Map of the Jerritt Canyon mining district

The map shows the locations of properties of mining companies in the Jerritt Canyon mining district as of early 2007.

Map of the Hog Ranch mining district

The map shows the locations of the properties of mining companies in the Hog Ranch mining district as of early 2007.

Map of the Hycroft - Rosebud mining district

The map shows the locations of properties of mining companies in the Hycroft-Rosebud mining district as of early 2007.

Map of the Battle Mountain mining district

The map shows the locations of properties of mining companies in Nevada´s Battle Mountain mining district as of early 2007.

FREE Nevada Gold and Silver Mining Maps

Here are five gold and silver mining maps of the State of Nevada ready for download. These maps are low-resolution jpg-files of the commercial products that I offer here. Since the maps reflect the state of the mining sector in Nevada as of February 2007, all prices have come down considerably. Please email me (dmasuch@servicioshidrogis.com) for updated pricing and shipping conditions. 1. Map of precious and base metal mining companies in Nevada (2007) 2. Reserves and resources of mining companies in Nevada (2007) 3. Major gold and silver mines in Nevada (2007) 4. Gold and silver producers, developers, and explorers in Nevada (2007) 5. Map of abandoned mines in Nevada (2007) Please take a look at the comprehensive GIS-database of Nevada gold and silber mining companies! There's also a free list of stock exchange listed companies active in Nevada.

Methodical Exploration as a Hint for Mining Investors: Aurelian Resources’ Fruta del Norte 13 Million Ounces Gold Discovery in Ecuador

Methodical Exploration as a Hint for Mining Investors: Aurelian Resources’ Fruta del Norte 13 Million Ounces Gold Discovery in Ecuador

By Dirk Masuch Oesterreich

Though Aurelian Resources, merged into Kinross Gold last year, is now a story of the past there are important lessons for investors and speculators to be learned from the history of this company.

The success story of Aurelian Resources is probably the best known among junior gold investors in this cycle. In 2006, Aurelian discovered the giant Fruta del Norte epithermal gold deposit in the Cordillera del Condor part of the eastern foothills of the Ecuadorian Andes. The stock went on a meteoric rise which took it from $0.60 to $40 within a few months as continued drilling confirmed the initial grades and thicknesses of more than 200 meters grading double-digit grams per ton.

Speculative investors reap most of their profits when getting in early on an emerging play. So this discovery raises an interesting question: Is the discovery of a company maker like Fruta del Norte just a lucky shot or are there possibly any prior indications to that a company is about to find something big?

In Aurelian’s case there is in fact an important lesson to learn since there were a lot of signals that the market simply overlooked. While several factors contributed to Aurelian’s success probably the most important single factor was a methodical exploration program tailored to the natural conditions of a difficult to access tropical rainforest and a mountaineous terrain with a great number of streams and rivers.

The very first step in exploration is a thorough historical research to narrow down on preliminary target areas. Field surveys are then conducted to visually examine the prospective areas. In the case in point these preliminary studies showed that a lot of the creeks and rivers in southeast Ecuador were gold-bearing. However, the source of the mineralization remained unknown.

In this case the source deposit can only be upstream, so that a delineation of the watersheds defines the limits of the area where the deposit has to be located. The mineralization cannot be on the opposite site of the watershed.

Once the perimeter of the gold bearing hydrological basin was defined, Aurelian carried out a textbook stream sediment sample program that lead their geologists upstream to the source of the mineralization. Aurelian consequently integrated these data in a Geographic Information System. A GIS is a software technology designed to analyze and recognize spatial data patterns and to visualize spatial relationships in attractive maps and 3D models. Aurelian made these maps available to the public all the time via their website. These maps are a very good example of a typical stream exploration program. In combination with classic geological mapping, soil sample analysis, geophysical methods, and exploration drill holes, Aurelian defined 30 targets for gold and 12 targets of the porphyry copper type. Assays of samples of the weathered and decayed material of gold bearing rocks showed the presence of pathfinder elements like arsenic and mercury. Additionally, historic mining and gold handcrafts by local residents gave important clues to the potential of the Cordillera del Condor.

An important step in the discovery process was made early on when Aurelian’s geologists recognized an approximately 45 mile long, north-south striking fault zone. Known as the Las Peñas fault this structural element controls the occurrence of gold mineralizations that are literally lined up along this fault.

A tectonic element of these dimensions usually is easy to spot by remote sensing technologies. Examples of NASA satellite imagery could be found in Aurelian’s company brochure on their website as early as 2004, two years before the discovery of Fruta del Norte. To the trained eye, the imagery clearly revealed the structural control of what could possibly define a new unknown gold trend.

In April 2004 Aurelian announced results from 8 boreholes drilled in the Bonza Las Peñas prospect, just south of Fruta del Norte. The most successful bore hole showed 114 meters of 1.58 g/t. Mineralization could be traced over 500 meters and was open to the north, to the south, and to depth. Aurelian’s methodical exploration program was beginning to show early and promising results.

It was in this context that important clues for a similar or even larger deposit in the Fruta del Norte prospect became obvious. Fruta del Norte was interpreted as the northern prolongation of the Bonza las Peñas trend.

Interestingly, Aurelian’s geologists found proof of another fault zone in boreholes in a nearby copper prospect. This fault zone was found to offset the Fruta del Norte zone for about 250 meters to depth against the Bonza Las Peñas deposit. This meant that a possible new deposit in this zone was protected against erosion by the overlying sediments. So chances were that a new discovery within the Fruta del Norte zone could be even larger by volume than the Bonza Las Peñas discovery.

All this information was made available by Aurelian via their website. However, the market did not recognize the importance of these geological clues. Aurelian stock declined after the Bonza Las Peñas announcement and consolidated at low levels throughout 2005.

Summing it all up, astute investors had a chance to recognize Aurelian Resources as a speculative play with significant chances of a major discovery early on. The necessary information was hidden in plain sight on their website. Aurelian kept updating the reports, maps and cross sections on the website with great detail. As a matter of fact, Aurelian had one of the most informative and best structured websites of all junior gold companies. The quality of geological information they provided was outstanding.

Last year’s revision of the Ecuadorian mining law and the turmoil it raised among foreign mining companies, however, raise another important point: when is the time to get out of a stock like this? While the exact date of new government regulations cannot be predicted, a healthy degree of caution is warranted for companies in similar situations. Certainly, Aurelian appeared as a big dot on the radar of the Ecuadorian government after the initial discovery. The dot surely grew larger after the 43-101 compliant initial inferred resource calculation for the Fruta del Norte deposit came in at 13.7 million ounces. To many observers of the resource markets, Aurelian must have seemed like a sitting duck, waiting to be taken aim at. In a situation like this, at least partial profits should always be taken off the table, while new positions should be entered with great caution.

Leveraged Vehicles for Commodity Investment and Speculation

Leveraged Vehicles for Commodity Investment and Speculation

By Dirk Masuch Oesterreich

Foreword: This article was originally written for Brookshire Raw Materials in July of 2008. While most references to trends and prices are entirely out of tune with the current developments in the commodities markets, the investment vehicles mentioned here remain interesting for speculation.

The ongoing bull market in commodities sparked a whole new category of investment vehicles designed to follow or even leverage the price performance of the underlying commodity or sector stocks. These new instruments come along as Exchange Traded Funds (ETF) and Exchange Traded Notes (ETN).

The concept of ETF’s of course is nothing new. The NASDAQ PowerShares QQQQ has been around quite a while. The fund has been wildly successful as an instrument for investment and speculation. It was only a matter of time before similarly structured funds would be available for commodities investors.

Among the first of the new commodity ETF’s was the Gold Shares SPDR (GLD). The fund aims at tracking the price performance of gold bullion. The iShares Silver Trust (SLV) is designed to do the same for silver. The US Oil Fund ETF (USO) tracks the price of West Texas Intermediate Crude.

I don’t want to go into discussions whether GLD and SLV, at any given moment, do or do not hold all the bullion they claim to hold. Neither do I intend to discuss the specific details of any of the instruments that follow below. Like always, you should do your own research of the funds that may appeal to you.

There are funds and notes that trade to the long side and there are those that trade to the short side. There are long, short, double long, and double short exchange traded funds and notes on almost every commodity and sector stocks.

Now before diving head on into the world of highly leveraged commodities speculation, consider that these vehicles work in both directions. Make your best effort to ensure you are trading in the right direction. Otherwise it will feel like the wrath of Khan is upon you – you will lose money very fast.

A few examples will illustrate the tools investors and speculators now have in their box. Suppose you are of the opinion that high prices for corn and food for livestock will have to work their way into meat prices. The DJ Livestock ETN (COW) may be the vehicle to act on that opinion. On the other hand there is AGA, a two times leveraged short ETN on the price performance of the agricultural sector.

The US Gasoline Fund (UGA) would be interesting for those who think that gasoline prices in the US still do not reflect the reality of $140 oil, or even $100 oil. For the adventurously inclined, a bet on UGA can even be leveraged by options. The Merryl Lynch Oil Services Holders ETF (OIH) is a basket of stocks from the oil and oilfield services industry. Companies like Schlumberger, Halliburton, Baker Hughes, and Diamond Offshore Drilling comprise large parts of this ETF´s holdings. Two brand new vehicles, PowerShares Crude Double Long (DXO) and PowerShares Double Short (DTO) allow leveraged bets on the price of crude. The iShares US Exploration & Production ETF holds shares of companies like Occidental Petroleum, Devon Energy, Chesapeake Energy, and Anadarko Petroleum. The PowerShares Dynamic Exploration and Production ETF is similarly structured and offers the leverage of options trading.

The precious metals complex also offers leveraged trading vehicles on their price performance. While GLD (gold) and SLV (silver) are already well established, the new ETNs DGP and DZZ offer a double long or a double short leverage. DGP may be interesting at the beginning of a new gold upswing while DZZ could be a vehicle for timing a correction. Just remember, buying into neither of these instruments entitles you to physically hold gold or silver bullion. GLD and SLV even have to occasionally buy and sell bullion to achieve their stated goal to keep track of the bullion price.

In this context an often overlooked fund may offer a conservative investor more peace of mind than the funds mentioned above. The Central Fund of Canada (CEF) is a very conservatively managed and strictly audited fund that holds securely vaulted gold and silver bullion. It does not engage in market actions to adjust its holdings for price performance since it does not intend to track the bullion price. However, the fund occasionally adds to its holdings. It does so by offering a number of new shares in line with the value of the added bullion so that dilution is not an issue. Metal in CEF’s property basically sits in a Canadian bank vault and defines the fund’s Net Asset Value around which the share price of the fund fluctuates.

The clean tech / alternative energy sectors also provide a wide diversification of funds and ETNs. TAN and KWT are globally diversified vehicles of investing in the solar energy sector. Both of them offer options trading for leverage. If you subscribe to the fear of a global water crisis, several instruments are available for investing in the water industry as well as the clean tech sector.

Nuclear energy these days is making a comeback as a reliable energy source. The Market Vectors Nuclear Energy ETF and the PowerShares Global Nuclear Energy ETF offer participation in this trend. They invest in energy providers like German giant E.ON and global industrial conglomerates like Toshiba. NLR also holds shares of uranium miners Cameco and Uranium One.

Last but not least, the Market Vectors Coal ETF (KOL) is a simple way to participate in the growing bull market in coal. While surely not counting as clean energy coal is still the major energy source worldwide. Reserves are plenty and there is no “Peak Coal” in sight. In times of Peak Oil and ever rising oil prices coal is again gaining traction as the most reliable source of energy. Options of KOL can be traded for leverage.

The effect of these new instruments on commodity markets will probably be increased price volatility. They may also divert capital into funds that would otherwise be invested in shares of commodity producers and explorers. This has surely been the case with the junior mining sector, especially the exploration companies. Their performance over the last two years or so has been nothing but frustrating. The big miners as indexed by the HUI also seem to have lost their former leverage factor to the gold price. It may well be that they lost a great amount of shareholder capital to GLD and SLV.

I don’t know if this is a good thing or a bad thing. As an investor you probably don’t care too much as long as the long term trend of your investment doesn’t break while a trigger happy speculator will probably be delighted by the new trading tools he now has in his arsenal. In any case prepare for more interesting times to come.

Are there risks associated with these exchange traded funds and notes? Plenty. Each of these vehicles has its own specific risk related to the underlying commodities or the performance of their sector stocks. There is, however, an additional specific risk to consider. It is the risk related to the bank issuing these instruments. In today’s environment, this has to be a serious consideration. There is no use in being right in the choice of your ETF/ETN when the issuing bank is at risk of going out of business. Holding an ETF or an ETN is holding a paper promise. It is not clear how an investor holding a certain ETN would be made whole in the case of a bank default.

Written 7 July 2008. First published in Dexterity News, Brookshire Raw Materials.

SYMBOL	NAME	OPTIONS	LONG / SHORT
	AGRICULTURE
COW	iPath DJ AIG Livestock ETN		1x long
MOO	Market Vectors Agribusiness ETF	X	1x long
DBA	DB Powershares Agriculture	X	1x long
AGF	DB Agriculture long ETN		1x long
DAG	DB Agriculture double long ETN		2x long
ADZ	DB Agriculture short ETN		1x short
AGA	DB Agriculture double short ETN		2x short
	OIL OR GAS
USO	US Oil Fund	X	1x long
UGA	US Gasoline Fund	X	1x long
UHN	US Heating Oil		1x long
UNG	US Natural Gas	X	1x long
DBO	Power Shares DB Oil Fund	X	1x long
OIH	Merril Lynch Oil Services Holders	X	1x long
FCG	First Trust ISE-Revere Natural Gas	X	1x long
OLO	DB Powershares Crude long		1x long
DXO	DB Powershares Crude double long		2x long
SZO	DB Powershares Crude short		1x short
DTO	DB Powershares Crude double short		2x short
	OIL AND GAS
IEO	Ishares Dow Jones US Exploration & Production		1x long
XOP	Spiders Oil & Gas Exploration & Production	X	1x long
DIG	Ultra Oil & Gas ProShares	X	2x long
DUG	Ultra Short Oil & Gas	X	2x short
	ENERGY (GENERAL)
IXC	iShares S&P Gobal Energy	X	1x long
IYE	iShares Dow Jones US Energy	X	1x long
XLE	Energy Select Sector SPDR	X	1x long
DBE	PowerShares DB Energy	X	1x long
ENY	Claymore/SWM Canadian Energy Income		1x long
PXE	PowerShares Dynamic Exploration & Production	X	1x long
	GOLD AND SILVER ETF & ETN
GLD	Gold Shares SPDR	X	1x long
DGP	DB Gold Double Long ETN		2x long
DGZ	DB Gold Short ETN		1x short
DZZ	DB Gold Double Short ETN		2x short
SLV	iShares Silver Trust		1x long
	ALTERNATIVE ENERGY
TAN	Claymore/MAC Global Solar Energy	X	1x long
KWT	Market Vectors Solar Energy ETF	X	1x long
CGW	Claymore S&P Global Water	X	1x long
PIO	Power Shares Global Water	X	1x long
FIW	First Trust ISE Water	X	1x long
PHO	Power Shares Water Resource	X	1x long
GEX	Market Vectores Global Alternative Energy ETF		1x long
PBD	Power Shares Global Clean Energy		1x long
PBW	Power Shares Wilderhill Clean Energy	X	1x long
	NUCLEAR ENERGY
NLR	Market Vectors Nuclear Energy ETF		1x long
PKN	PowerShares Global Nuclear Energy		1x long
	COAL
KOL	Market Vectors Coal ETF	X	1x long