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 Wed Jan 5, 2000
Report Jan-Feb 2000: Altoro Gold Corp - Top 20 RS BF for 2000
    Publisher: Kaiser Research Online
    Author: Copyright 2000 John A Kaiser

 Report Jan-Feb 2000: Altoro Gold Corp - Top 20 RS BF for 2000

Altoro Gold Corp (ATG-V: $0.36)

Top 20 Resource Sector Bottom-Fish for 2000

Story: Platinum Group Exploration
Tel: (604) 718-9079
Web Site: www.altoro.com
Issued: 16,470,943
Diluted: 20,068,335
Working Capital: $750,000
Cash Breakup: $0.04/sh
Key People: Ross Beaty & David O'Connor
Insider Stake: 33%
Life Cycle Stage: Mid
Bottom-Fish Buy Range: $0.30-$0.49



Synopsis: Altoro is by no means the strongest bottom-fish in my Top 20, but it is my favorite platinum group metals exploration junior. What I do not like about Altoro is its relatively weak financial position, most of which will be gone by the time a US $360,000 program on the Pedra Branca project in Brazil is completed in March. Altoro has completed a 15 hole shallow drill program totaling 1,200 metres on several outcropping zones of a shallowly dipping sill complex that has been traced over a strike length of 30 km. Trenching results suggest potential to develop an open pit mineable resource with a combined PGM grade of 3 g/t or better. The recent drill program apparently intersected the target horizon, but assays will not be available until early January. For Altoro to launch into a speculation cycle it will need results that signal a significant discovery. Altoro's search is restricted to North and South America, where platinum group metals have been exclusively mined from only two deposits, Stillwater and Lac des Isles. PGM production is dominated by South Africa where it is mined from high grade reefs within the Bushveld complex. The rest of the world's PGM supply comes as a byproduct from nickel sulphide mines such as Nor'ilsk and Sudbury. Platinum enjoyed a boom as a resource sector commodity play during the eighties when various groups including one headed by Ross Beaty explored for PGM's in North America. That boom ended in disappointment and PGM exploration went into hiatus until the late nineties when gold tanked while platinum prices held up. The recent revival, which has yet to reach boom status, has been led by palladium, whose price has climbed from $100 per ounce five years ago to parity with platinum in the $400-$450 range. The sustainability of palladium prices is a big question mark because the substantial increase in 1999 has been caused by a lack of supply from Russia created by a legal roadblock that is in the process of being resolved. The general view is that palladium prices will retreat during 2000, but that assumes Russia has the capacity to produce palladium, an assumption that is looking increasingly doubtful in view of the infrastructural decay Russia is undergoing. Palladium emerged as a substitute for platinum in catalytic converters during the eighties partly due to its relative cheapness and a desire by industrialized nations to rid themselves of dependency on South African production. Carmakers are unlikely to switch back to platinum for strategic reasons, including the fact that the palladium grade in PGM bearing systems outside South Africa is generally twice that of platinum. Another reason to avoid industrial uses for platinum is the "white" metal's growing emergence as a jewelry substitute for gold. It seems that consumers perceive gold as old-fashioned and classical whereas platinum seems more in line with the futurism associated with the technology boom and new millenium thinking. Some juniors like the Hunter-Dickinson group's Anooraq have gone to South Africa in search of PGM deposits, but others like Altoro are looking at the poorly explored layered intrusive complexes of the Americas whose economics have never been viewed in terms of platinum-palladium price parity. What I like about Altoro is that founders Ross Beaty and David O'Connor have turned the junior into a PGM exploration vehicle with this strategy in mind. Beaty is famous as the principal behind Pan American Silver (PAA-T), a pure silver vehicle that has even attracted a sizable investment from Microsoft's Bill Gates. But unlike Pan American, whose growth strategy is to acquire marginal silver deposits as a speculation on higher silver prices or take on politically risky deposits such as the Dukat in Russia where gangsters play games with foreigners, Altoro's growth strategy hinges on exploration success. In making Altoro one of my Top 20 bottom-fish I am making less a prediction about the success potential of Pedra Branca in Brazil or Rincon del Tigre in Bolivia than a vote of confidence in management's commitment to turning Altoro into a PGM success story. All Altoro needs is a little help from mother nature to turn into a hot play.

 
 

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