Winston’s Growth Stock Report

Your Source for High Potential Stocks

Issue 39 October 3, 2010

Orsu Metals (OSU, TSXV) If you’ve doubled your money take some profits!

Orsu had a couple of positive news releases this past week.

First off, their Greenfield exploration project at the Akdjol property in Kyrgyzstan had some good results. Their featured drill hole intercepted 14.2 meters grading 5.32 grams/ton gold and 59.51 grams/ton silver. Trenching also uncovered 36 meters of mineralized ore. 14 trenches confirmed a mineralized strike length of at least 700 meters.

This exploration program is in its infancy and won’t really do much for the overall price of the stock at this point. However they are off to a good start and if they are successful in outlining a good sized mineralized zone proven by drilling results then the project will have an impact on the share price as early stage exploration projects tend to do.

The bigger news item this week came from Orsu’s Taldybulak (40%) joint venture project with Gold Fields. A resource update was announced which showed resources of 1.04 million ounce gold, 191 million pounds copper and 11.8 million pounds of molybdenum which would be attributable to OSU’s 40% share.

This project has been Gold Fields number one exploration project worldwide for a couple of years now. The exploration results show the potential for an open pit mine which means lower cash costs for mining. You never know, but Gold Fields just might buy out Orsu’s share at some point, probably for what it is trading for now which would leave them with the advanced Karchiga project and the exploration stage plays like Akdjol.

Now speaking of where it’s trading, this past week Orsu shares had a quick run up to 40 cents before settling on Friday at 32 cents. The major reason for this was that the Executive Chairman, Dr Sergey Kurzin was in Vancouver expounding on the virtues of Orsu to the institutional investment community.

For those readers who bottom fished this stock, this would be a good time to take some profits off the table. Do hold on to some shares though. The potential for a 10 bagger for this stock is realistic given the smooth development of Karchiga and Taldybulak. This will be at least a two year hold and more likely three years.

Wildcat Silver (WS, TSXV)

Work on Wildcat’s Hardshell property in southern Arizona is progressing nicely. This past week the company released an updated scoping study which estimates the project will have an internal rate of return of 19% with silver production to average 6 million ounces per year for the first 5 years. When adding in the other by-product metals of manganese, zinc and copper; the cash costs of the silver production is (negative) -40 cents per ounce. The mine plan includes an open pit operation initially with underground operations beginning 4 years after start up. The mine is expected to have a life of 18 years with an annual average production of:

• 4.1 million ounces of silver
• 233,000 tonnes of manganese carbonate
• 20,187 tonnes of zinc cathode
• 960 tonnes of copper

Financial Highlights

“The M3 study concludes that the project has potential to be feasible and should progress to pre-feasibility engineering, and that there are further opportunities to improve and optimize the project's economics. M3 ( the Engineering firm) used 60/40 base pricing for NI 43-101 reporting purposes, reflecting 60% historical and 40% forward market prices.” -Wildcat news release, Sep. 28, 2010

Wildcat is in the early stages of entering into what we would call an advanced mining project. There is a good understanding of the resources available and now the company has to go through the slow and painful process of completing the more engineering studies, hopefully leading to project financing and finally building a mine.

Wildcat have also announced they are undertaking a financing to raise $5 million which they will earmark for a 12,500 foot drill program to help further extend the mineral resource.

As I’ve mentioned before there are two times to make money with junior mining stocks, pre-discovery and pre-production. We probably have a two to three year wait with Wildcat but I’m betting there will be at least a triple for the patient investor.

Encanto Potash (EPO, TSXV)

Our speculative potash pick, Encanto Potash has finally started their drilling program which will determine a resource estimate on their Muskowekwan project. This deal has been stymied with delays but now seems to be getting some life back into it.

With rumors swirling about an imminent buyout coming to our number one pick, Potash One (KCL, TSX), the speculation in potash stocks is again heating up.

There are a number of prospective potash properties in Saskatchewan and for the most part most of these properties, projects and associated small cap stocks will never develop into anything.

What makes Encanto unique is that they are working on First Nations (Aboriginal) Lands where the First Nations can benefit from any future mining profits. Since this isn’t Crown Land, a great deal of bureaucratic red tape can be sidestepped in the potential mine development therefore saving time and money. Given Encanto has an economic resource, it would be a politically correct P.R. move by the provincial and federal governments to see that a mine would be built. This is the advantage Encanto offers to a potential buyer of Muskowekwan.

The next catalyst is to prove up an economic resource.

This is a hold as a higher risk speculation.