Cory's Insights – Tue 26 Jan, 2016
A major silver discovery announced in Mexico
I am sorry I could not post on this yesterday but I was attending and moderating a panel at the Vancouver Cambridge House show. Tune in to the second hour of the weekend show to hear what people were saying while on the floor.
Back to the major discovery… Orex Minerals (TSX.V : REX) (in full disclosure I own this stock and have owned for a while) released a seriously impressive drill result on the Sandra Escobar property in Mexico which is under an option agreement from Canasil Resources (TSX.V : CLZ). Here is the table from the press release and notes on what it means to me.
|Sandra Escobar Project SA-15-001 Drill Hole Intercepts — 2015-2016 Program|
|Hole||From (m)||To (m)||Core Length (m)||True Thick. (m)||Ag (g/t)|
- High-grade silver over a long distance of 62 metres.
- The silver starts right at surface with the best grade starting at 4 metres down.
- With silver grades this close to surface it is important to see what comes out of deeper drilling and step out drilling.
While the news release focuses only on the results from the one hole the Company has already stated this is part of a larger drill program. Back on December 10, 2015 Orex issued a release outlining a total of “about 2,000 metres in as many as 12 drill holes”. There is a lot more news to come from Orex in the next couple months.
The weather in Durango State has been on the cold side recently so we should expect to wait at least another few weeks before another hole or two is released. I am sure the markets will be paying close attention.
Clearly the market took notice yesterday popping the stock $0.125 to $0.335 (up almost 60%). Today the stock has pulled back $0.06 to $0.275 on continued high volume. I am not worried about the sell off today. Investors are clearly taking some money off the table and waiting for the next results. This is an inherent problem with exploration, people will sell on the news and wait until just before when they think the next results are to be released to buy back in. These results are too good for me to think that the stock will move significantly down from here.
Looking at Canasil, this stock made an even more impressive jump. Trading at $0.05 and under for the past long time the stock jumped to $0.15 yesterday and had pulled back to $0.125 today. Canasil will continue to ride the coattails of this drilling if the results of this one hole will be confirmed.
Some factors outside of the press release to consider…
A factor that I like about Orex and a reason why I continue to hold is the track record of management. Gary Cope (CEO and President) along with Ben Whiting (VP of Exploration), both of whom I know very well, were the team behind Orko Silver. Orko was a silver exploration company focused in Mexico and sold to Coeur Mining back in 2012. I like when management sticks to locations they are familiar with and metals they have already found as well as management that can get a sale done.
I also like to see insiders buying their company stock out of the open market. It shows that management believes in the company and helps support the overall price in down markets. This is exactly what Gary has been doing for more than a year. Check out CanadianInsider.com to see for yourself.
Let’s take a look at the financials. As at October 31, 2015 Orex had over $4.5 million in the back plus another $2.6 million in receivables. Net this cash (some of which would have been spent) with the very low payables and no debt Orex has more than sufficient funds to carry out this drill program and move the company forward.
While it is impossible to know what the results from the next hole or the full drill program will yield this is the most promising discovery the sector has seen in a while. The company was recently placed back on John Kaiser’s bottom fish list as well as a number of other newsletter writers. There is going to continue to be some buzz around this stock as well as Canasil as we all anxiously await the next few holes. Let’s see what happens next…
** Do not constitute this as investment advice. As stated above I (the author, Cory Fleck) hold shares in Orex and is a personal friend of management. I was not paid for this article in any form. Please do not use this article as a reason to buy or sell any shares. I am working to keep our listeners up to date on major news in the mining industry. Do your own due diligence.
If you have any questions please leave them in the comment section below or email me directly at email@example.com.