Knight Resources Ltd.
Company Contact Info: http://www.goldmau.com/knp.php

Stock came under pressure from the $2.6 million financing at 30 cents in June that became free trading last week.  It also did not help that Knight announced some more drill results last week that were somewhat lack luster.  http://biz.yahoo.com/iw/071003/0310355.html

Keep in mind the West Raglan package is over 700 km sq.  You are going to get hits and misses.  At $19 million market cap, these two events make up a good opportunity to buy Knight.

Riverstone Resources Inc.
Company Contact Info:  http://goldmau.com/rvs.php

Riverstone announced the acquisition of Goulagou from Golden Star today:
http://biz.yahoo.com/ccn/071011/200710110418280001.html?.v=1

I spoke with Jim Robertson for 15 minutes this afternoon.This is a terrific deal as RVS manages to tie up a property that already has a 43-101 resource of 500,000 oz’s for 4 years by spending $4 million and issuing  2 million shares.  After 4 years, RVS can choose to pay $18 million for the property in cash or in RVS shares. $18 million is also the amount spent on the property through 50,000 meter drilling by previous operators.

RVS' existing Rambo and Kao properties are just 3-4 km to the east. One can now see the possibility of a combined (Goulagou, Rambo, Kao) suite of claims that achieve the magic 1 million oz Au mark. With just 40 million shares outstanding, RVS is a bargain.

You can watch the interview I did with Mr. McInnis (CEO) in September at:
http://goldmau.com/archives.php

New Company Coverage:

Independent Nickel Corp.
Company Contact Info: http://www.goldmau.com/ini.php

Indepedent Nickel came recommended by my broker Lily Fey at Canaccord. I had followed the stock for 2 months, and after talking to CEO Richard Murphy and CFO Guy Mahaffy in Las Vegas, I was quite blown away by what Richard and Guy had assembled into INI:

Lynn Lake mine property:

The company acquired the Lynn Lake Mine from Black Hawk Mining in Feb 2005 for 1 million shares. Richard studied the Lynn Lake property and got a great deal as no one wanted anything with Nickel back in early 2005 when Nickel was trading at $6 a pound. 

The Lynn Lake nickel mine was operated by Sherritt-Gordon from 1953 to 1976. During its 23 years of operation, the mine produced over 20 million tonnes of nickel-copper ore at a grade of 1.02% Ni and 0.54% Cu, making the Lynn Lake mine, historically, the third largest nickel producer in North America after only the Sudbury and Thompson mining camps. The mine was closed in 1976 due to a period of stagnant growth in the nickel market and not because the ore was mined out. An estimate of un-mined mineralization includes 5.76 million tons of 0.80% nickel, and 0.32% copper, including a higher grade portion of 2.32 million tons grading 0.92% nickel, and 0.34% copper, within the ‘N’ and ‘O’ ore bodies occurring between depths of 2,000 and 4,000 feet. The Company is uniquely positioned to employ new exploration technologies in an underexplored nickel mine setting.

The recent Preliminary Economic Assessment, prepared by Wardrop Engineering, on the Lynn Lake property highlighted the following:

• Mining plan for 11.4 million tons at 0.7% nickel and 0.35% copper;
• Mine life of 9.6 years and production rate of 3,300 tons per day;
• A net present value (NPV) for the project of $133.7 million;
• An internal rate of return (IRR) of 14.4%;
• Initial capital requirement of $192 million for pre-production costs;
• Annual nickel production of 13.9 million pounds;
• Annual copper production of 7.45 million pounds; and
• Calculations based on metal prices of US$6.95/lb per pound nickel and US$1.74/lb for copper.

http://independentnickel.com/images/MineMap.lg.jpg
Picture: Red is mined out, blue is high grade remaining.

The company is drilling at Lynn Lake and results will roll out in the weeks to come. It will take another 2-3 years before a mine is built but INI is an enthusiastic bunch that will make sure the project is advancing at the fastest pace possible.

The economics of the project are almost as robust as say Canadian Royalties’ Nunavik Nickel Project, but note the difference in market cap (CZZ: $300 million, INI: $30 million), and if Nickel prices stay above $10 a pound, IRR could eventually prove to be substantially above the quoted 14.4% by Wardrop.

Minago Nickel Royalty:

In April 2007, INI signed a binding letter agreement with subsidiaries of Glencairn Gold Corporation (“Glencairn”) to acquire their Net Smelter Return Royalty (“NSR”) of up to 3% (when nickel prices exceed US$6/lb) on Victory Nickel Inc.’s Minago nickel deposit, as well as the 2% NSR on the Company’s Lynn Lake mine property, both located in Northern Manitoba.
http://independentnickel.com/News/070417NR.htm

Under the terms of the purchase agreement, the Company paid $5 million in cash and issued 2,500,000 shares of the Company to Glencairn.
http://independentnickel.com/News/070417NR.htm
Victory Nickel is advancing its 100% owned Minago Project, located 225 km south of Thompson, Manitoba in the Thompson Nickel Belt, toward production.

With a NI 43-101-compliant measured and indicated resource of 49.1 million tonnes grading 0.516% nickel (558 pounds of in-situ nickel) and an additional inferred resource of 44.1 million tonnes grading 0.528% nickel (513 million pounds of in-situ nickel), Minago is one of Canada’s largest undeveloped sulphide nickel deposits.

Highlights of the scoping study prepared in November 2005 by Wardrop Engineering Inc. include:

• An IRR of 23.1% using the three-year trailing average nickel price of US$7.43/ lb;
• Net present value of $334 million calculated using an 8% discount rate;
• Total cash flow of $953 million;
• Average life-of-mine operating costs, net of by-product credits, of $3.82/lb nickel (US$3.09/lb);
• Conventional mining and processing combining a 10,000 tonne per day open pit and 3,000 tonne per day underground operation;
• Initial capital of $286 million and sustaining capital of $155 million for total capital costs of $441 million, including a $41 million contingency and $9 million for the frac sand processing facility;
• 16-year mine life producing approximately 314 million pounds of nickel, 15 million pounds of copper, 4 million pounds of cobalt, 4 million tonnes of frac sand along with platinum, palladium, rhodium, gold and silver.

http://www.victorynickel.ca/minago.html

This means Minago could churn out 20 million pounds of Nickel per year for 16 years. 3% NSR on 20 million pounds of Nickel at $10/pound is $6 million cash flow per year. Net cash flow from the 3% royalty is $96 million, and NPV of that easily exceeds $30 million. Victory Nickel owns Minago, and is managed by the Nuinsco folks, who are mining operators and know how to build a mine.

Now you ask, why did Glencarin sell the royalty to INI for $5 million? Richard had connection with Glencarin, and Glencarin had been running into difficulty with its mine in Costa Rica (eventually they shut it, stock down from year high of 72 cents to now 20 cents) and was looking for cash. As soon as Richard knew the Minago royalty was on the block, he quickly arranged a meeting and a deal was consummated.

Conclusion:

Both Lynn Lake and Minago are in Manitoba, which has been ranked as THE MOST mining friendly district by the Fraser Institute.
Last Thursday, INI announced very favorable metallurgical testing results for the Lynn Lake Mine,
http://biz.yahoo.com/cnw/071011/independent_nickel_te.html?.v=1

1. Nickel recovery of 1.5%;                                                                                          
2. Copper recovery of 92.0%;                                                           
3. Cobalt recovery of 80.5%;
4. A high quality mill concentrate containing 9.3% nickel, 7.5% copper and 0.3% cobalt;
5. Favorably low magnesium (MgO) content of 1.3% in the concentrate.

The market reacted very well to the news. Last 2 weeks I bought 150,000 shares and paid 43-48 cents for the stock. Technically, the stock looks to have bottomed at 42 cents. Once it takes out the 50 DMA (blue) of 52 cents, the stock can quickly race to test 200 DMA (Red) of 72 cents.  Honestly, I really don’t know what downside there is to INI at 50 cents. Mind you, even at 72 cents ($42 million) with about $10 million in cash, the stock still has not fully valued for just the Minago royalty, let alone for Lynn Lake’s potential.

Please note I own all of the stocks featured above.