Resource World Magazine

20 www.resourceworld.com o c t o b e r / n o v e m b e r 2 0 1 4 b r o k e r ' s p i c k s A l f S t e w a r t S ince the TSX Venture Index topped out in the spring of 2011, it has not been fun for investors focusing on the mineral exploration sector of the market. However, beginning in June 2014, the mar- ket began a base building pattern, which is one of my favourite chart formations. More recently, Frank Guistra, a respected resource investor, has publicly stated that now is the time to accumulate beaten up juniors with a view to earning superior returns over the next few years. The key to success, in my opinion, is to identify those companies which can sur- vive for the coming 12 to 24 months, have good quality assets and good management, and are trading at attractive valuations. From my point of view, Metals Creek Resource Corp. [MEK-TSXV] fits that description exactly. To survive the next 24 months, MEK has current assets of $1.4 million in their last quarterly report compared to $1.8 mil- lion when their last corporate presentation was prepared about a year ago, indicating a cash burn rate of about $400,000 per year. In addition, the company has about $500,000 of shares in other companies acquired through various corporate deal- ings, so the company has enough cash to survive a continuation of poor market con- ditions, should those persist. The company's exploration properties are diversified, spanning Newfoundland, Ontario and the Yukon. Its flagship property is the Ogden Gold property near Timmins, Ontario where the company has earned into a 50/50 Joint venture with one of Canada's premier gold mining companies, Goldcorp Inc. [G-TSX; GG-NYSE], by spending about $4 million on exploration on the property and outlining two near surface, high-grade gold zones on the prolific Porcupine Destor shear zone. The Thomas Ogden Zone, has a recorded high-grade drill intercept of 210.9 grams per tonne gold over 12.5 metres and the Naybob South, has an intercept of 9.24 g/t gold over 6.6 metres, both occur on the Ogden property. Metals Creek is a fully vested participating partner with Goldcorp in the Ogden joint venture and, at the present time, the parties are drafting up the definitive joint venture agreement with Metals Creek as the operator. Should gold prices improve to the point where significant margins can be earned in devel- oping new gold assets, this property will be attractive given its location and grade. The company also has a significant early stage gold property in the White Gold District in the Yukon, and a good gold property in west-central Newfoundland on which the company recently gener- ated encouraging early stage results by the discovery of high-grade granitic boulders along the Cape Ray/Victoria Lake fault zone on its Staghorn property. I really like both the Ontario and Yukon properties. Over my long career in the business of investing in speculative secu- rities (I bought my first speculative shares in 1978, also in gold exploration in the Yukon), I have learned that even more important than what the company has already accomplished is what the manage- ment can accomplish going forward. Metals Creek management is headed by Alexander (Sandy) Stares as President, CEO and Director. In February 2013, Sandy was awarded the Queen Elizabeth II Diamond Jubilee Medal for his dedication to his Peers, Community, Canada and the Prospecting Community. He was also one of the recipients of the PDAC "Bill Dennis Prospector of the Year" award in March 2007, which was awarded to members of the Stares/Keats family. He assumed the role of President and CEO of Metals Creek Resources in December of 2007. Sandy has demonstrated an ability to react quickly to emerging trends in the commodities sector, and locate and acquire valuable properties to capitalize on those trends whether they emerge in precious metals, uranium, plati- num group metals or graphite. Finally, Metals Creek has a market capitalization of less than $3 million, has nominal liabilities, and has current assets and share positions approximately equal in value to the market cap, giving no value to its mineral property holdings. I believe this qualifies as a substantial undervalu- ation, and leads me to believe that MEK will be a winner when the market for the junior miners improves. n This article expresses the opinions of Alf Stewart, and not necessarily those of Raymond James Ltd. Statistics and factual data and other information are from sources RJL believes to be reliable but their accuracy can- not be guaranteed. As an investment in Metals Creek Resource Corp. is not suitable for all investors, a recommendation would only be made after a personal review of an individu- al's financial objectives. Raymond James Ltd., member – Canadian Investor Protection Fund. METALS CREEK RESOURCE – diversified, entrepreneurial and solid value The key to success, in my opinion, is to identify those companies which can survive for the coming 12 to 24 months, have good quality assets and good management, and are trading at attractive valuations.

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