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Midas Letter ʻCheap Shotʼ Alert:
Sunset Cove Mining Inc. (TSX.V:SSM)
Shares Outstanding:
Warrants & Options:
Fully Diluted:
55,870,001
34,350,000
21,520,001
Market Cap@$0.10:
$3.4 million
Sector: Precious, Base Metal Exploration
Operating In:
Peru
Insiders Own:
25%
DISCLOSURE: We do not own shares at this time.
OUR STRATEGY: Accumulate to $0.20, until more drill results, then re-evaluate.
OUR EXIT: 50% at $0.50, let the rest ride with trailing stop-loss if shares lose 25% or more
combined in any 5 trading session in a row, or until the company is purchased by a bigger
company.
Sunset Cove is a brand new company that has acquired two projects in Peru, one of which was
the site of small scale artisan production,. The company is attractively priced thanks to the fact
that there are 16.5 million shares that were acquired at a cost of $0.10, with an accompanying
16.5 million warrants for two years at $0.15.
So the gamble is that the operators will be able to leverage the share price higher based on
exploration success, and demonstrate good potential for significant value appreciation. The risk is
that the holders of the inexpensive shares are going to seize the opportunity to exit their
investment with a minimal return, but a return none-the-less.
CEO Lorne Woods and Chief Operating Officer Marc Blais, whom I met with in Lima last week,
are confident that the investors they have aligned themselves with are interested in far more than
taking a mere nickel off the table, and I tend to think theyʼre right. So Iʼm going to dive in with an
investment, because they have completed drilling their first two holes on their flagship project.
Carolay Property, La Libertad, Perú
The Carolay project is a Silver-Lead-Zinc Epigenetic vein system located in the Department of La
Libertad, Peru. A non-43-101 compliant bulk sample taken by the property vendor yielded 1,545
grading 403.89 grams per tonne of silver, 1.4 % lead and 0.80% zinc, and 0.50% copper. Sunset
is earning a 95% interest in the property.
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The Carolay Property is located approximately 550km NNW of Lima, Peru. The property consists
of 2,747.24 hectares distributed in 7 concessions. Two areas of importance were sampled for
both silver and copper mineralizations respectively. They are called the Carolay underground
silver vein (Area 1) and the Juayobal (Area 2) surface copper dissemination.
Historically, work started in the 1870s when Portuguese colonials mined a silver vein from 3
access adits, drifts and subdrifts. Only limited small scale artisanal mining was realized. The area
was visited in the 1950ʼs by the geologists of Minera Retamas and a couple of others but the
claims were abandoned.
Recent works were completed in 2008 by Minera Carolay with geologists Fredy Huanqui, P. Eng.
Geol. and F. Llerena, P. Eng. Geol., completed topographic and geological surveys in the mine
area as well as mapping and sampling of the drifts, subdrifts and chimneys followed by a work
report.
Azulcunca
On May 10, 2010, Sunset signed through its subsidiary Minera Sunset Del Peru S.A.C. a Mining
Concessions Option Agreement to acquire 100% of the shares and rights of 2 mining
concessions called here after the Azulcunca Property. The option term is for five years and
expires on May 10, 2015. Minera Sunset Del Peru S.A.C. will pay to the titleholders a total
amount of US$1,000,000 for 100% of the value of the 2 mining concessions in five yearly
instalments and the obligation of exploration expenditures of US$1,000,000 over 3 years
including US$500,000 during the first 2 years, of which of the first installment of $15,000 has
been paid.
Paved road access stops six (6) Km from the property. National power line grid at 10 Km. Ocuviri,
a medium size community, is at about 20 Km from the project. Mining activity is present in the
area; qualified workforce and basic services are available.
The project is located in the SE extension of the prolific Apurimac Copper Porphyry-Skarn Belt.
Major exploration and mining operations are located in this geological environment (skarn &
porphyry types): Las Chancas (200 Mi T @ 1% Cu; Southern Copper Corp), Las Bambas (+300
Mi T @1.1% Cu; X-Strata Copper), Tintaya +200 Mi T @ 1.5% Cu; X-Strata Copper), Antapacay
(390 Mi T @ 0.83% Cu; X-Strata Copper), as well as the Antillas, Trapiche, Haquira,
Cotabambas, , Katanga, Anty and Quechua properties.
Sunset Coveʼs team collected 18 samples on the property, five (5) of which returned copper
values from 3730 to 7350 ppm (note: 10,000 ppm = 1% Cu) and two (2) others returned values of
3.83% Cu and 8.30% Cu. For the silver, values have range up to 6.3 g/T and for the gold values
have range up to 0.334 g/T.
CONCLUSION
I think there is a very high probability that Sunset Cove will experience drilling success at one or
both of the projects in Perú, and given the very low price of the shares, it shouldnʼt be too much of
a stretch to get the shares up over the $0.20 range, where the company will likely raise more
money.
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Management is confident that the holders of the outstanding shares and warrants are interested
in a much higher exit price than $0.20, and so, if they play ball and allow the company to
generate some enthusiasm based on the current activity, all should be well. Given that Peru is
elephant country, investors may even be in for a big surprise.
ABOUT “CHEAP SHOT” ALERTS:
Cheap Shot Alerts are a new service within the MidasLetter Premium Edition subscriber services.
We track stocks that are falling in price, and when we think theyʼve bottomed and hold maximum
value, we bring them to your attention. The reason is simple: in our pursuit of stocks that double
or better within 12 to 18 months, weʼve learned that its much easier for a stock to go from twenty
cents to forty cents than it is to go from two dollars to four dollars. Cheap Shot Alerts are issued
without warning, and are always under CA$0.25. The built-in, proprietary strategy of Midas Letter
applies: sell half on the double, let the rest ride with a 25% cumulative 5 day stop less. (If the
shares lose 25% in total over 5 trading sessions in a row, a sell signal is triggered. Whether we
actually sell them or not depends on the intelligence we can glean from the company and the
market.)
DISCLAIMER: The publisher of the Midas Letter, James West, is not a registered securities
professional and as such is not qualified to give personal or individual investment advice.
Subscribers to the Midas Letter Premium Edition are cautioned that while we select companies
based on the quality of management, projects and capital structures, there is always the risk
when investing that you could lose a substantial portion of or even your entire investment.
The information contained herein is derived from sources believed to be reliable, but no warranty
expressed or implied exists between the subscriber and James West that this information is
accurate. Resource investing is risky and you could lose part or all of your investment. Consult a
registered investment professional in your area before making any investment in any security.
The information contained herein is for information purposes only and is no way intended to be
construed as advice to buy or sell shares in any security or asset.
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This document is copyright protected and may not be copied, disseminated or distributed without the prior express
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