April 18, 2006

Seeing things

Observing Cassidy's activity with my geologist/analyst eyes has given me a "bright light squint". It's sort of given me the President George W. "Dubya" Bush look of appearing to always be looking directly into the bright sun. For months I saw dazzling news announced.  I kept looking into the light, waiting for the share price to reflect the brightness. Results of follow up drilling at Cassidy's newest discovery named Kinekine really do shine. They include two "jewelry shop grade" gold bearing intersections, one a remarkable 28 meters (90 feet!)  thick and the other (richer) 14 meters thick. Wow! Very good values are reported from the possibly 800 meter long (so far) trend. Share price did react in the "right direction" after the latest several news releases. The per share price has more than doubled since December 2005. A greater number of eyes obviously see the light. I keep looking, squinting and saying, "But you ain't seen nothin yet!"

Action!

Cassidy's current exploration program is in overdrive. Four drills kept consultant RSG Global's highly respected management team busy. Reported results are unassailably credible when reported by RSG. RSG's management does the orderly evaluation of an increasing number of new discoveries. Doing evaluation/exploration programs at "big company pace" is expensive. The current capital burn rate must be at more than six million dollars per year. Cassidy's frugality results in almost all treasury money "going into the ground". It spends almost nothing on "stock promotion". Funds already in treasury will sustain current rates of work for about a year. Share purchase arrangements can add $15 to $16 million more to be available for continuing work.  

CASSIDY, An Institutional "Penny" Stock 

After a first  investment by fund managers from Europe's TopGold Fund, Malaysia's Phoenix Fund and US's Raffles Funds, the highly capable money managers of  Dundee Precious Metals Inc. stepped in for  "really serious" amounts last December.. The treasury was augmented in March 2006 by a five million dollar injection. The spectrum of "investment grade" financiers is notable. Dundee increased its share ownership to a potential 21% level. (Its commitment to Cassidy is one of the largest single holdings in its portfolio). Cassidy's President J.T. Gillis, speaking at the International Gold Investors Conference in London, U.K. named other institutions that participated in the latest financing. It includes two of Canada's most successful investment managers, Sprott Gold and Precious Minerals Funds and Mackenzie Financial. Evidence of a buying program (more than 6 million shares in 2006 to date), indicates probable other professional investment fund interest.   

Batting a thousand 

 Exploration drilling of targets that were indicated by soil geochemistry or ancient artisanal diggings shows a 100% success rate so far. No discovery has been delineated to its full areal and/or depth extent. Drilling will continue for years to extend already found mineralized zones and features indicated by geophysical measurements, even after the first mines are activated. My count is that there are more than a dozen separate discoveries. This is in only a 50 or so square kilometer area explored to date. This is extraordinary. Such results in a small part out of the thousand square kilometer landholding makes my squint get even squintier!

Value guesstimates 

 I carry two value guesstimates. I calculate one that is my personal best estimate of the best but still logical possible "outcome". It applies calculations that extend the mathematically averaged actual reported results downward 50 meters below the ends of holes and to the ground surface from the depth at which minerals are reported. This upward extension is entirely logical since the artisans do get gold at surface. The measured gold content and thickness intercepted are averaged. The apparent length of each trend is used.  While not "banker" correct, the fact that I average results from the hundreds of holes now actually drilled says that "statistically" I can defend such approximation. Using those averages and "textbook" average rock density I calculate tonnage and indicated gold content. If the present value of gold in the ground is taken at US$200 per ounce, then the "sunny side" amount at which I would sell out without hesitation is more than $100 per share. Squint squint! It keeps growing! 

Not a penny less 

 A more conventional estimate uses the resource calculation made by RSG's engineers to reflect securities regulators standards. As at last July that figure was  433,000 ounces of gold at a cutoff  of 2.7 grams per ton. Considering that ores with gold content of less than 1 gram per ton are being mined at a profit by neighboring companies, this is truly a conservative cutoff number. The drilling now indicates 14 finds already made over the course of the program. I expect that of these, only four had enough drilling to provide density of drilling sufficient to satisfy the resource calculation formula. The date of onset of the rainy season may govern how much "resource drilling" will be added this year. President Gillis speculated at the London conference that drilling since last July will extend the resource amount to 1.2 million ounces. An appropriate present value for such resource, using comparison with recent successful takeover bids is C$300 per ounce. This puts a "value" on Cassidy at $360 millions, or, $6 per share now issued. That's a sextuple, right? Have always wanted to work that word in. So, don't take a penny less. Remember it's sexy and it's still growing!                  

Disclosure Statement

  Ed Zederayko is a shareholder of Cassidy Gold Corp. He is not an insider of the company.