Philip Ker, an analyst with Toronto-based Union Securities, expects the junior mining sector to witness an increase in M&A activity throughout the remainder of 2012, which could funnel more capital into the space. Philip’s coverage universe includes several gold juniors with near-term growth catalysts and lofty 12-month target prices. He sat down with SmallCapPower.com to discuss some of the companies Union Securities is covering.
SmallCapPower.com: So you’re saying that virtually everything in the junior resource sector is underperforming, especially those companies working in high-risk jurisdictions. Nonetheless, you have some companies that you believe will eventually perform. What are some of those names?
Philip Ker: Kootenay Silver Inc. (TSX.V: KTN). It’s a unique brecciaed epithermal silver deposit in Sonora State, Mexico. Kootenay is currently wrapping up a 25,000-metre drill program on its Promontorio deposit and plans to publish an initial resource estimate later this quarter. There’s a historical resource estimate of about 25 Moz silver-equivalents, which takes into account some substantial lead and zinc credits. I toured the property in February, and was impressed with the location, as well as the drill core. My target for the resource estimate going forward is 100 Mozsilver-equivalent, which would be a substantial uplift from the previous estimate. Kootenay recently hit some great intersections at Promontorio, particularly in the Northeastern zone where some grades exceeded 800 grams per tonne silver-equivalent.
SmallCapPower.com: Kootenay is trading at about C$0.95. Is there a
warrant outstanding?
Philip Ker: There is and some of those expire this year. It should bring in some capital for the company for future exploration, which is expected to start later this year. The property has numerous untested targets and some may be followed up on in conjunction with delineation drilling at Promontorio.
SmallCapPower.com: What’s your 12-month target on Kootenay?
Philip Ker: My 12-month target is $2.50 based on a conservative in-situ valuation of only $1.25/oz silver.
SmallCapPower.com: That’s great.
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