Cadillac Mining’s (CQX, TSX-V) relentless charge higher continues. The stock, which we introduced to BMR readers December 9 at 23 cents, hit another 52-week high today and closed at 41.5 cents, a gain of 4.5 cents on CDNX volume of nearly 1.3 million shares (over 200,000 on ALPHA).
Cadillac has had an amazing run with record trading volumes. What’s happening and where could it go from here?
For a variety of reasons, this is a classic “Perfect Storm” scenario which is why we brought CQX to the attention of our readers with some urgency. This company was flying “under the radar” and we were lucky to come across it. We put all the facts on the table and they are extremely compelling. As part of our due diligence and continued follow-up, we’ve spoken with several well respected mining people concerning CQX in addition to numerous seasoned investors – they all like what they see in this company. We added Cadillac Mining to the BMR Portfolio with a great deal of excitement and confidence and we’re very happy for our readers that it has done so well already. This appears to be just the beginning, however, as CQX has tremendous prospects for 2011 which we’ll outline in this article. As always, do your own due diligence.
The last two days of trading have clearly demonstrated the powerful state Cadillac Mining is in right now. On Wednesday, the stock fell 3 pennies intra-day to as low as 34 cents. A large bid at .34 was sold into and it appeared the stock may even head lower. It quickly reversed, however, as bargain-hunters stepped in immediately and drove it back to the high of the day (resistance) at 38 cents. It closed up half a penny at 37.5 cents.
Today, CQX opened half a penny lower at 37 cents before buyers stepped in again with resistance quickly smashed at 38 cents. It got as high as 42 cents before some profit-taking or nervous nellies drove it back down to test new support at 38 cents (previous resistance). That support held and then CQX rose steadily through the rest of the day to close just half a penny off its high at 41.5 cents. That kind of trading action speaks volumes about how strong this stock is at the moment.
So what are the fundamentals driving Cadillac Mining?
- Reading between the lines of the company’s most recent news release, Cadillac could be close to “pulling the trigger” on a potentially major precious metals project (or projects) in the Great Basin. Company officials have been carefully researching opportunities there for over two years, so we suspect something significant is brewing that could really be game-changing;
- Cadillac’s 100% owned “Wasa” Property adjoins Richmont Mines‘ (RIC, TSX) Wasamac Property along the Cadillac Trend in northwestern Quebec (15 kilometres west of Gold Bullion’s Granada Gold Property). Ongoing drilling by Richmont is making new discoveries and defining a significant Gold deposit with the principal structure hosting that mineralization dipping northerly toward the seven claims (164 hectares) held by Cadillac. This information is publicly available but many investors have missed it – Cadillac holds strategic and valuable land right beside a former mine that likely is going back into production as an underground operation;
- More results from Wasamac and a new resource estimate are coming in January. Richmont started drilling Wasamac last May and has steadily stepped up its drilling efforts with a sense of urgency, adding a a third rig in September. The original plan was to drill 10,000 metres. Due to good results this was expanded in late summer to 15,000 metres and has been increased again to 20,000 metres;
- The only hole ever drilled by Cadillac at its “Wasa” Property was very encouraging as it intercepted a zone that is interpreted to be a feeder system typical of those seen under VMS systems in the Noranda camp. The discovery of an alteration pipe on these claims, and Richmont’s drilling success to date, underscore the value of this important asset for Cadillac;
- Cadillac is a large landholder west of GBB’s Granada and has just partnered with Visible Gold (VGD, TSX-V) which will be aggressively exploring the Cadillac claims which total over 7,000 hectares (excluding “Wasa” which is 100% controlled by Cadillac);
- Cadillac has a silver property (“Silver Streak”) of considerable merit near Houston, British Columbia, with mineralization displaying some similarities to the massive Equity Silver deposit less than 30 kilometres to the east. Historical trenching returned 1.99% Cu and 338 g/t Ag over 33 metres. Cadillac drilled four holes in 2007 with one hole returning 28.2 g/t Ag over 28.4 metres (16.4 to 44.8 metres). Unfortunately this hole was abandoned at 44.8 metres “in better mineralization due to bad ground conditions in a fault.” With numbers like that, there’s no question Silver Streak has significant potential and the company realizes that. They completed a high-resolution ground magnetic survey in March and a follow-up drill program is clearly warranted;
- Cadillac has a terrific share structure – just 25 million shares outstanding, NO warrants and only 2.5 million options. There is no warrant selling pressure with this stock, as we see in many other plays, and according to our research only 10,000 shares have been sold by insiders this year (vs. buying of 718,000 shares). That’s despite the substantial recent gains. Management holds at least 20% of the stock and it appears they’re holding on very tightly;
- Cadillac has experienced management with outstanding mining industry backgrounds.
As part of our due diligence on Cadillac Mining we contacted President and CEO Victor Erickson. He’s an accomplished mining engineer who knows his stuff. Over his long career he has worked for several major mining firms, both domestically and internationally. He’s determined and has all the ability, in our view, to turn this company into a major success. At his side is Andre Audet (not the same Andre Audet who’s with Everton Resources, though the two know each other and Everton’s Audet speaks highly of his namesake). Cadillac’s Audet is the company’s Vice-President, Exploration, and served as Chief Geologist at the Sigma Mine in Val d’Or when he was with Dome Mines Group from 1974 to 1987. He has since worked as an international mining consultant in Asia, Africa, and the Americas focusing on exploration, property acquisition and evaluation primarily on Archean and epithermal Gold and VMS and Sedex base metal deposits. Needless to say, there are smart mining people running Cadillac. That fact, plus the fact they’ve been researching opportunities in the Great Basin over the past two years, suggests to us they could come up with a whopper of a project down south.
Volume is such an important indicator with a stock. The volume surge in Cadillac Mining actually started last May (right around the time Richmont commenced drilling at Wasamac) and has steadily increased in intensity (more 12 million shares have traded on the CDNX over just the last 8 sessions). We’ve seen many other examples of this (Gold Bullion, Seafield, Sidon, Currie Rose and Greencastle, to name just a few) and in every case when a stock starts going up on record volume for that stock, you know that something big is likely in the works.
From a market capitalization standpoint, Cadillac is still very modestly valued at $10.4 million (it actually has the lowest market cap of any of the 11 companies in the current BMR Portfolio). Given the company’s strong fundamentals and the bullish overall market conditions, it’s not at all surprising investors are consistently pushing CQX’s market cap higher. This is an exciting story and a good example of a company moving forward in a real and powerful way.
A potentially dramatic 2011 is lining up for Cadillac. We’re looking forward to our upcoming trip to Rouyn-Noranda as we’ll be able to report from the scene on what’s unfolding at Wasamac and elsewhere around the general area where Cadillac has a large land package.
Disclaimer:
The writer holds a position in Cadillac Mining. BullMarketRun is completely independent from any companies it covers. BMR accepts no compensation of any kind from the companies we cover in return for that coverage. We accept no advertising either. 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 adviser, 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 BMR personnel, writers and their associates may hold or dispose of or trade in positions in any securities mentioned herein at any time. Owner/Publisher of BullMarketRun.com is Terry Dyer of Langley, British Columbia, who does not hold a position in Cadillac Mining.
Looking at the 2 month daily chart, we see that during the month of December SFF has experienced extreme volatility. On Dec. 3, Seafield gapped up at the open to 35 cents and during the day rose to a high of 77 cents before closing at 57 cents (total CDNX volume of a whopping 71 million shares) for a gain of 34 cents thanks to a spectacular drill result from its Miraflores Property in Colombia.
