Windarra Minerals: An Unusual Play On Gold
by Norman Duncan
I’ve come to the startling conclusion over the past few months that my crystal ball has a problem with timing.
The gold correction that I was worrying about came in January, rather than the usual early spring pull-back. As of the writing of this article (mid-February) gold looks to be poised for a rebound, which could signal the end of a rather nasty pull-back. I still remain bullish on the metal long term (what a surprise) but am really taking an aggressive trading stance on the metal and equities until I get a definitive buy signal. I will be trading rather than holding any new positions added to my core holdings. I realize that I will make wrong moves trading in this manner, but by using stops and tempering my upside greed I suspect that I can keep my head above water.
I don’t generally recommend this type of investing for most people as it requires very strict trading discipline and can be rather pricey if you pay full commissions. If you are looking for a longer term style of investing (which I strongly recommend) then I would watch for a bit more stability in the markets before buying. It may cost you a bit more, but should be worth it by saving your nervous system from stress. In general, I am still bullish on the markets as a whole and like the recent correction as an opportunity to pick up some companies that we missed on the way up. The market weakness also lets you gauge the relative strength of individual companies. I like to see how my holdings perform in weak markets as it indicates the quality of share ownership and management. Strong management teams tend to hold onto their investors in a weak market. This is particularly true for junior companies.
One company that attracted my interest in this regard is the subject of my article, it is Windarra Minerals Ltd.
Windarra Minerals is a junior mining company based in Vancouver. The company has several properties, principally in Ontario, and also holds royalty interests on properties in Newfoundland and Ontario. Windarra recently optioned its Pukaskwa Property in the Mishibishu Greenstone belt of Ontario to Wesdome Gold Mines. Under the agreement Wesdome can earn up to 60% interest by expending $3 million on the property by the end of June 2014. The Pukaskwa property comprises 55 claims located 15 km west of Wesdome’s Eagle River Mill.
In addition to the two known gold anomalies, Windarra recently discovered a new prospect. The showing is in boulders which look to be near their source and samples taken from the occurrence graded from 12.2 to 62 opt gold. Wesdome began its exploration program on the property in November of 2009. The program entails 3,000 metres of drilling in 25 holes. It is designed to establish the size potential and continuity of the Middle Finger Lake Zone (MFLZ) and provide an initial test of the Bonanza Zone. Previous shallow drilling of the MFLZ has returned gold grades up to 4.16 gpt gold over 6.55 metres. It should be very interesting to watch the results of this program come in and I expect to see some in the very near future.
Additionally, Windarra is planning a surface mapping, sampling, geochemistry and geophysics program on its 100% owned Mishi Leases this year. This property is located immediately west of Wesdome’s Mishi Pit.
Windarra is a bit of an unusual play on gold. The company has historically conducted early stage exploration and then options off its properties to others who carry out more extensive (and expensive) exploration. This is an interesting strategy for a junior and has allowed Windarra to accumulate royalty interests in the Turk massive sulphide property in Newfoundland, and the Mishi Pit and Magnacon Mine in Ontario. Share of Windarra trade on the TSX Venture Exchange under the symbol WRA. There are about 32.2 million shares outstanding on a fully diluted basis and the 52 week trading range is $0.19 to $0.05 with a current trading price of $0.12.
I like this company as an interesting and somewhat different play on gold as the chart for Windarra has a good correlation with the gold chart over the past two years or so. The company has been in existence for 25 years and has a seasoned management team.
Those of you who know me also know that I really like these low share priced stocks. There are liquidity issues with this type of investment so one has to be prudent when trying to buy and sell. Those of you looking for a speculative play on gold should take a look at Windarra Minerals Ltd. But, as always, caveat emptor.
This article is solely the work of Norm Duncan, a registered investment advisor at Canaccord Capital Corporation. The views (including any recommendations) expressed in it are those of the author alone, and are not necessarily those of Canaccord Capital. The information contained herein is drawn from sources believed to be reliable, but its accuracy and completeness is not guaranteed, nor in providing it do the author or Canaccord Capital assume any liability. The holdings of the author, Canaccord Capital, its affiliated companies and holdings of their respective directors, officers and employees and companies with which they are associated may, from time to time, include the security mentioned in this article. www.canaccord.com.
