recommended spec buy -from s.r.c

Marengo mining is an exploration company with interest in Aust & PNG. The s/p has risen strongly over the last year, which is creating value in the Feb 2008 options to buy shares at 20c. In addition to this favourable strong up trend there have been 3 insider buys on market over the last year. Directors bought 110k shares on market at 9c in Sept 2004, 100,000 shares at 15.5c in April 2005 and another 100,000 shares at 14c in May. The rise in the s/p appears to reflect the acquisition and developments of major projects: In early 2005 the company began drilling at its Minigwai project in W.A and has discovered high grade magnetite ( i.e greater than 66% iron) and ilmenite. The company is seeking a partner to fund further exploration. It also aquired two major projects in PNG: Yandera & Bolubolu. The Yandera covers 1163km2 and contains "one of the largest undeveloped porpheyry copper-molybdenum-gold deposits in the South West Pacific region" plus "numerous other porpheyry copper and epithermal gold prospects". Marengo mining will earn 50% interst in this project by spending $500k over the next two years and this can increase up to 75% with an additional $2.5m in exploration and up to 90% by funding completion of a BFS. Marengo Mining has also aquired data on US $20m of exploration carried out by BHP, Kennecott Copper and Triako Resources from 1970 until 1989. This data indicates over 300 million tonnes with copper grades of 0.35-045%. At the Bolubolu project on Goodenough Island, Marengo mining plans to drill for gold. The geology is similar to the neighbouring Fergusson island where the Wapolu and Gameta deposits have resources of 880,000 ounces of gold. The Bolubolu north prosect was discovered in the mid 1980's, with stream pan samples up to 35 g/t Au reported, but the prosect was never drilled. Trench sampling has revealed 39 metres at 2.1 g/t, including 6 metres at 11.9g/t, and 8 metres at 4.89g/t, including 4 metres at 6.1g/t.
SUMMARY AND RECOMMENDATION
Marengo Mining is a high risk exporation company, but the large PNG projects offer good leverage as this company has a market cap of just $10.1m. So favourable developments can have a significant impact upon the value of the shares and options. It is difficult for any outsider to evaluate the potential of spec exploration interests, so insider buying is an important indicator of potential value in Marengo Mining. The strong uptrend in the share price is also favourable - increasing the likelihood that investors will continue to re-rate the shares in the future.