Pat McKeough responds to many requests for advice on specific stocks and other questions on investment and the economy from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. Our Inner Circle members ask Pat many questions about familiar stocks that are well known to investors, but he also gets a lot of requests to give his opinion on specific penny stocks in the resource sector. This week, in reply to a question on DNI Metals, Pat looks at the numerous risks this stock faces as it pioneers a technology that has had only limited success so far. Q: Pat: Can I have your opinion on junior resource stock DNI Metals? Thanks. A: DNI Metals (symbol DNI on Toronto; www.dnimetals.com), which trades at $0.05, aims to produce a number of metals from its Alberta Black Shale project, about 900 kilometres north of Calgary. These metals include molybdenum, nickel, uranium, vanadium, zinc, copper and cobalt, plus specialty metals, such as scandium, lithium and thorium. Traditional mining methods won’t work on black shale rock, so the company hopes to use a process called bioleaching. Using this process, DNI will dig up the ore, pile it onto a leaching pad and irrigate it with a solution containing certain bacteria. The tiny organisms then “chew up” the rock and expel the metals as waste. The metals are then piped into a refinery and separated. [ofie_ad]
DNI has sufficient cash to carry on its development
In nature, bioleaching is triggered spontaneously by micro-organisms in the presence of air and water. Technology modifies this process so the metal can be recovered faster. DNI holds cash of $2.2 million, or $0.03 a share. It’s using up its cash at a rate of about $222,000 a quarter, so it has enough to carry on its exploration and development at the current pace. Bioleaching is now in use at the Talivaara mine in Finland. However, that project faced a lot of start-up problems and environmental issues. It is also losing money. These issues could make it difficult for DNI to raise the estimated $1 billion that it needs to build its proposed mine. In the Inner Circle Q&A, Pat looks at whether DNI Metals can overcome the risks it faces in financing and building a mine in addition to utilizing a technology that has only a limited track record. He concludes with his clear buy-hold-sell advice on the stock. (Note: If you are a current member of the Inner Circle, please click here to view Pat’s recommendation. Be sure to log in first.) COMMENTS PLEASE—Share your investment experience and opinions with fellow TSINetwork.ca members If a company is still in in its development stage and does not yet have a producing mine, what information do you require before you will invest in it? Have you ever had notable success with a penny stock like this? Let us know what you think.
