Tis the season for a great many things. Of course, it’s the holiday time of year, but for the investment world it’s a time of selling for tax purposes to offset gains and minimize the capital gains taxes that will line government coffers. What this also means is a time of bargain shopping for investors to acquire shares that have been discounted for no apparent good reason, an opportunity that only presents itself at this time of the year.
The trigger dates to record capital gains or losses are December 24 for Canadian equities and December 26 for U.S.-listed stocks. Investors need to pay close heed to these dates as any panic selling preceding them can be followed by a subsequent correction and appreciation in share values as new money enters looking to scarf-up equities with unjustifiably low valuations. To that end, the small cap markets should see a broad increase in value.
Given the fact that the Toronto Venture Exchange has had a difficult year, losing about 30 percent from February highs and about 15 percent since the start of 2012, the selling pressure could be strongest this year since the market collapse in 2008. Equally important, the Venture is sitting just above a support level at 1,150 that could mark a significant bounce point. A nice storm could be brewing for the savvy investor, especially for small- and micro-cap companies.
With these scenarios in mind, investors should be taking a look at Sierra Iron Ore Corporation (TSX-Venture:NAA) in the near-term. The Vancouver, British Columbia-based company has two promising properties in its portfolio: The El Creston property in the Sinaloa State of west-central Mexico and the Tom Cat property within the historic Aspen Grove copper camp northeast of Vancouver. In addition to those holdings, Sierra Iron is currently finalizing an option agreement to acquire up to an 80% interest in a highly prospective iron ore property near the northeast boundary of Sinaloa and Chihuahua states in Mexico. Called the “Mazamique property,” the concession covers 3,055.27 hectares and has excellent infrastructure to transport drill equipment and heavy machinery with an existing 25 kilometer partly sealed and all weather gravel road from the city of Choix.
El Creston consists of two contiguous mineral concessions covering a total area of 500.1 hectares under option to Sierra Iron. Under the agreement, Sierra Iron, by paying cash and shares in stages would earn a 50% interest in the property. The infrastructure is in place at El Creston with the property close to major transportation corridors, power lines, seaport loading facilities at Tolopobampo, towns and major cities served by air transportation. Roads have been constructed and upgraded with equipment on site to continue fieldwork programs comprised of drilling, mapping and sampling to prove-up the mineral reserves.
Although a great deal of historic work has not been done on the property, what has been conducted is very promising. Significant magnetite bodies occur on the northern part of El Creston near the El Veinte and Los Burros old workings as well as on the southeastern part of the property in the vicinity of the Silver Mine old workings where minor copper mineralization is associated with the magnetite. A total of 103 chip samples from magnetite outcrops collected showed values ranging from a low of 3.36% iron to a high of 71.40% iron with a general arithmetical average of 35.29% iron.
Closer to home, Sierra Iron holds a 100-percent interest in the Tom Cat property, a series of eight contiguous claims covering 3,142 hectares within the Aspen Grove copper camp. Aspen Grove has been recognized for more than a century for its prolific mineralization. Sierra’s property hosts nine documented mineral prospects or showings in a localized three by two kilometer area.
To the north, the Big Kidd property was recently optioned and is under exploration by Xstrata plc (OTCQX: XSRAY).
Historic exploration reported prior to 2006 showed a drill intersection of 45.7 meters of 0.32% copper. Exploration work by Bold Ventures in 2006 and 2007 resulted in the delineation of viable chargeability IP drill targets and copper soil anomalies associated with mineral showings. A single drill hole confirmed the historic result in the intersection of 4.4 meters of 0.54% copper in a 40-meter section of noted mineralization.
Looking to confirm the mineralization, Sierra recently announced an exploration program of geological mapping and sampling in preparation for a diamond drill program which is underway.
Sierra Iron Ore is an extremely clean company with a capital structure that is aligned for growth with only 15.07 million shares outstanding. The company has recently completed a second tranche of a non-brokered private placement with very favorable terms for the company demonstrating the upside that qualified investors see. Total proceeds from the financing totaled approximately $3.1 million. The financing will result in the issuance of about 3.8 million shares at a price of 80 cents per unit. Each unit consists of one common share and one-half of one share purchase warrant. A full warrant entitles the holder to one common share at a price of $1.00 with a two-year expiration date. This is quite a solid financing for a company that closed trading last Friday at 52 cents.
Given the upside potential for copper and iron ore and the potential of a sharp upward move for the Venture Exchange, Sierra Iron Ore Corp. is uniquely positioned for strong appreciation in 2013. The company is still only commanding a market capitalization of $9.8 million and it is foreseeable that the valuation will rise as its drill programs produce results. The properties are located in areas of minimal exploration and intercepts of high mineralization where the diamonds have cut the soil. The team is experienced and already showcased their keen sense to find prolific projects and the financing to put cash in their account to see them through. It is for these reasons, as well as the ones mentioned above, that we have decided to bring focus on Sierra Iron Ore Corporations (TSX-Venture:NAA) and encourage readers to take a closer look at this junior miner preparing for its moment to shine.
