John Kaiser: Look for ‘Exploration Free Lunch’

At the 2015 Canadian Investor Conference, held in Vancouver on May 31 and June 1, the Investing News Network spoke with John Kaiser of Kaiser Research about trends in the metals market and about junior mining companies doing innovative exploration.

Kaiser often speaks about the importance of innovative exploration, and he said again that it will take “an exploration program with a target that has world-class discovery potential” to reignite faith in junior mining companies.

But what does that mean for investors who still think junior mining stocks are too risky? Kaiser advised them to “look for an exploration free lunch,” or stories that are hedged with lower-risk exploration programs.

“If they don’t find it, nothing happens, but if they do find it, [the stock] goes way up,” he said. As one example, Kaiser pointed to Tsodilo Resources (TSXV:TSD), which he owns. Tsodilo holds the Xaudum project in Northern Botswana, and First Quantum Minerals (TSX:FM,LSE:FQM) has spent roughly $14 million working to define the property’s copper potential.

However, Kaiser noted that the company also owns a diamond pipe that’s very similar to the AK6 pipe that Lucara (TSX:LUC) turned into the Karowe mine; Tsodilo is doing systematic exploration there as well. “So you have a plodding feasibility demonstration story in the background to which the market is assigning the main value,” he said. “So you get the upside on this discovery for free.”

Kaiser also spoke about the importance of having strong geological arguments behind such exploration programs and about how moves to cut emissions in China could affect the metals sector. He suggested that China will cut down on dirty mining and refining operations in coming years, and is positive on zinc in particular.

“You’re going to see zinc supply come down from China,” he said. “And the market doesn’t believe this happens. They think China has an invincible ability to keep ramping up zinc supply, which is why they’re reluctant to jump into the zinc juniors right now.

Kaiser cited InZinc Mining (TSXV:IZN), which he owns, as a zinc play he recommends. “Now’s the chance to just put in a position that over the next two to three years, in my view, has 1,000-percent upside potential when zinc breaks out and then there’s a scramble.”

The last stock Kaiser bought was Uravan Minerals (TSXV:UVN), a company conducting uranium exploration in the Athabasca Basin by looking for lead isotopes at surface. Watch the video above for more of what Kaiser had to say.

For more information and full disclosures from Kaiser regarding the companies mentioned here, please contact him via his website — Kaiser Research Online

Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

InZinc Mining is a client of the Investing News Network. This article is not paid-for content.

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