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 Tue Jul 15, 2008
Bottom-Fish Comment: Ascot suspends construction of Swamp Point gravel project
    Publisher: Kaiser Research Online
    Author: Copyright 2008 John A Kaiser

Ascot Resources Ltd (AOT-V: $0.52)Profile Search Web Site Tree Forum SEDAR Quote

Bottom-Fish Comment - July 15, 2008: Ascot suspends coonstruction of Swamp Point gravel project

We closed out the Ascot Resources Ltd bottom-fish cycle on January 17, 2008 with a Spec Cycle Sell 100% recommendation at $1.45 in Tracker 2008-04 (Is Ascot a tedious gravel play or a hot gold play?) after the company raised $23 million at $1.75-$2.00 for its Swamp Point gravel project in northwestern British Columbia while teasing the market with its mysterious Dilworth gold-silver project near Stewart. It turns out Ascot is no longer a tedious gravel play and has become a not so hot gold play. Ascot finally reported results on February 26, 2008 for its 2007 drill program consisting of 36 holes 4,850 metres. The results were mediocre, consisting of either high grade spikes over short intervals or low grades over somewhat longer intervals. Ascot plans to spend $3.2 million on further work in 2008 after retaining a geophysicist and mapper to better define the targets at Dilworth. Most of the financing proceeds, however, were allocated for construction costs at the Swamp Point gravel project, which may explian why Ascot's key geologist Ken Carter jumped ship in late January 2008 to head up Sheldon Inwentash's Mega Silver Inc where Carter is currently farming into silver projects other juniors are unable or unwilling to fund. On July 11, 2008 Ascot suspended construction when the company's plan to secure gravel supply contracts in California was impacted by a "recent dramatic downturn in the US housing market". Recent? Ascot remains confident in its business model, but will not resume work on its shiploader until "market conditions improve". Although a summer drill program is now underway at the Dilworth gold-silver project, the stock price is falling as shareholders contemplate the not so good news about Fannie Mae and Freddie Mac. When, pray tell, they must be asking themselves, will the value of existing homes stop falling, and when will new home construction in California resume on a sufficient scale to generate demand for BC gravel? Not any time soon, and given the speed with which Ascot's management recognizes trends far from its backyard, it may be a long time before Swamp Point sucks up more money. Our bottom-fishing question thus is how much money does Ascot have left? It had about $17 million left at Dec 31/07 after the financing, plus 2.4 million shares of Cardero. The year end was March 31, but we will have to wait until the June 30 quarterly financials are published in late August to see what is left. Meanwhile, unless Dilworth delivers a miracle hole, Ascot's stock is heading lower as the placees from the December 2007 financing extract tax benefits from their losses. So put Ascot on watch as a possible bottom-fishing candidate for later this year.


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