“Limitless Wealth from the ‘Tar Sands’ of Rare Earths and Precious Metals” (Nick Hodge)

Alternative Energy Speculator teaser of the "world's next mega-mine" explored -- "Is This the Goldmine of the Future?"

By Travis Johnson, Stock Gumshoe, November 15, 2011

I promised to keep looking at Bakken stocks, but the overwhelming barrage of requests piling in overnight for this “goldmine of the future” teaser ad forces me to push that one to the top of the pile.

And let me just say, even before I begin, that this one is dangerous — the stock they’re teasing is teensy, with a market cap of under $20 million … and they say that their “special report” is not out on this stock yet, so that leads to some risk that they’re just priming the pump for a stock, and may even be trading around it since they’re not specifically mentioning the name yet (in part because they know that quite a few folks will go searching for info and find it, either here or elsewhere). I don’t know if they’re doing this, just that they could — their disclaimer reads as follows:

“The publisher, editors and consultants of Angel Publishing may actively trade in the investments discussed in this newsletter. They may have substantial positions in the securities recommended and may increase or decrease such positions without notice.”

So that’s your up front caveat — just wanted to get that out there before we build up the excitement level for this “goldmine of the future!”

So what is the stock they’re teasing with this promise that the report will be available “in the next couple of weeks” to paying subscribers?

Well, for that we need some clues … here’s what they tell us:

“I’m standing on what could become one of the largest metal mines in the entire world.

“It’s so big, the Canadian media calls it:

‘… the world’s next mega-mine…’

‘… an endless river of base and precious metals…’

‘… with the potential to generate billions of dollars in wealth…’

“And when I recently discovered that some of the wealthiest and most successful resource investors in North America were putting their own money into this project, I hopped on a plane with Nick Hodge and Andrew Mickey to see it firsthand.”

And of course, we get the obligatory, “here’s a photo of me with a helicopter, and some pictures of rocks to prove that we really went to check it out” pictures. Your friendly neighborhood Gumshoe is embarrassed to admit that I would have no idea which rocks to take pictures of were I to join in one of these junkets. Then again, I also will not be getting into a helicopter of my own free will, not unless I’m being airlifted to safety from a volcanic eruption, so I probably won’t get to visit any really exciting rocks anyway.

And in addition to the photos in the ad, we also get a line that we’ve heard so many times that it ceases to have much meaning:

“What we saw blew us away…

“I knew that I was looking at possibly the greatest investment of my lifetime.”

But you know, even if we are a bit jaded … we still really, really, really want to know what stock this is.

Some more clues?

“Like a blanket covering 670,000 square acres (1,050 sq. miles), the metals are at the surface, visible to the naked eye.

“You can literally scoop up gold, silver, copper, nickel, cobalt, and zinc with your own hand.”

And we’re not satisfied with just gold and copper and the like, there’s more!

“Every metal vital for modern civilization is right there, billions upon billions of dollars’ worth.

“The property also contains uranium.

“Perhaps more important, the area is blessed with an abundance of highly-sought-after rare earth elements like lithium and vanadium, vital to the United States military and the growth of the hybrid automobile market.”

We’re told that this is an “early-stage” project, only known to “super insiders” — which would help to explain why the entire market cap is so tiny. To give you some perspective, $20 million is less than the annual dividend paid out by Royal Gold (RGLD)… and RGLD shareholders get only a 0.5% yield. Most companies you’ve heard of could come up with $20 million from the cupholder in their car.

One list bit of verbiage from the ad for you:

“And here’s the clincher: This mega-metals property sits right next to the legendary oil sands at Fort McMurray in Alberta, Canada, where the oil also sits right at the surface.

“Are you starting to see the opportunity here?

“The geological forces that created the prolific oil sands at Fort McMurray millions of years ago are the same forces that created one of the largest base and precious metals formations in the entire world.

“The Alberta government has known about it for years. But the technology was never there to extract the metals.

“That all changed in 2008.

“Alberta believes it could control two of the largest and most lucrative mining operations on the planet in the years to come: oil and metals.

“And I believe this Alberta polymetallic mine project will turn early investors into millionaires.”

So what, pray tell, are they talking about? As usual, we toss all those little tidbits into the Thinkolator, let it chaw and chew for a moment, and we get our answer: This must be … DNI Metals (DNI in Canada, DMNKF on the pink sheets — free trend analysis here from MarketClub, one of our advertising partners)

And I’ll repeat that bit about “tiny” from above: ONE eager Gumshoe reader could easily move the price of this stock by 5% with some hyperactive buying, the recent average daily trading volume is only about $40,000 worth of shares. Which is why I often hesitate to write about stocks of this small size … but still, questions come in and we want to answer them.

DNI, which used to be called Dumont Nickel and which also owns a diamond prospect in Ontario that seems to be a bit of an afterthought at this point, has been working on exploring and developing the black shale polymetallic deposits north of Fort McMurray for many years. They have two main challenges as far as I can tell: The process is new and may not work or be economically sensible; and the deposits are very low grade, so if their process doesn’t work they don’t have an easy “plan b.”

The general idea is that they will mine the “ore”, which is what they think they have as much as 24 billion tons of in their properties, crush it, and leach it similarly to the way gold miners use cyanide to leach the gold out of piles of crushed ore. Only instead of cyanide, they do “bio-leaching” that seems to use (native) bacteria to do the same job — they make big piles of crushed black shale, pour whatever the liquid agent is over the top, and let it compost and leach until the liquid comes out the bottom with metals dissolved in it. Then repeat, and repeat, and repeat until concentrations are high enough to process the metal.

This isn’t a gold mine, though — maybe figuratively, I guess, but in a literal sense there’s probably some gold in the deposit, but it’s a small enough amount that they don’t even include it in their assumptions and estimates. So if you’re literally minded, perhaps that’s reason to sow a small seed of doubt about the findings of the mighty Thinkolator… but remember, there aren’t exactly a lot of tiny companies seeking to process 24 billion tons of low-grade polymetallic ore near Forth McMurray. There aren’t even two, as far as I can tell, so I’m convinced DNI is it.

The concentrations, as I noted, are very low — for example: silver isn’t a core target of the mining, but their first mining area is estimated to have something around 0.5 grams/ton of silver for a total of perhaps 20 million ounces, and you’re unlikely to see a real silver producer bother with any projects under 40 grams/ton. Molybdenum does seem to be an important potential product of the mine, and they think they have at least 200 million pounds of it in this first target zone (the Buckton property), but the concentration is around 75 parts per million — 0.15 pounds per ton. That equates to 0.0075 percent Molybdenum for the ore — for comparison sake, the best molybdenum mine in the world (the Climax mine, owned by Freeport and in the process of reopening) is at 0.165% … in case that doesn’t sound like a big difference, that means the ore at the Climax mine is 2,100% richer than the black shale ore at Buckton.

Which doesn’t mean that it can’t be profitable — this is, indeed, an entirely new kind of mining. It just means that we should remember that we’re dealing with a new paradigm, so it’s very hard to compare this project to anything else. Their argument — both for themselves and for the province of Alberta — is that the polymetallic nature of the ore and the long mine life and consistent ore concentration means that they should be insulated from the swaying prices of any one commodity. The latest studies indicate that their bioleaching should enable them to get “high recoveries for Ni/U/Zn/Co/Cd and lower recoveries for Mo/V/Cu/Li,” so it’s a lot of metals — and, importantly for the province’s business development plans, it lets them potentially diversify away from being so dependent on oil and natural gas (a dependence which exacerbated the economic crisis in Alberta when oil prices plummeted, albeit for a short while).

So you can see why the folks in charge in Alberta are pretty excited about the potential for this project, especially because it sounds like the environmental impact may be far less scary than the oil sands development or than typical mining or cyanide leaching operations.

The reason that it became feasible in 2008 is that’s the year that the only other comparable mine in the world started operating — the Talvivaara mine in Finland. There are a few other projects in development or exploration, but Talvivaara is the one that they all seem to point to as proof that it can be done.

And it is indeed impressive — we’re talking about a project of potentially massive scale, comparing it to the oil sands megaprojects of Alberta is reasonable, at least in concept, because they have to process billions of tons of earth (including roughly 50-100 meters of overlayment, which itself contains small concentrations of rare earth elements and lithium) before they get to the shale, and then the shale itself is perhaps 20 meters thick, across many square miles of ground (that first mineralized zone alone, the Buckton area, is 26 square km), so you can imagine the huge earth-moving project this would be. The planning and cost would be extraordinary and long-term in nature (as would be the production for those of us who are used to quick results — it sounds like bio-leaching can take a long time for big stacks, though they’re really still testing the concept), so if any of this gets to any kind of commercial stage, it will mean bringing in lots of partners or raising billions of dollars.

The quotes from the “Canadian press” that sound so impressed with this project are mostly from one source, an online news generator and syndicator called TroyMedia — DNI conveniently makes their very positive articles available on their website here if you’d like to read up. The articles are interesting, but also pretty cheerleader-y — it ain’t the Financial Times.

So that’s the basic rundown — this is a new kind of mine, with huge numbers in their projections (including massive mine lifespans of perhaps 100 years), and as such there’s a lot of work to be done. You can see the first resource estimate, their latest investor presentation, and their financial reports on their site here if you’d like to start researching the company. The first resource estimate, released on October 24, despite the fact that it’s just the first inferred resource estimate and it’s just for a small portion of the property, seemed to have roughly the same impact on the share price (30%+ pop) as did the initial email from Brian Hicks yesterday … though with a stock this tiny it’s extremely hard to tell why it moves — it takes very little trading to cause a shocking percentage move, and often very little time for those moves to reverse themselves.

Their current focus is on “advanc[ing] this Zone toward a preliminary economic assessment and scoping study in 2012,” so that seems when some sort of economics will be applied to the project. They’ve raised a bit of money over the past year, and say that it’s enough to advance their plans “into 2012.” How far into 2012, I don’t know. If you want the more exhaustive details, they’re in the last quarterly report here.

There you have it, then — not exactly the exhaustive report that they promise Nick Hodge will be sending out in a couple weeks, and your friendly neighborhood Gumshoe certainly doesn’t know enough about geology and leaching to provide much more detail, but I can at least tell you that from the clues they gave they must be hinting around about DNI Metals … and that most of the time when someone claims that a $20 million company is going to change the world or invent a new way of doing something, it turns out to be even harder than it looks.

The story of DNI Metals has been around for a while, since they’ve been proselytizing about this bio-heapleaching technique since it started to be proven in 2008 in Finland, and the low grade deposits of the Alberta shales have likewise been known about for a long time — will this be the moment when this company starts to create a huge business out of that potential, or is it still just a pie in the sky? Let us know what you think with a comment below.

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16 Comments Read More

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21 Comments on "“Limitless Wealth from the ‘Tar Sands’ of Rare Earths and Precious Metals” (Nick Hodge)"

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C. J. CORNELIUS
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C. J. CORNELIUS
November 15, 2011 3:08 pm

A real shot in the dark. Do you have any thoughts on Technology Profits Alert promoted by the Penny stock alert?

Bonsap
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Bonsap
November 15, 2011 3:55 pm
I invested in the stock after investigating it earlier. and was please yesterday when it got up to the price I had paid for it a few months ago. (I’ll leave it to your readers to determine how noteworthy it is that I didn’t recognize it from Brian’s teaser, which I had read yesterday.) Anyway, the reason that I invested was that the Talvivaara bioleaching story was viable and seemed transferrable to Buckton. Having some background in chemistry, I understood that the bioleaching process isunique to each bioheap, and the process of extraction of metals requires lots of time and… Read more »
C. J. CORNELIUS
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C. J. CORNELIUS
November 15, 2011 4:13 pm

The Technology Profits Confidential was touted by Penny Sleuth regarding spintronics which has been touted by others earlier. This is supposed to be as revolutional as the commputer was at the outset.

hullevad
Irregular
8
November 16, 2011 5:58 am

Theoretically it can work out! But the big problem is ROEI (Return On Energy Invested)!
If oil prices soar (peak oil) as can be foreseen, it will make the project uneconomical with the massive amount of diesel oil needed for the BIG earth works.
The Finns have perfected the nickel process no doubt, but their margins are not impressive.
With so many targets it simply gets a LOT more complicated, also to finance. I do not seen any future for this project in the short to medium turn!

Peter
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November 19, 2011 1:14 am

Thank you Gumshoe for a realistic, efficient summation of the prospects!

who noze
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November 19, 2011 8:15 pm

a close friend bght dumont nickel at east 20 yrs ago he passed on several yrs back leavimg me w// the stockwhich is in his name though i have death crt. any ideas where i go from here i realize you dont offer advice but if u have suggestions w// be much appreciated

Matt
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Matt
February 6, 2012 7:29 pm

The only way you would gain ownership is if you are specified in his will. That’s something for a lawyer to figure out. Sorry not the answer you are looking for.

Carl
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Carl
November 20, 2011 4:18 pm

Energy costs? Environmental costs? I’m only familiar with bioleaching at copper mines, and that is far from free, easy, and benign. At this size, just a few significant economic, strategic, or regulatory hurdles could stymie the company.

Gary
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Gary
November 29, 2011 12:55 am
It might turn out to be a super investment but it is so early in the development process. They claim there are areas without much over burden. Moving very large amounts of earth can be done with various machines. Usually something like a drag line is used or they can use something along the line of a rotary digger / conveyor depending of the materials in the over burden. Need to see the details develop. Might be able to just play the price action but at this level I would not be inclined to get in. Something to be tracked… Read more »
Steve
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Steve
November 29, 2011 4:38 pm

What concerns me is that of all the literature I’ve seen on it, DNI does not say they will use the SAME bioleaching process as the Finns, so it implies they will have some R&D to do there as well. Good luck with making that work quick! I can’t see this taking off without a massive amount of investment, which certainly could come and speed things up some, but wash your measly little investment piece of the pie a long way down the leach pile. Watch and wait before committing your life savings….

Elizabeth
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Elizabeth
January 30, 2012 2:23 am

Yes, I agree with Steve, it is not clear how, or by whom the bioleaching process will be applied. Is Talvivaara (of Finland) going to build a processing plant in Alberta at the site??? Surely megaloads of this earth are not going to get shipped to Finland for processing, costing megadollars in shipping??

paulknabenshue
Irregular
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paulknabenshue
December 2, 2011 10:05 am
Thanks for the Detective work on this one Travis. I see the pink sheets bounce between about $.10 a share up to about $.40 a share. Seem they are at about $.30 a share right now after the latest round of teases… I would think to let it settle back down again – then maybe worth a nibble at about …$.15 a share. This looks like it will take a long time and successive rounds of dilution before they become profitable, if ever. Call their current stock an ‘option’ with a long expiration date!
Terry Price
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Terry Price
December 20, 2011 1:14 pm
I invested in this stock recently. I lived in Alberta for over 30 years. I’m not sure if it’s because of the fact that my heart is still in this wonderful province or not, but I believe in the story. I’ve seen and experienced first hand, the great business environment and business friendly government, that The Province of Alberta is. In fact I worked for the govt. for over 25 yrs. and Alberta has the $$$ and the political connections to bring this project to fruition like no other entity I know, and to do it fast and to do… Read more »
Gungho
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Gungho
January 5, 2012 11:50 am

Check Dumonts past except for PRs they never hit something for real, only mining for OPM.
This story unfortunately sounds familiar.

leeze
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leeze
January 20, 2012 3:40 pm

So I got really tired of reading everything on this process so can you tell us what the name of the stock is or is that a no no here.

George Haralabakos
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George Haralabakos
November 20, 2012 2:37 pm

Please tell me how could I buy shares of DNI Metals,which are those that is expected to increase in price,etc. Which is the price nowadays?Is the TSX-V:DNI)(PK:DMNKF) a share?
Thanks in advance,

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