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 |   Thu Apr 5, 2007
Gold Mining Stock Report
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| | Bitterroot Resources (BTT.TSXV/$0.87) - We've been clear and consistent on our rationale for favoring Bitterroot for its uranium exposure: the company has had a micro-market cap. (one that has been subject to upward revision in recent days), solid management with a diversified exploration portfolio, and we will know very soon if Bitterroot and partner Cameco (CCO.T/$52.21) have discovered a new uranium basin in Michigan . In light of the paltry market cap. and the four active exploration programs underway, my take on Bitterroot is that it represents almost a "free pass" on multiple exploration projects.
As the Michigan uranium project is the clear focus of the market's attention, and those results are believed to be imminent (and should be out no later than Monday, in advance of the Casey Uranium Summit in Las Vegas), let's review a few things before we see those drill results:
Not a Johnny-come-lately - Unlike so many companies in today's overcrowded uranium stock market, it was 1999 when Bitterroot and Cameco began discussions of BTT's theory that a new uranium basin may be waiting to be discovered in Michigan . The deal between the companies was formalized in 2003, and given what has been announced to date, there appears little risk that Cameco will be doing anything but staying in this deal.
Already a Technical Success - The comment just made about Cameco continuing in this deal has been made before, not out of any insight I have into that company, but instead, due to what the partners have previously disclosed: as described in BTT's February 1 press release, shareholders already have been told that the geological model has been confirmed. The unconformity being targeted was intersected in all seven drill holes, graphitic conductors were intersected in four of five target areas, and those who want to view the model for what I'm talking about should consult the diagram on page one of Bitterroot's web site ( www.bitterrootresources.com).
Uranium The Missing Link - As we've noted before, elevated levels of uranium have been reported in the water supply in areas of Michigan's Upper Peninsula, and that's one of several variables supporting the geological theory being pursued by Bitterroot and Cameco. Finding uranium in a drill hole would be another, of course, and it is this information that we should have within the next few days. Finding mineral deposits is a process that almost never lends itself to immediate gratification, and relative to most mineral deposits, finding a uranium deposit in an unconformity setting can be expected to be a painstaking process. A lot of drilling could take place without encountering any uranium, and this would not begin to diminish the prospectivity of the project. Discovering any uranium in the recent drill program, however low grade, will be a major success, one that strongly implies that a uranium deposit remains to be found in close proximity. In the current case, such an outcome would also confirm the discovery of a new uranium basin, much like Canada's Athabasca, the chief geological difference appearing to be that the depth of the unconformity in Michigan occurs at much shallower depths.
Look, Don't Think - Those are words of uranium uber-bull and technical analyst Jim Dines, and I think most anyone who has even a passing acquaintance with technical analysis would concur that the Bitterroot chart has an upward bias. (See formatted PDF version for chart.) That's an observation we've made several times of late, and it was greatly enhanced by yesterday's high-volume breakout on both the one-and five-year charts. The chart has been constructive for some time, but the recent advance has a self-fulfilling feel to it. Whether it is the market betting that uranium has been confirmed in the recent drilling, or chartists buying the breakout-or more likely, a bit of both-the BTT market has a good look and a good feel to it.
Conclusion: News from Cameco and Bitterroot cannot be far off, and with some of you in this one at prices below $0.10-$0.075 was the lowest price at which BTT received a favorable mention a few years ago-those who have not taken any money off this table should plan to do so into good news. I say that not because good news won't imply still higher prices, but because there is likely to be good liquidity and that defines the optimum conditions for profit-taking. If you've already done that, recent market action suggests that it may not be necessary anytime soon. www.bitterrootresources.com. |
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