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Friday, March 4, 2011

Unlocking the hidden value in TNR Gold Corp!

Subject: TNR Gold Corp

If you owned 18 valuable properties consisting of gold, silver, copper, lithium and rare earths, in various locations in North America, South America and Europe, you might have a problem explaining to shareholders and potentioal shareholders, just how much value is stored up in those properties. Frustration could set in for both you, and your shareholders.

That is the position TNR Gold  (TNR-v) finds itself at this writing. Management has spent the past few years acquiring some very promising properties, and is now struggling to release the value inherant in owning a fairly large number of various resource discoveries under only one banner.


That is why TNR intends very soon, to spinout their wholly owned subsidiary, International Lithium Corp (ILC) to release the value of their lithium properties to shareholders. It has been a trying year for TNR up to this point as they have missed several dates for this highly anticipated spinoff of ILC.  After all, this deal was supposed to occur in Q1 2010 (one year ago) as is shown in their promotional material.  Investors have become somewhat frustrated (this investor included) by a company that has so much intrinsic value stored up in resource plays, at a time when resources are the name of the investment game.


Currently TNR,s many assets are distributed as such:

1. International Lithium Corp. - 100% subsidiary of TNR Gold.

2. Ameri Gold - 100% subsidiary of TNR Gold - Shotgun Gold deposit in Alaska with 1 mil AU Oz historical (NON 43-101) resource.

3. REE portfolio in Ontario, Canada - early stage exploration.


I am told by a company spokesman that their first priority is the spinnoff of  International Lithium, of which TNR shareholders will individually share in. For every 4 shares of TNR held, shareholders will receive 1 share and 1 warrant (convertable to shares) of International Lithium Corp. This alone will unlock much pent up value in this conglomorate of resource properties. 

Their second priority is the spinnoff of Amerigold Corp, as a developer of their gold properties in Alaska.

Strategic partnerships may also be in the works in the months ahead for these two new entities, and that may well be what the hold-up is.  Whatever the case, it is time for TNR management to get on with it.

I recently corresponded with TNR's "Non-Executive" chairman and largest shareholder, Kirill Klip who advised me the company is working hard toward the spinoff of International Lithium this spring, which he feels will release much pent up value in the shares of TNR Gold. You can find Mr Klip at Linkedin.

The current valuation of $19 Million for TNR Gold is laughable if you consider their holdings could be sold off at easily 3 times that multiple and probably more. There is so much hidden, pent up value in TNR shares right now that, strategic investors should be chomping at the bit to acquire some of these properties.

If these events occur, or even one of them by summer 2011, then long suffering shareholders should be rewarded handsomely for their patience.  I plan on being one of them as I have held shares for the past year, and I bought more in early March.



Overview:

TNR Gold Corp has early to mid-stage exploration assets, with 18 active projects held as three
groups: Argentina gold-copper; lithium and rare metal projects; and Alaskan gold. A TSX spin-out of the Li-REM projects, as International Lithium Corp, is in progress


The Alaskan projects could follow Lithium-REM projects and corporate spin-off: TNR has nine early stage lithium brine and hard-rock lithium /rare metal projects, commodities that are used in high-tech applications (e.g. batteries and magnets), and havea growing market in the automotive industry as it moves towards the production of electric vehicles.

TNR plans that these assets will be spun off on the TSX.V as International Lithium Corp (ILC), now anticipated in 2011. The parent company and shareholders should retain ~87% of ILC, and there will be a C$2.5m IPO. Year 1 exploration budget is expected to be C$1m-$1.5m. The initial focus is on Mariana (ARG), which covers 160km2 among the Andean Salars (ARG). Brine samples range 250-650mg/L Li (average 440mg/L) – current producers range from 150-1500mg/L of Li – as well as average 12,700mg/L K. A resource could follow drilling in 1Q11 (up to 20 holes to 100m depth).

ILC will also drill in 1H11 at brine projects in Nevada (5,285 hectares),in the area of Clayton Valley (producing Li since 1967). 

The Canadian pegmatite projects, prospective for lithium and the rare metals (e.g. tantalum, niobium and the REE) include Moose, which lies 12km from Thor Lake (TSX:AVL) and is a past high-grade producer of Li and Ta (samples include 6.7m @ 2.07% Li2O), yet untested below 25m depth. The Mavis Lake Project has channel samples including 5.3m @ 1.24% Li2O.

Mid stage exploration of the Forgan Lake Project is operated by a JV partner (TSX:CKC).

Argentina projects (Au-Cu-Ag): Among 5 active projects in San Juan Province, the primary focus is on El Salto (13,300 hectares) and El Tapau, which are both early stage and have potential for bulk tonnage Au-Cu-(Mo) porphyry discoveries. El Salto has a 6 x 1.5km chargeability anomaly and limited drilling (incl 55m @0.21% Cu and 0.012% Mo). El Tapau has three target areas; exploration includes grab sampling averaging2.2g/t Au over 4.5km strike, and limited drilling (incl 82m @ 0.49% Cu). Both projects will be the target ofgeophysics and follow up drilling.

TNR retains a 25 per-cent back-in right to certain of the properties at the Los Azules Cu-Au-Ag deposit, which contains 12.5 billion lbs Cu, with 2.3moz Au and 57moz Ag. The back-in terms are the subject of a legal dispute with Xstrata, which assigned its interest to Minera Andes Inc. TNR served a back-in notice in April 2010 and has a C$5m loan that can be drawn down to support Los Azules. Minera Andes rejected the notice, the validity of which is the subject of a legal dispute with Minera Andes. The
matter is scheduled for court in June-July 2011. The project has a high conceptual value: with capex US$2.8bn and production 159ktpa Cu at US$3/lb, NPV8 is $4bn with IRR 24% (Mineras Andes figures, Dec „10).

Alaskan Projects (Au, Cu): TNR has Shotgun (controlled by subsidiary Ameri Gold Corp), a breccia-hosted Au target with a non compliant resource of 980koz Au grading 0.93g/t and drill ready gold targets. The Iliamna Project is < 80km from the giant porphyry-hosted Pebble Deposit (18.8blbs Cu and 31.3moz Au).

Investment Comment: TNR‟s plan to spin off some of its Li and REE exploration portfolio (as ILC) is a welltested strategy for unlocking the value of mineral assets. The ILC listing was slated for 2010, but lengthy negotiations with potential cornerstone investors mean the listing is now planned for 1H11. If listed on the TSX with a starting market cap of C$15m, ILC should be seen as significantly undervalued in comparison to its Lifocused peers (capitalised at C$4-C$240m in 4Q10). Further value should be added to both TNR and ILC by ongoing exploration and resource definition in 2011, e.g. at Mariana, which bears early comparison to the nearby Hombre Muerto (Fenix) mine of FMC, providing 14% of global lithium supply.

Other share price catalysts could be a positive decision over the Loz Azules back-in, and exploration at El Salto and El Tapua.



Disclosure: Long TNR.

Herès to your Retirefund.

HP


Related Articles:
TNR has many irons in the fire!
Gold, Lithium and Rare Earths in one penny stock!


March 21, 2011 - We increased our holdings of TNR Gold Corp.

Here are some recent quotes from Resource Capital Research about TNR Gold:

"TNR's near-term exploration program will focus on lithium brine
projects at Mariana (ARG) and Clayton Valley (Nevada), as well as gold
at Shotgun (Alaska). The proposed TSX spin-out of Li and REE assets
as International Lithium Corp (ILC) could proceed in early 2011."


"The TNR lithium/REM assets could be spun out in early 2011, as International Lithium Corp, ILC:TSX.  ILC, with 60m shares at C$0.25 and early stage projects, is good value relative
to some comparable, if more advanced, lithium-focused companies."



Investor overview of TNR Gold!

UPDATE MAY 6TH 2011 

TNR's "Non-Executive" chairman and largest shareholder, Kirill Klip reports the following:

We had a very strong interest in our financing last week.



We have submitted our documents to the TSX and expecting the listing process to be completed shortly.



Record date will be announced after we receive the TSX approval for listing.



We have another very strong group joining our company as Insider with holding of more than 10% now - its background is in Energy Generation and Grid Management business. It will strengthen even more our shareholder base, particularly for TNR Gold post ILC IPO.



Los Azules will receive more attention now and  will be moving forward further for TNR Gold with additional technical steps in preparation to the announced litigation in June 2011.



We are conducting negotiations on J/V opportunities for a number of our projects at this moment in order to speed up the development of the existing opportunities.

URGENT UPDATE--FRIDAY MAY 13TH!!!
from Marketwire:

TNR Gold gets TSX approval of International Lithium Spinoff on May 19th 2011!

2 comments:

Sufiy said...

Hi HP,

I guess you have some eye for the hidden value,

Please check Minera Andes MD&A released today.

Now TNR Gold claims not only 25% back in right into the Northern Half of the Los Azules copper deposit in Argentina, but to return this property outright back to TNR.

This story is getting more interesting by the day now.

Regards,

Sufiy.

H. Pelham said...

Thanks for the update. Minera Andes would be well advised to settle this now, as they stand to lose more than 25% to TNR.
A settlement could triple TNR stock price overnight, in my humble opinion.

Again, thanks for the update.