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Southern Arc strikes gold and nobody noticedBob Moriarty I wrote about Southern Arc about two weeks ago. I told readers to watch out for a news release sometime around the 10th of May. Here's what I said. "We were talking about 600 meter deep holes and any intercept of over 200 meters would be a strong indication of a giant system. Greater than 400 meters of similar grades to SGD-01 or SGD-02 (.5 gpt Au and .25-.35 Cu) would drive the stock price through the roof. The company told me it would take about a month for drill results to be released. So any time after about May 10th or so, things could get real interesting for Southern Arc." Southern Arc did exactly what they said they would do; they delivered the drill results right on May 10th. And apart from a small blunder on their part, the drill hole is probably a company-making hole. Here's what they said. "MB001 was completed at a total depth of 476 m, with the first 33.8 m intersecting a non-mineralized late-stage dike. Continuous mineralization was logged to the bottom of the hole, resulting in an overall intersection averaging 0.28 per cent Cu and 0.42 g/t Au FROM 442.9 metres (33.8 to 476.0 m)." Oops. It should have read, "resulting in an overall intersection averaging 0.28 per cent Cu and 0.42 g/t Au FOR 442.9 metres (33.8 to 476.0 m)." Changing the correct word, FOR to FROM completely changes the meaning. And while they were trying to show investors the 166-meter high-grade intercept, the blunder in wording made it look like that's all they did, 166 meters. It's not 166 meters of high-grade, that's just a third of the mineralization. Here's how the numbers should work. (sanumbers) As I said three weeks ago, Batu Hijau type numbers would drive this stock sky high. And guys, that's just what Southern Arc delivered, 442.9 meters of $34.86 ore (I'm still using $3.50 for Moly) and that works out to $7.5 billion dollars when you cube the hole and figure $34.86 ore and a specific gravity of 2.5. There is 1.2 million ounces of gold based on cubing the one hole. That's company making. When I first looked at the company, the market cap was about $15 million. As of yesterday, after the press release, the company was about $40 million. For a similar valuation, look at Palmarejo. They got bought out a week ago for $1.1 billion based on a preproduction status with 3 million ounces of gold. That's the potential Southern Arc has just based on the Selodong gold-rich porphyry copper system. So far, Southern Arc has delivered everything they said they would do, when they said they would do it. That's rare and valuable all by itself. But yesterday they delivered a company-making hole. Another 600-meter hole is in progress with results in another three weeks. I thought they were a 10 bagger from the $.35 level but I'm going to raise my estimate. They have a giant system, Newmont is going to be breathing hard down Southern Arc's neck and the Chinese with their $250 billion dollar slush fund for minerals is going to be on them like white on rice. I think Southern Arc will be taken out in the next 12-18 months at a price between $1 billion to $2 billion. They have a Batu Hijau on their hands. The market has been looking for a giant new find and I think Southern Arc just delivered. When the market wakes up and Southern Arc goes over their press releases a little more carefully, look for a lot of fireworks. We owned shares before, I participated in a private placement and I bought more shares on the open today. I am biased. And I love this company. They are advertisers.
Bob Moriarty 321gold Ltd |
