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BMR Morning Market Musings... - BullMarketRun.com

January 3, 2013

BMR Morning Market Musings…

Gold has traded between $1,676 and $1,689 so far today…as of 5:00 am Pacific, the yellow metal is down $8 an ounce at $1,678…Silver is off 14 cents to $30.84…Copper is down slightly at $3.69 after a strong move to the upside yesterday…Crude Oil is off 55 cents to $92.57 while the U.S. Dollar Index has surged one-third of a point to 80.15…

We continue to be on an abbreviated postings schedule until Monday, January 7…

Today’s Markets

Asian markets closed higher overnight on hopes of a steady economic revival in China, though gains were marginal compared to the previous session’s strong gains as investors took some money off the table and braced for more U.S. budget battles…markets in Japan and China remain closed until tomorrow…stocks are generally flat in Europe while futures in New York as of 5:00 am Pacific are pointing toward a slightly negative open on Wall Street after yesterday’s robust start to 2013…

Below is an updated 2.5-year Venture chart from John that compares the Venture with Gold and the CRB Index…yesterday, the CDNX climbed 19 points to close at 1240…you can see that once again, the Venture is threatening to break above its down trendline that has been in place since early 2011…we’re not saying this is about to happen right away, but the probability of this event occurring in the coming weeks appears to be very high…investor patience is critical…this market is looking much healthier technically for 2013…

Rainbow Resources (RBW, TSX-V) Update – Rainbow Intersects High-Grade Gold and Silver at Gold Viking

News from Rainbow Resources (RBW, TSX-V) yesterday was highly significant in our view as the company reported drill results from two additional holes from the southern part of Gold Viking (GV-12-04 and GV-12-03) that were even better than the first two.  Below is our explanation as to why these results, including 17.3 g/t Au over nearly 2 metres near-surface, are so important.

This particular area of British Columbia (Slocan Valley) has a rich history of high-grade deposits, and of course right next door to the Gold Viking Property is Rainbow’s Ottawa Property that is part of the past producing Ottawa Mines – the Slocan Valley’s #1 Silver source in the early 1900’s.  Nearly 2 million ounces came out of the Ottawa Mines at an incredible average production grade of 61 ounces per ton.  Ottawa is developed on nine levels, five of each are serviced by adits driven at vertical levels of about 30 metres.  A broad shear/breccia zone in coarse-grained, porphyritic, Nelson quartz monzonite comprises two well-defined lodes with most of the historical work completed on the east lode that is 0.6 to 6 metres wide.   Narrow veins, but very high grade.

Importantly, the first four holes EVER drilled at Gold Viking show continuity of a vein system (more than one vein was hit in these initial holes) that likely “pinches and swells” and could lead Rainbow into a stockwork system, a rich mineralized “shoot”, a breccia pipe or some other type of significant high-grade underground deposit.  Where there’s “smoke” in this particular region, there’s often “fire”.    These high-grade deposits in B.C. can be very economic to mine as Huldra Mining (HDA, TSX-V) is discovering at its Treasure Mountain Property near Hope, B.C., a silver-lead-zinc fracture-controlled deposit where veins occur in proximity to the Treasure Mountain Fault and a feldspar porphyry dyke that partially occupies the fault.

Huldra has been a great success so far as it has managed to fast-track Treasure Mountain into production which began in the fourth quarter of last year.   In 2011, Huldra completed a 51-hole drill program (5,000+ metres) over its main mine development area at Treasure Mountain.

Out of 51 holes drilled at the main mine development area, here is what Huldra reported:

– A total of 67 significant intercepts

– Only 15 of the 67 intercepts were 2 metres or more in width (drilled lengths, not true width)

– 23 of the intersections graded 100 g/t Ag or better with several in excess of 1,000 g/t

Treasure Mountain includes no Gold – just Silver, lead and zinc.

The point is that you don’t need long intercepts to make these high-grade situations work.  You just need HIGH GRADE at reasonable depths, in an area close to infrastructure.  Huldra is extracting rich ore using short mining widths.  They are shipping the ore to a 200-tonne per day mill they constructed just over an hour’s drive away in Merritt, then it heads off to a smelter.

Out of the first 4 holes drilled at the Gold Viking Property, here is what Rainbow has reported NEAR-SURFACE:

– 1.9 metres grading 17.3 g/t Au and 65.6 g/t Ag – the Silver grade will increase as there was 1 over-limit Ag sample

– 2.7 metres grading 34.1 g/t Ag and 2.4 g/t Au – again, the Silver grade will increase as there was 1 over-limit Ag sample

– 4.6 metres grading 45 g/t Ag and 0.6 g/t Au – again, the Silver grade will increase as there were 2 over-limit Ag samples

– 1.2 metres grading >100 g/t Ag and 1.1 g/t Au – again, the Silver grade will increase as this 1.2-metre sample was 1 over-limit Ag sample

In this case, the Gold mixed in with the Silver makes the situation at Gold Viking particularly interesting, plus the fact of course THAT THIS PROPERTY HAD NEVER BEEN PREVIOUSLY DRILLED.  It is rare these days in the exploration business that a company will hit high-grade intercepts like this in the first holes drilled on a property.  Importantly, Rainbow now has a trail of mineralization to follow for the next phase of drilling.  And that’s when they could start hitting the “sweet spot” with even thicker intersections of higher grade. Given the area, it would not be surprising to see a system that also hosts plunging ore-shoots.  It’s important for investors to understand how these type of mineralized systems can work.  Gold Viking is a completely different situation than Rainbow’s International Property.

Keep in mind also that Rainbow completed a Fugro heli-borne electromagnetic survey at Gold Viking that revealed a very prominent low resistivity feature that corresponded with a multi-element geochemical anomaly that extended beyond the areas drilled in the Phase 1 program.  There appears to have been a lot of hydrothermal activity in this area.  Given the Slocan Fault, the Nelson Batholith and the thrusting effect of the nearby Valhalla Metamorphic Complex, all the necessary “plumbing” exists to have created the heat and fracturing necessary to produce late stage quartz veining and a significant mineral deposit.

Rainbow is gearing up to get a drill rig back at Gold Viking for Phase 2 drilling shortly – in the middle of the winter, which demonstrates the importance and urgency of this discovery.  As the structure and orientation of this vein system is better understood, the company has an excellent chance of drilling even better intersections in the next round.  This is something we expect the market will be anticipating which should keep interest in this play at a high level.  And of course, more results from the recently completed drill program are still pending.

Gold Viking is a large, intrusive body in the right structural setting for the discovery of a deposit.  In addition – and this is critical – the property is right off the main road from Slocan.  Easy access plus a power line in an area with a mining history.

Just 8 miles to the north, Discovery Ventures (DVN, TSX-V) has plans to put its underground Willa deposit into production.  A possibility we see for this general area is consolidated ownership of the Camp – gold-silver production from a few different mines with ore processed at a local concentrator.

Rainbow is well-positioned for success at Gold Viking, an attractive early-stage property.  We like the fact that drilling is planned to start again shortly.  Between Gold Viking and the more advanced Jewel Ridge Project in Nevada, this should be an exciting first quarter of 2013 for Rainbow.

Technically, Rainbows has several positive factors in its favor at the moment with RSI(14) at support and accumulation continuing.  Below is an RBW 2.5-year weekly chart update from John.

Abcourt Mines (ABI, TSX-V) Chart Update

We continue to see a lot of fundamental value in Abcourt Mines (ABI, TSX-V) with its Elder-Tagami Gold Project and Abcourt-Barvue Silver Property…like with many situations at the moment, investor patience is important here…below is a 2.5-year weekly ABI chart from John…note that the top of the stock’s down trendline is 13 cents – this is ABI’s key technical hurdle at the moment…

Note: John and Jon both hold positions in RBW.



    Comment by STEVEN — January 3, 2013 @ 7:08 am

  2. Nice comparative analyst on RBW vs Huldra Mining. Really helps to put a few things into prospective. Wish I could find more examples of this sort of back of the envelope analyst on a few other companies I own shares in. Narrow vein deposits can be tricky but I guess the important thing is location to infrastructure and depth of the resource.

    Comment by Jenny K — January 3, 2013 @ 9:12 am

  3. Hey everyone. Check out t.dnt. They just received water permits for drilling in Peru. Huge copper deposit, up nearly 40% today. If you want in on a a cheaper stock, check out v.io. They are just north of Candente and are trading at .12 cents and awaiting drilling permits on high grade gold deposit which was drilled in the late 90’s (but not 43-101 compliant….yet…..)

    Comment by Tony T — January 3, 2013 @ 9:18 am

  4. In late December, GBB raised $500,000 in the final closing of its previously-announced private placement by issuing 3,333,334 “flow-through” units at a price of $0.15 per unit to accredited investors in Ontario. Obviously the market does not support the view of those investors. GBB trading as low as .075.

    Comment by Alexandre — January 3, 2013 @ 9:38 am

  5. @jon. Any ideas on holds sudden plunge today?

    Comment by Heath — January 3, 2013 @ 12:37 pm

  6. Golds. Sorry

    Comment by Heath — January 3, 2013 @ 12:37 pm

  7. That was explained in Morning Musings. Venture is holding up, though, and that’s encouraging.

    Comment by Jon - BMR — January 4, 2013 @ 10:34 am

  8. Where in your musings was this explained Jon????

    Comment by Heath — January 4, 2013 @ 12:53 pm

  9. First paragraph.

    Comment by Jon - BMR — January 4, 2013 @ 12:54 pm

  10. Ya u state how much it is down! That’s it

    Comment by Heath — January 4, 2013 @ 1:15 pm

  11. Your on the wrong day my friend. Look again. I asked this yesterday.

    Comment by Heath — January 4, 2013 @ 1:17 pm

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