TGR: Are there any other juniors that are positioning themselves similarly?

JK: You asked earlier what strategies companies can use to create shareholder value and I neglected to mention the one that is not very popular in the market right now and that is old fashioned exploration aimed at making a major new discovery. I have a certain fondness for these companies because that’s where you can get the 5,000% to 10,000% type gains from a company that’s raising risk capital, putting geological creativity and ingenuity to work, establishing targets, drilling them, and coming up with, say, a 5, 10, 20 million ounce deposit. And one of the companies that’s on my list is Miranda Gold Corp. (TSX.V:MAD).

They have focused on Nevada and they’ve got their in-house team of people who are out there doing grunt work on the geological side to identify potential properties where buried gold deposits may exist based on their interpretation of fault structures and their intersection and their relative location to known deposits like Cortez Hills and so on. They also have a policy of making their nickel last a long time because they do the early stage work, they dress up the target, and then they farm it out to other companies which may be more promotionally minded. A company like Miranda—we call them a prospect generator type of company—keeps generating prospects, and they farm them out to others to spend the higher risk capital. The tradeoff is they don’t control the project while it’s under option to the other company and they end up with a lower net interest, but they keep repeating the cycle over and over again.

The market’s not very interested in this, but if we do get a significant move in the price of gold, the number of ounces-in-the-ground type projects is quite limited. Those will all go up substantially and then the market will wander down the food chain and start throwing money at those companies which can generate drill targets. Even if gold doesn’t go up, they may make a discovery tomorrow where suddenly this company goes up and delivers huge gains to the speculator.

Miranda Gold has about six to ten projects that they’ve got in their portfolio. Half of them are farmed out. Some of them have recently been dropped by companies that cannot raise the money. But each one of them right now, depending on whether they net 50% or 40%, is carrying a valuation of, say, $18 to $40 million. The failure of one does not make the stock go down. It’s a statistics game. A company can toil doing this forever and never come up with anything. But then it could finally get lucky and one of its farmed out projects could deliver that huge hole, and then it doesn’t matter if you have a 40% or 30% net interest. Your $40 million valuation will go to $4 billion, which would be a 100 times price increase.

TGR: Thanks, John. This has been very informative.

John Kaiser and/or his family owns shares of Miranda Gold, mentioned in this interview. He and/or his family are not paid by any of the companies mentioned.

John Kaiser, a mining analyst with over 25 years experience, is editor of the Kaiser Bottom-Fishing Report . He specializes in high-risk speculative Canadian securities and the resource sector is the primary focus for an investment approach he developed that combines his "bottom-fishing strategy" with his "rational speculation model." Kaiser began work in January 1983 as a research assistant with Continental Carlisle Douglas, a Vancouver brokerage firm that specialized in Vancouver Stock Exchange listed securities. In 1989 he moved to Pacific International Securities Inc where he was research director until April 1994 when he moved to the United States with his family. From 1989 until 1994 he was also a registered investment advisor. He worked six months as a researcher for Bob Bishop's Gold Mining Stock Report before branching out on his own with the publication of the first issue of the Kaiser Bottom-Fishing Report in October 1994. He has written extensively about speculative Canadian issues, is frequently quoted by the media, and is a regular speaker at investment conferences.