 Investor Info
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 |   Thu Jan 4, 2007
Gold Mining Stock Report
Publisher: Robert Bishop, Editor
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| | Bitterroot Resources (BTT.TSXV/$0.70) - Our last comment on Bitterroot ended with some thoughts on profit-taking-for those with gains in excess of 200%, in short, many of you-and with the observation that BTT would likely attain new annual highs before 2006 ended. That assessment proved overly optimistic, but because it did and because I have spent a bit of time visiting with management and reviewing this situation, I think Bitterroot at current prices remains a buy for those who have no exposure to it. I wouldn't be saying this if my year-end price expectations had been met, but it is precisely because they were not that BTT remains good speculative value today, ideally, on any signs of weakness. Here's why I say that:
Bitterroot's current market capitalization is approximately C$35 million, and in today's uranium share world, that is not a lofty number. There are a number of companies out there with pure exploration programs that are sporting market caps. in the $50-$100 million range, and almost without exception, their programs are not being funded by Cameco (CCO.T/$46.05 - CCJ/$39.32), the world's largest producer of uranium. Importantly, Bitterroot's joint-venture with Cameco has been in place since 2003, well before the current uranimania began to gather momentum.
There are three likely outcomes to the current exploration program: 1) uranium mineralization will be hit, and if comparables are any guide, BTT shareholders will have a $3-$4 stock ($150-$200 million market cap); 2) the recent drill program will prove to be at least a technical success, i.e., the right geochemical and alteration signatures will have been encountered, graphite bodies will explain the anomalies that defined the drill targets, and the right structure and setting for uranium deposition will have been identified; 3) Cameco is unimpressed with the results of the recent drill program and elects to terminate the joint-venture.
Given that the limited drill program of June 2004 has already identified the geological prospectivity of the region, and that drinking water sources on the Michigan's Keeweenaw Peninsula are known to contain uranium in amounts that "exceed the proposed Maximum Contaminant Levels" ( http://www.westernuphealth.org/env_health/water_supply_uranium.html), outcomes #1 and #2 appear far more likely than outcome #3. I say that because there is already a precedent for outcome #2, but also because no company knows better than Cameco that finding uranium deposits requires painstaking exploration, and in all likelihood, much more drilling than the preliminary program conducted to date by the Bitterroot-Cameco joint-venture. Cameco walking away after this early stage program would put them at risk of walking away from a project that could well produce a subsequent success, most likely for a competitor.
Lastly, and as noted before, Bitterroot is not likely to be delivering news on this program until late January/early February, which is another way of saying that the BTT market is likely to have an open field between now and then. Management's low-key style helps to explain the absence of any premium in the share price, but with the obvious upward bias of recent weeks and what appears to be a likely break of the downtrend from the April highs, it's difficult to imagine that BTT will not be in new high ground before we see any news out of Michigan. In light of that, those who have not taken any profits should wait to do so; those who want to buy a uranium stock that's headed higher should own BTT before a technical breakout creates a self-fulfilling prophecy. www.bitterrootresources.com |
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