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27-12-2004, Mon 4:55 PM
Editor’s note: In this report I detail Andresmin Gold Corp. (ADGD: OTCBB). Although Andresmin was created as a gold exploration firm, their primary focus is copper. And, as you’ll see, they may be sitting on one of the largest copper finds in recent history. The Steal Of The Century If the Peruvian Government knew what Lucho Villena told his friend and business partner Len DeMelt 48 hours earlier, they probably would not have agreed to the deal. But just as Lucho suspected, the Peruvian Government had no clue - and Len, like any savvy businessman, took full advantage. When the final deal went through…Len’s upstart natural resource company purchased a piece of property for $170,000—the Winicocha property. I believe Winicocha could be worth $50 billion. Not because it’s prime real estate, but because of what lies beneath the ground. To early investors, it could be the windfall investment of a lifetime. Now, when this company begins major exploration work, perhaps in the next few weeks, the world will know the truth about what lies beneath this ground. But there’s no need to wait. This tiny stock could be our best chance at a home run all year… Here’s an “inside” look at this amazing story… Lucho’s Secret Although Lucho Villena is one of the most sought-after geologists in the world, he isn’t a household name. Run a Google search for him, and you’ll come up empty. Zero matches. Nevertheless, this Spanish-born geologist is, by all counts, a living legend. You see, Lucho was the senior geologist on the Beunaventura team, credited with discovering more gold reserves than anyone in Latin America. For 20 years, Lucho was employed by Benavides - the family which owns Beuenaventura - Newmont Mining’s 49% partner.
During his tenure, the market cap of Beunaventura hit $3.2 billion – most of which can be directly attributed to Lucho and his team’s amazing discoveries. The Steal of the Century So, when the Peruvian government auctioned off its mineral concessions, Andresmin founder Len DeMelt, himself a well-known and successful exploration geologist, sought the help of his friend Lucho. At the auction, Centromin (the Peruvian government mining agency) knew that Winicocha had 1.4 million ounces of gold – making it desirable based on that alone. But Lucho knew the property was much more valuable than that. He knew because he’d been on it and seen its potential. Taking Lucho’s advice, Len entered a full price bid…and won. When Lucho heard that Len was now the owner of the Winicocha property, he was ecstatic. Len just acquired the most sought-after piece of property in Peru for literally pennies on the dollar. Needless to say, Lucho gladly accepted Len’s offer to come on board as the new chief geologist of Andresmin Gold. But the celebration was short-lived. The Andresmin team quickly got to work – to see what was really underneath the surface of Winococha. As Len and Lucho quickly learned, their $170,000 purchase was the steal of the century… The Property In total, the Winicocha property is 8,500 hectares – or 20,400 acres - of countryside similar to the rolling hills of Oregon. Len and Lucho marked off 2,400 of the 20,400 acres and began doing geophysics - a series of tests to determine concentrations of ore beneath the surface…a kind of “geological MRI.” You’re looking for an anomaly – or evidence of valuable deposits that register above and beyond the typical make-up of the land. Remember, we already know, according to Centromin, Winicocha has 1.4 million ounces of gold – which justifies the stock’s current $75 million-dollar market cap.
But everything from rock geochemistry, mapping, and geophysics have shown three massive “anomalies” which quickly raised the profile of the project. If Lucho’s estimations are correct, the Winicocia property has a good shot at having 50 million ounces of gold. Even at very low grades, that could equate to $20 billion worth of gold deposits. According to my calculations, a confirmed deposit of that size would increase the value of Andresmin’s stock from $0.70 to 6.45, perhaps even more. $ My readers and I have seen this happen in Peru. Back in the 90s, I discovered a similar situation when a company called Arequipa confirmed 10 million ounces of gold. That announcement pushed their shares from $1.70 to $30. This deposit could be four-times larger. But amazingly, Andresmin’s gold deposit is just one of three massive targets identified by Lucho. In fact, this huge gold deposit isn’t the reason I’m so excited about the company. When you run the numbers, you’ll see that Winicocia’s gold deposit pales in comparison to an even larger deposit of copper. $40 Billion of Undiscovered Copper Often referred to as the 'metal with a Ph.D. in economics,' copper is more important to modern society than perhaps any other metal in existence. And, as a result of increasing demand, copper prices are up more than 100% over the past several years. The size and strength of the copper anomaly found in Winicocha indicates a high probability of this being Peru’s next major copper discovery. Just how much copper? Len and Lucho measured 150 meters deep – and they found an anomaly of 780 million tonnes. If you extrapolate that 780 million tonnes at 1% copper (20 pounds per tonne) that’s 15.6 billion pounds of copper. But let’s play it safe and assume they only have 500 million pounds of copper. That would still be enough copper wire to go from the earth to the Moon AND back 344 times! To calculate how this copper deposit will effect Andresmin’s stock price, divide the value of their copper deposits by the
shares outstanding – and you’ll get a fair price of $7.71 a share. That’s a 928% gain from current levels. Now, here’s the kicker. On the border of Winicocha is a site owned by Southwestern Resources. Unlike Andresmin’s 150 meter tests, Southwestern measured down twice as far – 300 meters. Even at those depths, they’re still finding high copper grades. With that information, it’s possible for us to double Andresmin’s estimated amount of copper. That means Andresmin could be sitting on 30 billion pounds of copper - worth approximately $40 billion dollars. The bottom line is – based on surrounding deposits, Andresmin has the potential for $80 billion in gold and copper deposits. When you run the numbers, you can see why I’m so excited about Andresmin. • Their gold deposit can increase the stock from $0.75 to $6.45 • Their copper deposit can tack on another $7.71 Adding the two together, you get a conservative price of $14.16 a share, a 1,788% gain from current levels. If the deposits exceed expectations, you could truly have a “home run” situation…pushing shares perhaps as high as $50. Quite frankly, Andresmin Gold is sitting on a potential bonanza in the middle of elephant country. That’s why I’m so confident that when the first phase of their drill program begins - perhaps in the next few weeks - you can make at least five times your money with strictly limited risk. Amazingly, the story gets even better… Surrounded by Monsters If you look at a map (which you can find online at www.andresmin.com) of the surrounding properties – and their respective market caps – you’ll see Andresmin Gold (ADGD.OB) is sitting in a sweet spot. • To the Northwest of the Winicocha property is a site called Las Bambas – where the owner, $10 billion X-Strata, is reporting 40 million tonnes of 2% copper.
• To the South of Winicocha is a copper site called Antapaccy owned by $73 billion BHP Billiton (BHP – NYSE) is reporting 390 million tonnes of copper. Look, when you have two of the biggest mining companies in the world - with a combined market cap over $80 billion — working feverishly on your border, you know you’re on to something. Andresmins’s Winicocha property is literally ringed by major mining companies looking for a piece of the action, and world class copper and gold deposits. Plus, and I’ll get into this in a moment, I believe each of these companies has contacted Andresmin in hopes of buying them out or working with them to develop Winicocha! But there’s more… • To the East of Winicocha is Tintaya, also owned by BHP Billiton, which hosts 200 million tones of 1.5% copper. • To the West of Winicocha is Las Chancas, owned by Southern Peru Copper (PCU: NYSE), a $3.6 billion company that operates two massive copper mines right next door. Reports indicate these mines have the exact same tonnage and grade as Andresmin’s property. Over the last nine months, PCU’s revenues rose 97% to $1.09 billion thanks (in part) to the performance of these mines. To the south, $38 billion Rio Tinto is drilling another massive target. Although Andresmin is tight lipped, I have reason to believe that several major mining companies on Wall Street have contacted Andresmin about a joint venture. After showing the majors their targets, geology, and huge geophysical anomalies - top executives from major resource companies no doubt want a piece of Andresmin’s land. In fact, the list of potential competing companies reads like a who’s-who list of major firms – totaling $81.333 billion in market cap. EITHER WAY, YOU WIN If there is any doubt remaining about Andresmin Gold (ADGD.OB), then let’s consider the facts: 1) The exploration team behind Andresmin has a track record that’s second-to-none. Lucho Villena has been instrumental in the discovery of more gold than anyone else in Latin America. Len Demelt grew up around – and
has run - one of the most successful mines in the world. These guys are proven winners—the best in the business, and now they’ve teamed up and started their own company – which could make fortunes for early investors like you and me. 2) They’ve discovered — and are set to begin drilling in Q1 2005 — several new gold and copper targets. At least one of these targets has indicated an anomaly so large, it could be considered the next great copper discovery in all of Peru. 3) I have reason to believe that the world’s top resource companies - like Newmont Mining, Placer Dome, and Southern Peru Copper - could enter into a bidding war to acquire Andresmin outright. 4.) Early next year the first drill results confirming what we already know could come in...catapulting the price of this stock far higher. Look, this is the way the game is played. You have to be in before the results go public. Remember my Arequipa pick, which gained 1,664%, had 9 drill holes before the property was bought out for $1.1 billion. Andresmin plans to drill 12 holes starting next month. As we get closer to that date I expect interest, and the share price, to increase in anticipation. I’ve been very successful in my investment recommendations in the past. I follow a lot of companies in every market from technology to natural resources and beyond - yet I know of no other company offering the same potential as Andresmin to experience a dramatic gain in its value. Andresmin Gold is what I call a “grass roots” play. What that means is it’s in the very early stages of development. Because of that, our upside leverage is very, very high. But a word of caution is due. With the upside comes a much higher degree of risk. And that’s why I recommend placing a 20% trailing stop loss on our position. If at any time the price of ADGD drops by 20%, we must sell. That way, we’re protected against any major losses, but we keep all the upside. Fact is, most investors don’t know what it’s like to buy a small mining exploration company BEFORE they are successful in bagging the “elephant,” or huge deposit. But I’ve done it time and time again. As we go to press, Andresmin’s projects could see success within weeks.
During his tenure, the market cap of Beunaventura hit $3.2 billion – most of which can be directly attributed to Lucho and his team’s amazing discoveries. The Steal of the Century So, when the Peruvian government auctioned off its mineral concessions, Andresmin founder Len DeMelt, himself a well-known and successful exploration geologist, sought the help of his friend Lucho. At the auction, Centromin (the Peruvian government mining agency) knew that Winicocha had 1.4 million ounces of gold – making it desirable based on that alone. But Lucho knew the property was much more valuable than that. He knew because he’d been on it and seen its potential. Taking Lucho’s advice, Len entered a full price bid…and won. When Lucho heard that Len was now the owner of the Winicocha property, he was ecstatic. Len just acquired the most sought-after piece of property in Peru for literally pennies on the dollar. Needless to say, Lucho gladly accepted Len’s offer to come on board as the new chief geologist of Andresmin Gold. But the celebration was short-lived. The Andresmin team quickly got to work – to see what was really underneath the surface of Winococha. As Len and Lucho quickly learned, their $170,000 purchase was the steal of the century… The Property In total, the Winicocha property is 8,500 hectares – or 20,400 acres - of countryside similar to the rolling hills of Oregon. Len and Lucho marked off 2,400 of the 20,400 acres and began doing geophysics - a series of tests to determine concentrations of ore beneath the surface…a kind of “geological MRI.” You’re looking for an anomaly – or evidence of valuable deposits that register above and beyond the typical make-up of the land. Remember, we already know, according to Centromin, Winicocha has 1.4 million ounces of gold – which justifies the stock’s current $75 million-dollar market cap.
But everything from rock geochemistry, mapping, and geophysics have shown three massive “anomalies” which quickly raised the profile of the project. If Lucho’s estimations are correct, the Winicocia property has a good shot at having 50 million ounces of gold. Even at very low grades, that could equate to $20 billion worth of gold deposits. According to my calculations, a confirmed deposit of that size would increase the value of Andresmin’s stock from $0.70 to 6.45, perhaps even more. $ My readers and I have seen this happen in Peru. Back in the 90s, I discovered a similar situation when a company called Arequipa confirmed 10 million ounces of gold. That announcement pushed their shares from $1.70 to $30. This deposit could be four-times larger. But amazingly, Andresmin’s gold deposit is just one of three massive targets identified by Lucho. In fact, this huge gold deposit isn’t the reason I’m so excited about the company. When you run the numbers, you’ll see that Winicocia’s gold deposit pales in comparison to an even larger deposit of copper. $40 Billion of Undiscovered Copper Often referred to as the 'metal with a Ph.D. in economics,' copper is more important to modern society than perhaps any other metal in existence. And, as a result of increasing demand, copper prices are up more than 100% over the past several years. The size and strength of the copper anomaly found in Winicocha indicates a high probability of this being Peru’s next major copper discovery. Just how much copper? Len and Lucho measured 150 meters deep – and they found an anomaly of 780 million tonnes. If you extrapolate that 780 million tonnes at 1% copper (20 pounds per tonne) that’s 15.6 billion pounds of copper. But let’s play it safe and assume they only have 500 million pounds of copper. That would still be enough copper wire to go from the earth to the Moon AND back 344 times! To calculate how this copper deposit will effect Andresmin’s stock price, divide the value of their copper deposits by the
shares outstanding – and you’ll get a fair price of $7.71 a share. That’s a 928% gain from current levels. Now, here’s the kicker. On the border of Winicocha is a site owned by Southwestern Resources. Unlike Andresmin’s 150 meter tests, Southwestern measured down twice as far – 300 meters. Even at those depths, they’re still finding high copper grades. With that information, it’s possible for us to double Andresmin’s estimated amount of copper. That means Andresmin could be sitting on 30 billion pounds of copper - worth approximately $40 billion dollars. The bottom line is – based on surrounding deposits, Andresmin has the potential for $80 billion in gold and copper deposits. When you run the numbers, you can see why I’m so excited about Andresmin. • Their gold deposit can increase the stock from $0.75 to $6.45 • Their copper deposit can tack on another $7.71 Adding the two together, you get a conservative price of $14.16 a share, a 1,788% gain from current levels. If the deposits exceed expectations, you could truly have a “home run” situation…pushing shares perhaps as high as $50. Quite frankly, Andresmin Gold is sitting on a potential bonanza in the middle of elephant country. That’s why I’m so confident that when the first phase of their drill program begins - perhaps in the next few weeks - you can make at least five times your money with strictly limited risk. Amazingly, the story gets even better… Surrounded by Monsters If you look at a map (which you can find online at www.andresmin.com) of the surrounding properties – and their respective market caps – you’ll see Andresmin Gold (ADGD.OB) is sitting in a sweet spot. • To the Northwest of the Winicocha property is a site called Las Bambas – where the owner, $10 billion X-Strata, is reporting 40 million tonnes of 2% copper.
• To the South of Winicocha is a copper site called Antapaccy owned by $73 billion BHP Billiton (BHP – NYSE) is reporting 390 million tonnes of copper. Look, when you have two of the biggest mining companies in the world - with a combined market cap over $80 billion — working feverishly on your border, you know you’re on to something. Andresmins’s Winicocha property is literally ringed by major mining companies looking for a piece of the action, and world class copper and gold deposits. Plus, and I’ll get into this in a moment, I believe each of these companies has contacted Andresmin in hopes of buying them out or working with them to develop Winicocha! But there’s more… • To the East of Winicocha is Tintaya, also owned by BHP Billiton, which hosts 200 million tones of 1.5% copper. • To the West of Winicocha is Las Chancas, owned by Southern Peru Copper (PCU: NYSE), a $3.6 billion company that operates two massive copper mines right next door. Reports indicate these mines have the exact same tonnage and grade as Andresmin’s property. Over the last nine months, PCU’s revenues rose 97% to $1.09 billion thanks (in part) to the performance of these mines. To the south, $38 billion Rio Tinto is drilling another massive target. Although Andresmin is tight lipped, I have reason to believe that several major mining companies on Wall Street have contacted Andresmin about a joint venture. After showing the majors their targets, geology, and huge geophysical anomalies - top executives from major resource companies no doubt want a piece of Andresmin’s land. In fact, the list of potential competing companies reads like a who’s-who list of major firms – totaling $81.333 billion in market cap. EITHER WAY, YOU WIN If there is any doubt remaining about Andresmin Gold (ADGD.OB), then let’s consider the facts: 1) The exploration team behind Andresmin has a track record that’s second-to-none. Lucho Villena has been instrumental in the discovery of more gold than anyone else in Latin America. Len Demelt grew up around – and
has run - one of the most successful mines in the world. These guys are proven winners—the best in the business, and now they’ve teamed up and started their own company – which could make fortunes for early investors like you and me. 2) They’ve discovered — and are set to begin drilling in Q1 2005 — several new gold and copper targets. At least one of these targets has indicated an anomaly so large, it could be considered the next great copper discovery in all of Peru. 3) I have reason to believe that the world’s top resource companies - like Newmont Mining, Placer Dome, and Southern Peru Copper - could enter into a bidding war to acquire Andresmin outright. 4.) Early next year the first drill results confirming what we already know could come in...catapulting the price of this stock far higher. Look, this is the way the game is played. You have to be in before the results go public. Remember my Arequipa pick, which gained 1,664%, had 9 drill holes before the property was bought out for $1.1 billion. Andresmin plans to drill 12 holes starting next month. As we get closer to that date I expect interest, and the share price, to increase in anticipation. I’ve been very successful in my investment recommendations in the past. I follow a lot of companies in every market from technology to natural resources and beyond - yet I know of no other company offering the same potential as Andresmin to experience a dramatic gain in its value. Andresmin Gold is what I call a “grass roots” play. What that means is it’s in the very early stages of development. Because of that, our upside leverage is very, very high. But a word of caution is due. With the upside comes a much higher degree of risk. And that’s why I recommend placing a 20% trailing stop loss on our position. If at any time the price of ADGD drops by 20%, we must sell. That way, we’re protected against any major losses, but we keep all the upside. Fact is, most investors don’t know what it’s like to buy a small mining exploration company BEFORE they are successful in bagging the “elephant,” or huge deposit. But I’ve done it time and time again. As we go to press, Andresmin’s projects could see success within weeks.