BullMarketRun.com

Gold has strengthened this morning, and as of 7:30 am Pacific time is hovering around $1,137 an ounce…traders should sell into strength and buy into weakness during this current correction and consolidation period…we see a two-week opportunity to pick up shares in strong junior resource issues that have pulled back in price since gold’s correction began last week…we expect both gold and the Venture Exchange to blast off right after Christmas, and we’ll get more specific about our reasons for that in the days ahead…Colombian Gold Mines (CMJ, TSX-V) which we initiated coverage on here recently at 60 cents, is trading at 71 cents this morning and looking very strong…we recommend accumulating on any weakness or any kind of a pullback as we see CMJ running well past the $1.00 mark early in the New Year…a company we’re also keeping a close eye on right now is Gold Bullion Development Corporation (GBB, TSX-V) which has the Granada Mine in Quebec, about 40 miles from Osisko…Gold Bullion has traded some impressive volumes the last couple of days and $1.5 million in private placement money is coming into this company to advance the Granada project which offers considerable potential in our view…we recommend investors do their due diligence on GBB and consider accumulating at the seven cent level…the fight for Freewest Resources (FWR, TSX-V) between Noront Resources (NOT, TSX-V) and Cliffs Natural Resources (CLF, NYSE) seems to be at a standoff at the moment…Noront’s news release yesterday afternoon
serves as further confirmation in our view that Freewest shareholders are better off tendering to Noront to benefit from the incredible upside potential of the Ring of Fire and perhaps the best bull market we’ll ever see in the Venture Exchange…more on the Freewest fight tomorrow…

Gold bounced off important support at $1,136 yesterday and as of 3:15 am Pacific time this morning is up $4 on the day to $1,162…the TSX Gold Index dropped 9% over the last three trading sessions as gold fell by as much as $90 an ounce or 7%…the Venture Exchange, however, which has been the best leading indicator of gold’s direction and the direction of the overall economy for that matter over the past couple of years at least, has held up extremely well, falling just 27 points or 1.8% over the last three trading sessions…what this tells us is that gold’s correction may not be that severe and is likely going to be more of a consolidation to unwind some of the extremely overbought conditions we recently saw…we expect gold’s new up-leg to $1,300 and better to begin by early January…an important day is coming up in the Ring of Fire battle for Freewest Resources (FWR, TSX-V)…Cliffs Natural Resources (CLF, NYSE) came out with a brutal attack on the credibility and integrity of Noront Resources (NOT, TSX-V) yesterday in a clear attempt to drive down Noront’s stock price…if that’s not stock price manipulation, we don’t know what is…Noront was very quiet yesterday and for the first time in a week did not issue a news release…we suspect something big is brewing with Noront, that “David” is preparing to fire his slingshot at “Goliath”…the tone of Cliffs‘ news release yesterday, and the fact they are holding a conference call with Freewest for investors this morning, suggests to us they felt they were starting to lose the public relations war in the battle for the hearts, minds and shares of Freewest stockholders…today is going to be a very interesting day in the Freewest fight…nickel prices, by the way, are up sharply this morning – 41 cents to $7.26 as of 3:15 am Pacific time…

Well, it appears Cliffs Natural Resources (CLF, NYSE) and Freewest Resources (FWR, TSX-V) agreed with our post over the weekend about Noront Resources (NOT, TSX-V) winning the public relations battle in the Freewest sweepstakes…Noront smartly didn’t come out with any news this morning, likely expecting an attack from Cliffs which is exactly what they got…now the ball is back in Noront’s court, and we expect they will fire back with a torpedo or two…Cliffs’ release a short while ago, which we’re still trying to digest, was nothing more than an attempt to drive down the Noront share price which they’ve succeeded to do to some degree…but only for now…this war is getting ugly, and now we wait to see what Noront delivers in terms of a counter-attack…gold is holding up above a key support level at $1,035…there are two other major support levels on gold that investors need to keep in mind…$1,090-$1,100…and right around $1,030…we believe gold is in a consolidation phase at the moment, which could last for a few weeks, so selling into strength and buying into weakness will be the key for traders in the days ahead…

The Ring of Fire is about to become the Blazing Ring of Fire as the battle for Freewest Resources (FWR, TSX-V) and its world class chromite deposit enters a new, more intense and likely very dramatic phase. Noront Resources’ (NOT, TSX-V) “final” all-share offer for Freewest (valued at 86 cents based on the $2.25 NOT closing share price Nov. 30 when the revised offer was made) expires this Friday, December 11, and we suspect Noront will be pulling out all the stops to pull off this hostile takeover bid and thwart major Cliffs Natural Resources (CLF, NYSE). This captivating battle amounts to a classic “David vs. Goliath” showdown, and at BullMarketRun.com our faith is in “David”. We’ll explain why as we take a “big picture” look at this intriguing situation.

Momentum is clearly in Noront’s favor at the moment. They are hitting hard at Freewest’s management and board, and they’re winning the public relations game. The heart of Noront’s argument is being played out right before our eyes as Noront’s stock price continues to rise: By accepting the Noront offer, Freewest shareholders are going to benefit immensely from the blue-sky potential of the Ring of Fire and Noront in particular. Freewest President and CEO Mackenzie Watson cannot cry fowl if Noront shares ramp up to $3.00 or $3.50 this week, making NOT’s takeover offer even sweeter for Freewest shareholders. Just as the market has come to a better appreciation of the value of FWR’s chromite discovery, so too is the market beginning to realize just how valuable Noront actually is – and how the synergies of a combined NOT/FWR could make for a truly dynamic company and investment that ultimately could develop into a multi-billion dollar takeover target.

This is not your typical takeover battle. Each time Cliffs ups the ante for Freewest, it pushes up the underlying value of Noront which of course has its own chromite deposits at McFauld’s along with a rich nickel-copper-PGM discovery. That, in turn, drives up the Noront share price which makes NOT’s offer for Freewest all the more attractive. It seems to us this is a game that Cliffs just cannot win.

The question a Freewest shareholder has to ask himself (or herself) is very simple: Am I better off getting a fixed value of 90 cents on my stock in shares of Cliffs Natural Resources, and giving them the ball in terms of developing a major chromite discovery, or am I better off getting one share of Noront for every 3.5 shares of my Freewest and one Noront purchase warrant (for every 7 shares) with a $4.00 strike price (a warrant that my board says has little or no value)? In our view, the answer at this point is very simple: Freewest shareholders are better off accepting the Noront offer, and we’ll explain why.

In recommending the Cliffs’ offer over Noront, the Freewest board surprisingly seems to misunderstand the very markets all these shares are trading in.

First, as Noront effectively pointed out in its news release last Friday afternoon, and how Freewest board member Neil Wiener had difficulty explaining in a conference call Friday morning, the Cliffs’ offer will be fully taxable to Canadian Freewest shareholders. But that’s okay, according to Wiener. “The board thinks that clearly, the Cliffs’ offer is a better offer, regardless of immediate or deferred tax consequences. We point out as well, as Mac Watson indicated, that the Cliffs’ shares are highly liquid, so that if certain shares want – if you want to sell some of the shares in order to pay a tax bill in April, 2011, you will clearly be able to do so (our emphasis).” Just what every investor wants to hear! And by the way, if you also happen to take a currency loss on that investment, well, that’s just a little more bad luck. Canadian Freewest shareholders get a tax-free rollover with the Noront shares, and that’s clearly a major advantage.

Now let’s look at something else even more important. Astute investors will realize that Noront shares are trading on a superior market. By that, we mean, when a TSX Venture Exchange bull market is underway, it clobbers just about every other market in sight in terms of percentage gains. Some may wish to argue this, but history, technical indicators and fundamentals are on our side: The Venture Exchange is in the early stages of another major bull market which could persist for several more years. There will certainly be corrections along the way – 20 and 30% hair-cuts now and then – but this is an extremely powerful market right now which could quite easily jump another 50% by the end of the first quarter of 2010. The great commodities super cycle did not end with last year’s financial meltdown – it was only interrupted.

The Venture Exchange so far this year is up a whopping 82% vs. just 18% for the Dow. Even over the last decade the Venture Exchange has beaten the Dow. Noront shares this year have quadrupled while Cliffs’ NYSE shares are up only 65%. If the Venture Exchange jumps another 50% in 2010, which seems likely given what gold and commodities are now doing, Noront – as a market leader – could easily triple or even quadruple in value again. And that brings up another very important point: The $4 Noront purchase warrant that Freewest shareholders would receive on a 7-for-1 basis.

If an investor holds, say, 56,000 shares of Freewest, under the Noront offer they’ll have the opportunity over five years to purchase 8,000 Noront shares at a price of $4.00 per share. Freewest’s board and management scoffs at the warrant offer, saying it has little or no value, but common sense tells you it holds tremendous value given both the direction of the market and the incredible potential of Noront’s assets and the Ring of Fire in general. Unless you’ve been hiding in a cave somewhere the past couple of years, who in their right mind cannot see Noront’s share price substantially greater than $4.00 over the next five years? Noront says it will also try to have these warrants listed on the Venture Exchange – another bonus.

By trading their Freewest shares for Cliffs’ shares, Freewest shareholders are giving up their exposure to a better performing market, not to mention exposure to the blue-sky potential of the Ring of Fire. It’s true that Cliffs’ shares do offer more liquidity than Noront shares, making it theoretically possible for every Freewest shareholder to dump their Cliffs’ shares at the first opportunity. Which is what they might end up doing to help pay an extra tax bill and get back in on the Ring of Fire.

But wait, it gets even worse: Freewest shareholders will get little value out of their non-chromite assets by exchanging their shares for Cliffs’ shares.

Freewest holds considerable non-chromite assets, in particular the Clarence Stream gold property which contains over 200,000 ounces (with one million ounce potential) and several million shares of Quest Uranium (QUC, TSX-V). On the more speculative and resource-focused Venture Exchange, those assets as part of Noront would likely be given much more value than they would as part of Cliffs on the NYSE. This is an important consideration especially with gold expected to climb even higher in 2010.

And what about the price of nickel, and its potential impact on Noront’s stock price? From 2001 through 2008, the average annual nickel price was $7.58 U.S. The current nickel price is approximately $7.20, 5% below the eight-year average. Most analysts agree that nickel is currently at the low end of its expected trading range over the next six to 12 months of $7 to $10 per pound. If nickel jumps even 20% from its present level over the next few months, the impact on Noront’s share price could be quite dramatic.

What a week it’s shaping up to be. We expect Noront to deliver exciting news on McFauld’s and drive home the point to investors that its Ring of Fire assets are substantially undervalued, which we believe they are. Noront’s share price is the best card it can play right now to win the hearts of minds of Freewest shareholders. As far as Cliffs is concerned, they’re going to have to pull a rabbit out of the hat in a hurry. We’ll find out very quickly this week just how determined they are to secure a world class – and North American – chromite deposit.

More later today.

The Freewest Resources‘ (FWR, TSX-V) board of directors are rapidly losing both the rationale and the public relations war in recommending to their shareholders not to tender their Freewest shares to Noront Resources (NOT, TSX-V) and instead accept the 90 cent per share all-stock offer from major Cliffs Natural Resources (CLF, NYSE)…Noront is hitting hard at Freewest’s management and board, and striking with almost surgical precision…to use an analogy, if this were baseball, Freewest President and CEO Mackenzie Watson has just received a knockdown pitch – a 100 mile per hour Nolan Ryan fastball high and inside, with a nasty curveball on the way…Noront reiterated yesterday that its latest offer for Freewest is indeed its final offer, and we suspect Noront will let its share price do the talking next week…Freewest needs to pull a rabbit out of the hat in a hurry, and that means a better offer from Cliffs…we will elaborate in much more detail in an article we’ll be posting Monday morning prior to the market open…

Welcome to our site, or at least a sneak preview of it! The final version will look much different than this as we develop a fully-integrated and very unique business, investment and money-management resource site.

An important component of this site is going to be original research on small and undiscovered junior resource companies that offer very real and significant upside potential. We are extremely selective in the companies we feature and put forward to investors – we prefer quality over quantity. Management is the first thing we look at – it’s our #1 criteria – because without superb or solid management, a company with the best properties in the world is either going to underperform or flat-out fail. As simple as that. So we look for superior management guided by strong business ethics and integrity, followed by an outstanding portfolio of projects.

Disclaimer:

BullMarketRun.com is completely independent from any companies we cover. We accept no compensation of any kind from any groups, individuals or corporations mentioned on our site. Our stock coverage is for informational purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. No investment opinion or other advice is being rendered on any stock or company. We strongly recommend that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, and do your own due diligence and research before making any investment decisions. The stocks we cover, by definition, are highly speculative and potentially very volatile. Investors are cautioned that they may lose all or a portion of their investment if they make a purchase or short sale in these speculative stocks. We are not Registered Securities Advisors. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.  It should be assumed that BullMarketRun.com writers and their associates may hold or dispose of or trade in positions in any securities mentioned herein at any time.

Given our very bullish scenario for gold and the Venture Exchange heading into January, we see tremendous potential for upstart Colombian Mines Corporation (CMJ-TSX-V) which is trading this morning between 55 and 58 cents. We first started looking at this stock a couple of months ago and we wish we had written it up sooner as it has been a strong performer. However, it appears to us that it could have much further to go, that it’s in the beginning stages of a potentially massive move.

Colombian Mines was incorporated in 2006 and merged with Corporacion Minera de Colombia S.A. in September, 2006. It began trading on the Venture Exchange early last year and plummeted from over a dollar per share to a ridiculous three-and-a-half cents due to the market crash.

Since 2006 this company has quietly assembled a high quality portfolio of Colombian properties, often through the lengthy application process. Their current portfolio includes contracts, licences and applications covering approximately 222,000 hectares of massive sulphide, porphyry gold-copper, precious metal vein, coal and phosphate properties. In the Marmato mining district, Colombian Mines will soon be drilling its Yarumalito property which hosts both porphyry and epithermal gold targets. Just recently, the company was awarded 3,000 hectares in northern Colombia (Rio Negro area) which may be on trend with exploration and development properties controlled by Greystar, Ventana and Galway.

This is a tightly-held stock with only 18,500,000 shares outstanding giving it a current market capitalization of only about $10 million. Its current cash position is adequate, a little more than $1 million, with one million stock options at $1.00 and 950,000 warrants at $1.20 (expiring in May, 2010). With a substantial portfolio of properties in a red-hot country for exploration right now, Colombian Mines has been approached with several interesting joint venture opportunities. Management is solid with extensive experience in Colombia.

Technically, this stock has strong support at the 50 cent level and all of its moving averages are in bullish alignment. While it has performed well recently, it is certainly not overbought at current levels based on stochastics and RSI which give fairly neutral readings at the moment. The tight share structure means CMJ has the potential to move very quickly, and we believe the next big move will be up.

We’ll be keeping a close eye on Colombian Mines in the coming weeks, and we suggest investors do their due diligence and look at this one very closely. Along with Seafield, Colombian Mines in our view is clearly an up-and-comer and should be a star performer in 2010.

Gold is down sharply this morning and at 9:00 am Pacific time is currently trading at $1,170, just off its lows…the TSX Gold Index, after touching its record high of 395 yesterday, is currently at 363 after falling as low as 357 this morning…this reaction was not unexpected on our part as we have been warning about gold’s very overbought conditions for several days now…the Gold Index should find strong support in the 350-360 area, with additional strong support at 335 (the 100-day moving average)…as far as gold is concerned technically, it needs to hold above last week’s intra-day low of $1,136…if it falls below that, the next critical area of support would be around $1,080 where it needs to hold in order for this parabolic move to remain intact…the Venture Exchange, which is critical to watch, is still on solid technical ground and that confirms to us that gold’s current weakness is merely a much-needed correction to unwind overbought conditions…we expect gold’s next up-leg to kick in by early January at the latest with a move to at least $1,300 an ounce…

We strongly suggest accumulating quality juniors on any substantial weakness before Christmas as we anticipate a possible record move by the Venture Exchange in January, a massive advance in conjunction with precious metals that could be similar in magnitude to what occurred back in 1983 when the old Vancouver Stock Exchange jumped a whopping 50% that month…

Yes, indeed, we could be looking at 2,000 or better on the Venture Exchange by at least the end of the first quarter of 2010 and possibly even by the end of next month…PREPARE!