This is the 2nd installment in the Nanika Resources newsletter. I would like to thank everyone for their input and the overwhelming response has been positive. The newsletter will be used to inform our shareholders on the progress of the Lucky Ship project, company activities and to help inform our readership on some of the benefits and risks of share ownership in junior resource mining companies. As we have seen over the last few months circumstances in the global economy have not only affected our company but the mining sector as a whole. We will talk about commodity prices and the longer term outlook in this edition. Opinions expressed in this newsletter are expressly those of the writer and should not be constituted as financial advice. |
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News Release “Nanika Announces Memorandum of Understanding”
November 27, 2008 Nanika Resources Inc. (TSX-V:NKA and FSE: C7X) (the "Company" or “Nanika”) is pleased to announce that it has entered into a Memorandum Of Understanding (MOU)with Palm Clean Energy Inc. and Daewon Chemical Co. Ltd. of South Korea, confirming intentions to form a joint venture company. The new joint venture company formed by these partners will hold the continued exploration, development and mining right to the “Lucky Ship” molybdenum project located at the “Nanika Ridge” site approximately 85 kilometres southwest of the town of Houston, British Columbia. Nanika’s President and Chief Executive Officer, James Jacuta, commented that: “I would like to thank the teams representing all of the parties for their efforts. They were certainly complicated by recent events around global fiscal uncertainty. The success achieved in arriving at this Memorandum of Understanding is the result of their persistence, commitment, and understanding in all of the circumstances”.
To read the entire news release click here |
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In this photo: South Koreans and
Project Manager
Bruce Graff |
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How are we doing during this economic downturn?
For most of us the recent developments in the overall global economic downturn is not comparable to anything we have experiencedin the past. Some of you may have gone through the market correction of 1987 but it is safe to say that what we are currently experiencing is unparalleled and unprecedented in its global resonation.
The key for a junior resource mining company to survive during a market downturn is to minimize overhead. As junior resource companies are either exploration or development companies such as Nanika Resources generate no revenue. Our only source of funding comes from the equity markets or joint venture projects. To help reduce overhead we have reduced salaries, and decreased investor relations expenses. Below are comparative charts of Nanika’s stock price and the TSX Venture Exchange index.
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Ensure market orderliness
The stock market and the commodities market are the same in that they are based on supply and demand. The stock markets have a tendency to have more dramatic swings as there is more of a human element affecting price fluctuations. Too much supply and no demand means depressed share prices which is currently the market condition we find ourselves in. Remember whether it is Nanika Resources or another mining company you may own if the fundamentals are sound these companies should rebound. In other words our resource numbers have not changed at Lucky Ship.
Also I think it is worth mentioning the commitment of management. Jim Jacuta the president has purchased in excess of one million shares of Nanika Resources in the last 60 days and director Ross Blusson has been purchasing Nanika Shares. The management of Nanika Resources is committed in seeing this project through to fruition.
See sedi.ca
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When will the commodities market improve?
As we have discussed the commodity markets are based on supply and demand. When there is an economic slowdown there is a buildup of warehouse stocks of base metals. Further along in this newsletter we will talk about government incentives in building of infrastructures to stimulate the economy. Molybdenum will start to trade on the London Metal Exchange (LME) commodities exchange in 2009 but for the purposes of this newsletter I provide you with the six month LME warehouse stocks of nickel and copper.
As you can see as warehouse stocks increase the price of the base metal diminishes until equilibrium is found. The large producers of base metals traditionally reduce or suspend production during periods of weak commodity prices. If demand starts to increase warehouse stocks will decline pushing the price upward. It is often a good time to be looking at making an investment in a base metal producer or developer when the LME warehouse stock are remaining stable or declining. During times of economic downturns countries often fund government projects to help stimulate their economy and build long term infrastructure projects when it is the cheapest to do so.
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Thompson Creek Metals CEO Kevin Loughrey predicts higher Molybdenum Price for 2009
To watch this video click here |
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We have a Fan!
Victor Goncalves publisher of the Equities and Economic Report has written a recommendation on Nanika Resources Inc. Mr.Goncalves is a regular speaker at the various investment conference held throughout Canada and the US. In this piece I have only taken the excerpts for Nanika Resources. There were 10 different companies covered in this report that was just recently brought to my attention.
To read the recommendation click here |
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How are typical porphyry deposits formed?
The Lucky Ship project is a porphyry deposit. Porphyry deposits can be the largest in the world. This is an excerpt from the Utah.com website.” Kennecott Copper Mine, the world's largest man-made excavation and first open-pit, is located 28 miles southwest of Salt Lake City. 2 ½-miles across, and ¾-mile deep, the mine is so big; it can be seen from space shuttles in outer space.”
British Colombia has the nickname porphyry country as many of the mines in BC are this type of deposit. Porphyry deposits are usually large tonnage and low grade. Most are near surface making them amendable to open pit mining which is the cheapest way to extract ore from the ground. The following in an excerpt from Natural Resources Canada. Porphyry deposits are the world's most important source of Cu and Mo, and are major sources of Au, Ag, and Sn; significant byproduct metals include Re, W, In, Pt, Pd, and Se. They account for about 50 to 60% of world Cu production and more than 95% of world Mo production.
To learn more about porphyry deposits click here |
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In all my newsletters I plan to do at least one article on how mining companies find, define and explore potential projects. We will talk about different types of deposits and how they are formed. All junior explorers hope to find an economic project that will be put into production. There are very few industries that offer such high risk and reward as the mining business. It can offer such hope and promise yet often result in disappointment. It goes without saying that investing in the junior resource market is not for the faint of heart.
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We hope that you have found this news letter informative.
Any comments would be appreciated and will we ensure that we continue to try and keep you
abreast of any changes that will affect your investment in Nanika Resources Inc.
Contact: Doug Kerr
Toll Free: 1-866-580-0699
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| Head Office: |
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Nanika Resources Inc.
Suite 670
789 West Pender St
Vancouver, BC,
Canada, V6C 1H2
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Chairman, President & CEO: |
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James Jacuta |
| Phone: |
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(604) 638-0699
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Secretary & CFO: |
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Nerio Cervantes |
| Fax: |
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(604) 638-0698 |
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Board Members: |
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James Jacuta
Ross Blusson
Conrad Swanson
Howard Bird
John Busswood
William Meyer
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| Email: |
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info@nanikaresources.com |
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Investor Relations: |
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Doug Kerr
(604) 638-0699
1(866) 580-0699 |
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