Napoleon supposedly maintained that he would rather his
generals be lucky than skillful under the interesting theory that you can
beat skill but you can never beat luck. Avrupa Minerals Ltd. (AVU:TSX.V) has
been displaying a lot of skill with their latest drill results in Kosovo of 3 meters of 38.7 g/t Au in hole SLV058. As luck would have it, potential investors will have the chance
to buy Avrupa on sale for the next five weeks due to warrants expiring soon.
Avrupa is a Canadian junior focused on projects in
Europe. They use a project generator model. They pick up likely looking
projects that fit their model and vend them to partners who get a big piece
of the project and spend all the money. Avrupa keeps a small piece of each
project but doesn't spend money.
In the very earliest stage of new bull markets the medium
size in-production companies go up the most. A good example would be Silvercorp
that sold for $0.60 a share in January and is now $4.54 for a 650% gain in 8
months. Project generator companies are among the last to get on board the
train because their deals take years to show benefits.
Avrupa, however, has the advantage of being around for
some time and has deals now showing the fruits of investment during the wave
of terror in the junior mining space. As markets improve, project generators
will regain the respect and valuation they had back in 2011 at the top of the
market. With just over a $10 million market cap, Avrupa has a lot of room to
run.
Avrupa has a joint venture with Colt Resources called the
Alvalade copper/gold project in the Iberian Pyrite Belt. They have a
tungsten project in the north of Portugal with Blackheath Resources named the
Covas Joint Venture. And the superb gold assays just released came from the Slivovo gold property in central Kosovo. Avrupa also has 85% of a gold project in what was East Germany in the ancient Erzgebirge mining
district. Mining took place in Erzgebirge as early as 2500 BC and provided much of the tin used in the
Bronze Age.
The single most significant project right now has to be
the Kosovo Slivovo Gold property. An Australian company named Byrnecut
International Ltd. will fund the project to a PFS (prefeasibility study) to
earn 85% of the project. The PFS must be complete by April 10, 2017, to
finish the earn-in. The local company owned by Avrupa is named Peshter Mining
and it is completing all the requirements for a mining license that will be
submitted by Q2/Q3 of 2017.
While the Slivovo project only has a 43-101 gold resource
of about 100,000 ounces, the recent drilling has opened up an entirely new
zone of high-grade mineralization. Avrupa's partner is a major Australian
mining contractor who is doing the PFS and an updated resource. The general
plan is to start with an open pit mine and mill and go underground after more
drilling. The partner has spent in excess of 3.5 million Euros so far. With a
40% unemployment rate in Kosovo the government is going out of their way to
make permitting a smooth process. The required infrastructure is nearby.
The 2nd most advanced project of Avrupa is
called the Covas Tungsten property and is located some 100 km north of Porto in the north of
Portugal. Avrupa is in a joint venture with Blackheath Resources. Blackheath
has so far earned 75% of the project. In April of 2015 the company released an updated 43-101 that showed an in-ground resource of about $200 million of
tungsten. The specific grades and tonnage are in the report above but there
was a mine at Covas before and with that value of tungsten, there probably
will be a mine again.
The downfall of project generator companies is that it's
really hard to put a value on the company. Avrupa has three major joint
ventures now that are progressing and an additional six in the wings ready
for either the company to advance themselves or to JV out. Rarely does a
company holding multiple projects get much value beyond their first project
and perhaps half the value of the second and none for the rest of the stable.
So valuation is relative and in the mind of the beholder.
I don't know what Avrupa is worth. The company has sold
for as little as $0.075 for one day earlier in March and hit a high of $0.25
in mid-August. I'm going to presume both those prices reflected the general
market for juniors this year with the low in March and the high five months
later. Many juniors have gone up 200-300% from their lows so presumable the
$0.25 price in August reflected a reasonable price. But and this is a big
BUTT, the company has about 2.5 million unexercised warrants outstanding at
$0.15 that expire on September 24th of this year. That's an
artificial roof for the stock. Every time the stock gets up to $0.17 or
higher, warrant holders are going to be dumping shares to exercise warrants,
(1) to make a few cents and (2) to put some much needed money in the
treasury. And there are another 2.8 million warrants at $0.15 due to expire
in October.
If the company has any sense and I know management and I
know them well, they will be putting out all the good news they can over the
next five weeks. Meanwhile my opinion is that the company shares are on the
sales table and come the middle of October there will be a reasonable bounce
as soon as the selling pressure is lifted.
Avrupa is an advertiser and I am biased. Their presentation is excellent and informative and should be viewed. The stock is fairly tightly held with over
50% in the hands of about eight investor groups and management. Please do
your own due diligence.
Avrupa Minerals
AVU-V $.15 (Sep 09, 2016)
AVPMF OTCBB 69.7 million shares
Avrupa Minerals website
Bob
and Barb Moriarty brought 321gold.com to the
Internet almost 14 years ago. They later added 321energy.com to cover
oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites
feature articles, editorial opinions, pricing figures and updates on current
events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1
pilot with more than 820 missions in Vietnam. He holds 14 international
aviation records.
Disclosure:
1) The following companies mentioned in the article are sponsors of
Streetwise Reports: Avrupa Minerals Ltd. The companies mentioned in this
article were not involved in any aspect of the article preparation so the
expert could write independently about the sector. Streetwise Reports does
not accept stock in exchange for its services. The information provided above
is for informational purposes only and is not a recommendation to buy or sell
any security.
2) Bob Moriarty: I, or members of my immediate household or family, own
shares of the following companies mentioned in this article: None. I
personally am, or members of my immediate household or family are, paid by
the following companies mentioned in this article: None. Avrupa Minerals Ltd.
is an advertiser of 321 Gold. I determined which companies would be included
in this article based on my research and understanding of the sector.
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