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« Gold rush ahead of Diwali | Main | GOLD STOCKS: Are you enjoying today? »
Sunday
Oct152006

GLASS EARTH LIMITED: Kiwi Gold?

glass1


GLASS EARTH LIMITED is a gold exploration company in New Zealand. It trades on the New Zealand stock exchange as NZAX and on the TSX as GEL.

This gold mining company was established in September 2002 for the discovery and development of precious metal and geothermal opportunities in New Zealand. Geothermal you say? Yes, New Zealand gets its power from hydropower and endless supplies of hot water from underground springs. I spent about six years living down-under and I have seen first hand people stick a pipe into the ground and instantly access a supply of hot water. In fact the best massage that I have ever had was under a constant supply of mineral water for about one hour. I don’t know what good it did me but I felt like a world champion afterwards.

Back to Glass Earth, the management team consists of a number of well-experienced geologists and technical people capable of doing the job. They have also managed to raise C$2.8 million to fund exploration programmes along with the more recent secondary listing on the New Zealand exchange as NZAX to raise a further NZ$10M in funding. So the picture starts to form, we now have a very capable team and the funds to enable them to execute their exploration programme for the next few years without going back to their investors for more cash, which in our view is a healthy position to be in. They have already stated that they will be using the latest airborne geophysical techniques to ascertain suitable targets along with a drilling programme, which commenced in May. They will be exploring a 20,550 sq km area in Otago, which is located in the South Island.

It is often said that the best place to build a gold mine is next to an existing gold mine, which leads us to looking at this countries history of mining. It can be soon ascertained that New Zealand has a rich history in gold mining with the Martha gold mine on its own has yielding over 7 million ounces of gold and about 50 million ounces of silver since the 1880s. There are still tourist attractions set around the old mine sites with primitive sluicing set-ups demonstrating just how it used to be. Now, with modern techniques being used who knows what they might find?

This is not an ‘Agnico Eagle’ it is purely an exploration play and you could lose everything that you put into it if they don’t discover anything. So, as always don’t go too mad on it but we think that a few bucks put in now could well give us a big surprise.

In the last 52 weeks the stock as seen a low of C$0.12 and a high of C$0.22 and is currently trading at C$0.18. There are 90 million shares and the company is valued at just under C$12.0 million. Apart from a million shares being traded on the 13 October the liquidity is poor with days going by without a share being traded. This means that your investment cash is not readily accessible so you can’t get out in a hurry. However, if you can put some cash in and sit on your hands for sometime then we think that you will be pleasantly surprised.

Now, timing might not be everything but it is very important indeed. We will not be buying just yet. We will wait for the euphoria of a new entrant to subside a little and we will watch the volume and news releases just to see how this stock progresses. But we will make an investment in the near future and report to you when that time appears to be right.

15 October 2006

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