come out of nowhere into full bloom as a developer and advanced exploration company. It is this lack of market recognition that is our advantage in addressing the investment opportunities with the company.
As stated above, any price below 80 cents is a great deal until new fundamentals become known, which should be very soon.
Corporate Information
Cadillac Ventures Inc.
Exchange/Symbol: TSXV: CDC, US OTC: CADIF
Recent Price Range: $C0.20 - $0.40
Shares Outstanding: 64 million
Shares Outst’d’g Fully Diluted: 72.5 million
Contact: Bernie Kennedy, IR
Phone: 1-877-489-4440 or 1-416-203-7722
Email: info@cadillacventures.com
Website: www.cadillacventures.com
SOURCE: http://www.midasletter.com/news/1002111_Cadillac-ventures-underappreciated-by-market.php
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