There is no substitute for your own detailed and thorough research. MiningMaven is not in the business of providing investment advice or recommendations and nothing contained herein should be considered as such.

So as promised, here is Part I of this list, Part II will be emailed to subscribers later in the week ahead of publication on our website. We hope you find it useful!

Ariana Resources (LON:AAU mid 5p) Common Sense:

2011 saw the bullion price outperform gold stocks by some margin. For 2012 however we anticipate a switch, whereby the stocks will lead the way (that’s called sticking your neck out!), as the market finally starts to recognise that a higher gold price means significant free cash flow for producers of the yellow metal.

There’s obvious logic to this, but experience also shows us that next in line, with significant leverage to the gold price, will be the near-term producers.

Ariana Resources, with their Red Rabbit JV in Western Turkey are well down that road, with production scheduled to commence 2013. They also expect to participate in a new round of license auctions imminently due to commence.

Setting all this aside, Ariana also has a joint venture in Eastern Turkey with European Goldfields (LON: EGU), and we believe this could provide investors with a very serious kicker! There is currently zero value attributed to the Ariana share price for this JV, yet EGU, as the Operator, have been drilling this target for about 2 years with indications that a super discovery may well be on the cards.

The latest results were expected to be announced by EGU by the year end, but this came and went with no news.

One reason for the delay may well be down to the fact that EGU have been the subject of takeover interest from Eldorado Gold, with the management recommending shareholders vote in favour of their $2.5b offer. So it would seem that EGU has other priorities and perhaps some sensitivities exists in this regard. Nonetheless, the drill results cannot not be held back indefinitely and we will certainly be watching with great interest to see what they may reveal. If they are as good as we hope, then we will start looking to attribute a seperate valuation for the JV. 

It is also significant to note that EGU currently holds an 11% stake in Ariana. If all goes to plan with the EGU takeover, then we will see this stake transferred to Eldorado, who already have significant operations in Turkey including two producing gold mines. If you want to get a taste of what Ariana are up to, this latest investor presentation is worth watching.

If this was a game of cards you could say that Ariana has a particularly nice hand, of course the markets have yet to really reflect this.  As the French would say ‘de grandes récompenses pour les investteurs diligents’.

Alchemy Resources (ASX:ALY mid 15.5c) Common Sense:

For Natural Resource investors, “Closeology” is probably one of the most reliable indicators you can find. Geological trends pay no regard to man-made boundaries how-so-ever legitimised by Governments treaties or Title Deeds.

For lovers of closeology and the potential for massive share price gains, we bring you Alchemy Resources (ASX:ALY) listed on the Aussie markets and easier to buy nowadays with many brokers offering overseas dealing services.

Now we could wax lyrical about the company’s Magnus Copper project in the Bryah Basin or the company’s Murchison gold project which has already accumulated a substantial JORC resource.  But we are going to keep it simple because the “Common Sense” here is that Magnus is located in the same system as Sandfire Resources DeGrussa copper-gold discovery. If you havent heard of DeGrussa, then an urgent Google search is in order.

After you have completed that, take a look at the chart and input a 3 year time horizon and you will see what that discovery meant with an upward share price move for Sandfire of over 100x in 18 months after the discovery (7c to $8.00 from April 2009 to October 2010).  There is an aggressive air about Alchemy Resources and a wish to emulate the neighbours achievements perhaps.  Worth a look!

Conroy Gold and Natural Resources (LON: CGNR mid 3.63p) Common Sense:

This is very obvious, to us at least.  A company with a million ounce gold JORC resource, with a drilling programme demonstrating resource continuity and mining studies demonstrating the viability of building a gold mine at their Clontibret project in Ireland, you would expect a very decent market capitalisation.  Of course there are plenty of cynics out there who could focus on the past and the number of years Conroy have been building their knowledge of their gold prospects.

But we would rather look to the future because with a conceptual study indicating the potential for 15-20 million ounces over a 30 mile gold trend, there is much to capture the imagination.

Ireland of course has its economic challenges so the prospect of a new large mining operation employing hundreds directly and increasing the affluence of thousands can’t be a bad thing.  Professor Conroy as Chairman has built a mine in Ireland before, and his professional and friendly style is appreciated by many, not least by those living in the local area.

Continental Coal (LON:COOL, ASX:CCC mid 11.13p) Common Sense:

Listed on both the AiM and ASX, Continental Coal has made much progress in a short space of time. We appreciate getting to grips with company fundamentals is often a challenging task, so investors should perhaps take a look at the company’s AGM presentation to get a head start.  There you will see details of the company’s current 2 million tonnes per annum production and their target of 7 million tonnes in 2013.  With resources of over 600 million tonnes, two open cast mines producing thermal coal and a third under development, the company is perfectly positioned to generate significant cash flow and profitability going forward.

Of course even the best prospects are sometimes even better with a few helping hands and with strategic investment and joint venture partnerships with EDF Trading, ABSA Capital./Barclays Capital, KORES and SIOC-cdt, the company has plenty of partners invested in the game.  Share price performance has been poor and not reflective of the value generated by the company, something we will be covering in due course with the release of our Continental Coal Value Proposition.

ECR Minerals (LON:ECR mid 1.1p) Common Sense:

Speaking of Value Propositions, we are also due to release an updated Value Proposition for ECR Minerals. The current market cap of is around £7m which is far less than the value of its listed assets. Baffling? Perhaps.

Of course cynics will line up with their reasons for this, which in the main centre around historical issues rather than the potential for substantial future value realisation.

It is our view that when the markets recover, the share price will in all likelihood respond, and as we said in an article a week ago ‘Illegitimi non Carborundum’, we believe that staying the course here is likely to reap rewards.

For one thing the company holds 14.35m shares and 14.35m (28c) warrants in TSX listed Themac Resources (TSX:THE), which is developing the significant Copper Flat project in New Mexico.  With the current THEMAC share price of 65c, and net of warrant exercise cost that means ECR has £9.2m of value in its Themac holding (that’s 1.44p per issued share).  Then the company has various other assets but is migrating at pace towards a focus on gold projects including Indonesian and Argentinian gold, the latter potentially providing them with early gold production options.

Perhaps the best thing is to watch the recent ECR Minerals MiningMaven presentation video recorded just last month in London.

Goldstone Resources (LON:GRL mid 4.625p) Common Sense:

Supercharged gold exploration with licences in Ghana, Senegal and Gabon.  Unity Mining (ASX: UML) the ASX listed gold business likes GRL so much they have bought over a third of the stock and are in the process of selling an Australian production site to concentrate on their Tasmanian and African interests, the latter of which relates to their interest in GRL.  What comes next, who knows, but we can all speculate! 

What would a cash rich business, focussing part of its business model on African exploration want with Goldstone Resources, who have a 405,600 ounce gold resource (with potential to rise materially this year) and some of the most prospective West African licences we have seen for some time.  The exploration data flowing in 2011 from Ghana and Senegal has been exciting to say the least, and after some wait, the company was able to confirm success in two licence applications in Gabon. 

The latter licence areas were selected after careful scrutiny of a €13m Sysmin survey sponsored by the EU and the size and scale of the gold prospects could be staggering.  Anyway, take a look at our October Value Propositionfor a good overview of the company or indeed Goldstone’s latest presentation at The Counting House is worth watching, of particular note is the intro from House brokers Optiva Securities!

New World Oil & Gas (LON:NEW mid 11.63p) Common Sense:

Every now and again company news can surprise to the upside…. strange though that may seem in current markets.  In December New World released their latest CPR update from their Belize Blue Creek project showing unrisked p50 294 m recoverable barrels of oil and an Expected Monetary Value (EMV) of $1.53billion.

That’s from just two of six targets in the Blue Creek licence area. Putting this into perspective, this means the current market capitalisation of the business at around £15m is about 1.5% of the EMV.

How the market reacted was interesting, and perhaps a little indicative of “indigestion”, because the price has only very recently started to gain traction in response to this news.  There can often be a delay whilst the market digests the significance of news, but with such a leap in potential value announced, it looks now like the market initially seemed to be quite stunned by the magnitude of the proposition, and is only now beginning to “wake up and smell the coffee!”, so to speak!

The rate of news flow emanating from the company has been impressive to date. Moreover, New World also has an additional licence area in Belize, a hugely exciting project in Denmark and, in respect of Blue Creek, has now opened a data room at RPS energy, their consultants, for interested parties who have approached the company, to find out more.  If management enthusiasm is reflective of things to come, then 2012 is set to be a great year for the Company. Its also worth viewing their Investor Presentation at The Counting House in December.

Range Resources (LON:RRL, ASX:RRS mid 8.15p) Common Sense:

One thing investors yearn for is a liquid stock, where for buying and selling the markets are normally ready and able to accept trades.  Range Resources, listed on the AiM and on the ASX, is certainly liquid, although the market’s recent traumas have brought the price down to levels that would have been unimaginable just a few months ago.

We say unimaginable because it’s the pure breadth and scale of this Company’s potential that has been the driver for much excitement, but when the markets turned sour  it impacted the share price without regard to the progress the company has been making across its operational and investment portfolio.

This is probably best explained by Managing Director Pete Landau in this December interview he gave to MiningMaven readers/listeners.  Have a listen, or read the transcript on the link provided; with over 3,100 hits todate, proof positive that Range Resources still has a huge following.

This is understandable, because the potential value in Range’s Texas projects alone accounts for a significant proportion of the current market cap. Indeed, Texas could well offer investors a value crystallisation opportunity in 2012.

Range, along with its partners, is on the cusp of spudding their second well in Georgia (the first was not a strike, but still holds potential for development after further work is completed) and, very significantly, spudding the first well targeting a mega oil discovery in Puntland, Somalia.

Added to that, the company is building a substantial business in Trinidad with significant potential to develop in the coming months as work continues.  Investors also yearn for newsflow and Range Resources has lined up a potential flurry of project news in the coming months.

Botswana Diamonds (LON: BOD mid 3.38p) Common Sense:

We mentioned recently that we will be focusing on diamonds in 2012, as the ultimate in high stakes exploration plays they hold the appeal to add some real spice to one's portfolio. Diamonds will never go out of fashion and for natural resource investors, the supply demand fundamentals just get better and better. Utopian conditions being a severe shortage of supply combined with burgeoning long demand growth, a clutch of licences in the right address and a management team with a proven track record for making discoveries. 

Welcome to the scenario one finds with Botswana Diamonds. Botswana is the largest producer of diamonds by value and global prices of diamonds rose strongly in 2011.  The industry demonstrates general undersupply due to limited operational mines, few recent discoveries and underinvestment in the sector for some years.  All the while, China, India and the like have been increasing their interest in diamonds providing a burgeoning market.  Botswana is centre stage but the company also has licenses in Camaroon and Zimbabwe, Take a look at the MiningMaven Q&A conducted with the management team just before Christmas to find out more, you might find this a sparkling opportunity!

Well there we have it. We hope this list of Common Sense Picks will provide you with food for thought and a good place to start your own research. Part II will be released later in the week, exclusively to MiningMaven subscribers, giving you a “heads up” preview in advance of publication on our website.

Please make sure your subscription details are up to date with your name, email address and region - thats all we need. We wont bombard you with spam or offers from third parties, and wont give out your details to anyone!

Disclosure: From time to time the authors may hold shares in the companies featured.


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