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Bob Moriarty When I first did a piece on Desert Sun about three months ago, President Stan Bharti laid out his goals, to outline a resource of 10 million ounces, up from the existing 3.6 million ounces, in order to become an attractive target for the majors. With today's announcement of drill results, he is well on the way. Desert Sun's Jacobina project is screaming "Buy Out." At a lot higher price than the stock is selling for today. Desert Sun trades on the TSX-V as DSM with about 22 million shares outstanding. (27 million on a fully diluted basis) I made mention in my previous article about Desert Sun that you should never place market orders on a stock because the market makers will scalp you. If you want to see a real ramp job done on a stock, take a look at the daily chart of DSM for today 1/20/03. The market makers know all about the press release and ran the stock down 15% just to suck as many shares as possible from a gullible public. Watch them run it up now. In the latest drill results reported today in Canada by Desert Sun, they drilled 12 diamond drill holes with a total of 2,247 meters in six different areas of interest. Today's announcement covers three of the six areas with another announcement due for early February. Significant gold intersections were found in all six areas of interest. The Jacobina project covers a strike length of 57 kilometers (about 25 miles) and is 2 to 4 kilometers wide. It consists of a gold bearing conglomerate similar in nature to the giant Witswatersrand Basin in South Africa which has produced 40% of all the gold ever mined from its 300 mile length. The biggest difference between Witswatersrand and Jacobina is that hundreds of companies operate in that district compared to the 100% ownership of Jacobina by Desert Sun. Desert Sun faces an interesting choice of alternatives, all attractive. .....1. They can continue to prove more areas and ounces. Today's announcement indicates just how large the district is. It's a big deposit capable of supporting several mines. On the basis of their already proven resources, the company is only valued at about $7.50 US an ounce. That's cheap. The next big thing in the mining business is going to be takeovers. Desert Sun is perfectly positioned to be very attractive as a takeover candidate. They have the resources and potential to be an elephant of elephants. .....2. They raise $16 million and go back into production with the mill capacity of 1 million tons per year expecting to produce about 73,000 ounces at a cash cost of $188 generating an internal rate of return of 35% at $300 gold. Naturally at $350 and higher gold, the internal rate of return will be far greater than 35%. .....3. They raise $67 million to expand the plant to produce 250,000 ounces a year at a dead low cash cost of $111. Today's results show a continuous mineralized belt 10 kilometers long of low grade, massive quantity thus potentially economic gold bearing material within 50-60 meters of the surface (means low stripping ratio and low cost) perfectly suitable for bulk open pit mining. (Low cost) Desert Sun Mining is in the process of selecting a large consulting firm for a pre-feasibility study on Jacobina and will continue to expand the already-successful drilling program. I maintain exactly the same attitude towards Desert Sun as when I first wrote about them. They have a very favorable project in a country which needs outside investments and jobs. The management of the company is first class and management has a significant financial interest in the success of the project. These drill results are spectacular and they will be announcing more and more gold intersections as the assays come back. The Jacobina project is very very big. For months the stock languished between Canadian $.50 and $.60. It broke out in December and went as high as $1.14 before correcting. Today's action was manipulation (eek, I used that 'M' word again) by the market makers. The stock has 10-fold potential even from the $.90 level. They don't come any easier to call than Desert Sun. It's a winner. Bob Moriarty Desert Sun: website _______________ |
