Lynden Energy’s Texas Star: Thom @ Large

By Thom Calandra

babybulls.com

Energy investing ideas are occasionally my cup of coffee.  Years ago, five or so years of my almost 30-year newspaper career was covering Chevron Corp., which was based in San Francisco. On the wire front, those who followed me at my MarketWatch.com got my takes on alternative energy, on Oklahoma natural gas and on other LNG (liquid natural gas) investments.

I know some of the new energy crowd, among them Ross Beaty of hydrothermal Alterra Energy, Robert Friedland of Ivanhoe Energy … a few uranium prospectors from Saskatchewan and Australia … and a collection of rock geologists who started their careers in petroleum. At Bloomberg in London, I was right around the corner from Royal Shell central. North Sea oil traders and shippers are thick as the trees in Sherwood Forest in the city of London.

The other day, looking at our roster of Torrey Hills Capital clients, I came across Lynden Energy (TSX-V: LVL; OTC: LVLEF). I did a double-take; about two years ago, I asked geologist Raul Madrid and a partner of his, Richard Andrews, over to breakfast to hear about their Texas lone star Lynden. (See Thom’s original article.)

Nevada’s Scorpio: Wind Cries Mary: Thom @ Large

Cranes Keep Bringing Nevada Gold To Scorpio's Treasury

By Thom Calandra

BabyBulls.com

MINERAL RIDGE, NEVADA — Peter Hawley’s current gold producer, Scorpio Gold Corp. (TSX-V: SGN and OTC: SRCRF), hits the ground running.

Scorpio, a client of our Torrey Hills Capital, is starting off the new year with pit results from its Mineral Ridge project in western Nevada. The Mary Pit shows 10.67 meters of 3.65 g/t gold and 4.57 meters of 13.06 g/t silver.

Our takeaway: an overburden removal at the Mary Pit began in late autumn 2011 and it appears to be working. Scorpio CEO Peter Hawley says the pit looks on track to nail a general target for 2012 production rate of 60,000 to 80,000 ounces of gold equivalent.

We’ll see a revised mineral estimate at Mineral Ridge sometime soon.

Our team at Torrey Hills and I have been to Mineral Ridge several times.  Investors seeking a solid gold producer eventually will see Scorpio account for far more gold ounces produced (and sold) in its quarterly reports than is the case now. And in a producer category.

Currently, Scorpio Gold is not classified as a “producer” so it accounts  for sales of metal on the balance sheet as mining assets.” The trigger for this change is four consecutive months of 4,500 ounces or better per month.  Thus, sales become net income.

Based on what we see happening at Mineral Ridge in terms of tonnes moved to the processing plant and average grades, we believe that Scorpio should cross that line well within the first half of 2012.

At a cost of $600 per ounce (this estimate from a recent Jennings Research Report), a target of 60,000 ounces creates a quarterly top-line earnings  number in the neighborhood of around $15 million. Current market cap of Scorpio is $100 million. I am an owner of the shares.

Recent Travel Digest from Mineral Ridge here:  http://www.babybulls.com/PDF/Scorpio_Gold-Mineral_Ridge_Travel_Dispatch_Oct_2011_FINAL.pdf

Recent Q & A with Peter Hawley, CEO of Scorpio Gold here:  http://youtu.be/uMCtQKPqNl4

VANCOUVER: I’ll be speaking at Cambridge House’s January gathering of 500 hard asset companies in two weeks. See: www.cambridgehouse.com.

— Thom Calandra is a lifelong author whose work has appeared in dozens of newspapers, newsletters, magazines and across the Web. He is a founder of CBS MarketWatch, now Dow Jones MarketWatch. He is a member of Torrey Hills Capital. Scorpio Gold is a client and provides stock options to Torrey Hills in return for investor outreach services. Your comments are welcome, but please, no foul language. (Photos — Thom Calandra)