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August 12, 2011

BMR Morning Market Musings…

Gold is lower again today but this is a necessary and healthy pullback as the yellow metal clearly became very heavily overbought after breaching $1,800 the other day…as of 7:50 am Pacific, Gold is down $39 an ounce at $1,729…John will produce an updated Gold chart over the weekend (in addition to a CDNX chart analysis)…Silver is up a nickel at $38.69, Copper is unchanged at $4.02, Crude Oil is up $1.01 at $86.73 while the U.S. Dollar Index is essentially unchanged at 74.64…U.S. retail sales in July posted their biggest gain since March, tempering fears that the world’s largest economy might be slipping back into recession…sales climbed 0.5%, in line with analysts’  forecasts and following an upwardly revised 0.3% gain in June…consumer spending, of course, accounts for much of U.S. economic activity (two-thirds of it) and the Commerce Department data released this morning indicates the third quarter was off to a decent start…excluding autos, sales increased 0.5% which was well above forecasts for a 0.2% gain…European stocks climbed after a handful of European governments banned short-selling of financial stocks….it’s always dangerous in our view when governments start meddling in the markets like that…France, Italy, Spain and Belgium imposed the ban while Britain, the Netherlands and Austria said they saw no need for action…Germany remained silent….the CDNX is up 14 points at 1808 which is just a few points below its close last Friday…Visible Gold Mines (VGD, TSX-V) jumped 26% on news yesterday and is up another 2 pennies at the moment to 36 cents…here’s what is so significant about VGD’s news yesterday…the company drilled what was essentially a “blind hole” (previously unexplored ground at Wasa Creek) and hit mineralization at different depths including a 16.4-metre shear zone…they now have a trail to follow which is very important…the hole suggests they could be at the edge of something bigger…LBWC-11-03 was collared about 4 kilometres southwest of Richmont Mines’ (RIC, TSX) Wasamac Main Zone and about 3.5 kilometres southeast of the Francoeur Mine, so VGD is drilling in a rich geological environment…what’s also interesting is that the style of mineralization in parts of LBWC-11-03 is identical to that of Wasamac – a close coexistence of Gold and pyrite disseminated in an altered shear zone…it’s still very early in the game for VGD at Wasa Creek but the news yesterday gives us confidence that this story has serious  “legs” to it…results are pending on 6 of the 7 holes completed so far…two drill rigs are concentrating on the area around LBWC-11-03 with 50-metre step-out holes and a “wall” of holes to the east in a north-south direction for 1.5 kilometres crossing the Cadillac Fault…the prolific Cadillac Fault runs right through the middle of the property…meanwhile, drill targets are being finalized at Wasa East which also looks very intriguing…VGD geologists see a possible connection between the Wasa Shear Zone (dips to the north) and the Cadillac Fault which are on either side of Wasa East…it seems some secondary faults are present which does well for the potential discovery of mineralization on that property…in addition, VGD has traced Richmont’s Wildcat Zone to the south to three claims that form part of the Wasa Creek Property…LBWC-11-08 was collared about 1000 metres south of the Wildcat Zone (a south dipping structure) which is about 300 metres south of the Wasamac Main Zone…there are two Gold systems at Wasamac, and little exploration has been completed to test the Wildcat Zone…wow, there’s a lot happening here and next week Visible Gold Mines is expected to outline its drill program for its very promising Joutel Project 150 kilometres north of Rouyn-Noranda…we added VGD to the BMR model portfolio in the spring of this year because of our strong belief that this is a well-managed, aggressive company with a talented geological staff and the ability to make a major discovery in northwest Quebec…VGD has $6 million in working capital…John’s updated chart gives a very bullish reading on the stock from a technical perspective…

(Note:  John and Jon continue to hold positions in VGD while Terry does not hold a position)…Richmont is taking a slight breather after a big run this week…as of 7:50 am Pacific, RIC is off 18 cents a share at $8.82…it, too, has a powerful-looking chart as the stock broke above important resistance this week in the $8.40 to $8.50 area…the earnings outlook for Richmont and the success of its exploration program at Wasamac suggest this stock could hit much higher levels in the year ahead…also in northwest Quebec, Gold Bullion Development (GBB, TSX-V) and Adventure Gold (AGE, TSX-V) have both bounced back after hitting lows of 31.5 cents and 40.5 cents, respectively, this week…these are also quality situations that we’ll be following very closely in the weeks ahead…it’s quiet on the news front today with the CDNXSeafield Resources (SFF, TSX-V) is one of the most active traders so far today…it’s up 3 pennies to 25.5 cents…the company made a significant announcement yesterday as Giovanny Ortiz, the former exploration manager of the Angostura Project, has been appointed General Manager of the company’s operations in Colombia…we like how new President and CEO Cesar Lopez is pulling things together with Seafield…patient shareholders have a chance to do extremely well with this company in the year ahead in our view…many of the Yukon plays have recovered nicely over the last couple of days after Monday’s selling climax…when there’s blood in the streets, that’s always the time to buy…just a few examples – on Monday, Kaminak Gold (KAM, TSX-V)  dropped as low as $3.25, Atac Resources (ATC, TSX-V) plunged to $7.05 and Silver Quest Resources (SQI, TSX-V) hit support at 83 cents…it takes nerves of steel to jump into a falling market but that’s often necessary in order to make the big money…the CDNX was clearly in heavily oversold conditions Monday and Tuesday and bargain hunters wisely stepped in…another Yukon play we like (as we’ve previously mentioned)  that is worthy of our readers’ consideration is Pacific Ridge Exploration (PEX, TSX-V) which dropped as low as 43.5 cents Monday after hitting a 52-week high of 68 cents July 29…it’s currently up a penny at 51 cents…John sees a lot of positives in the PEX chart which he updates below…

(Note:  John, Jon and Terry do not hold positions in Pacific Ridge Exploration)…

August 11, 2011

Wasamac’s A Winner

An emerging huge play along the Cadillac Trend in northwest Quebec is unquestionably Wasamac, Richmont Mines‘ (RIC, TSX) growing Gold deposit 15 kilometres west of the historic mining community of Rouyn-Noranda.  We started writing about Wasamac late last year and the news just keeps getting better and better, though many market participants still aren’t aware of what’s developing at this property and potentially – especially after today’s news from Visible Gold Mines (VGD, TSX-V) – in the immediate area around it.   That’s one reason BMR has arranged another Rouyn-Noranda visit for the very near future to explain this exciting story to our readers and the investment community at large.

Wasamac is a winner which is why Richmont, traditionally quite conservative, is aggressively tackling this property with five drill rigs at the moment.  Results like 46.6 metres grading 3.45 g/t Au and 68.42 metres grading 2.66 g/t Au (true width) demonstrate that Richmont is on track to significantly upgrade and expand NI-43-101 resources announced in mid-February (1.4 million ounces, all categories).  A scoping study is expected to be completed by year-end.

As interesting as Wasamac already is, today the story grew even more intriguing when Visible Gold Mines came out with some powerful news regarding claims to the south, west and east of Wasamac that it has optioned from Cadillac Mining (CQX, TSX-V).  There was a lot for investors to chew on in this news, so here’s what we found most exciting and important:

1.  Wasa East

This is highly interesting – Visible Gold Mines‘ geologists are suggesting a possible connection between the Cadillac Fault and the Wasa Shear, two Gold-bearing systems that are on either side of the 700-hectare Wasa East Property that straddles part of the eastern boundary of Wasamac.  Drilling will test for potential parallel zones of mineralization at Wasa East.

2.  Wasa Creek

Several major developments:

a)  Richmont’s Wildcat Zone, a south-dipping structure, has been traced to the south for more than 900 metres to three claims that form part of Visible Gold Mines‘ Wasa Creek Property.  Hole LBWC-11-08 was drilled in a perpendicular direction in an effort to intersect the Wildcat Zone;

b) Further to the west, in the very first hole drilled at Wasa Creek, VGD has hit Gold mineralization including a 16.4-metre shear zone.   This is particularly interesting because the company had virtually nothing to go on when it planned this hole – historical exploration in this area has, surprisingly, been almost non-existent.  The hole featured several zones of mineralization at different depths, including some high-grade, in addition to “many sections” of anomalous Gold mineralization which clearly suggests they could be at the edge of something much more significantVGD now has a trail – they just need to follow it;

c) Another hole, LBWC-11-04, collared 150 metres directly west of LBWC-11-03, showed a “very similar alteration style” to that observed in LB-11-03.  The fact VGD stated they are “eagerly awaiting assays” for this hole is also code language that LBWC-11-04 looked very good visually. Assays on this hole are pending.  Holes have also been completed 750 metres north of LBWC-11-03 and 300 metres southeast of LBWC-11-03;

d) And the action is intensifying.  VGD has two drill rigs concentrating on the discovery area with step-out holes being drilled east and west of LBWC-11-03.  In addition, a “wall” of holes is being drilled in a north-south direction east of LBWC-11-03 in order to test for parallel zones over a 1.5 kilometre stretch crossing the Cadillac Fault.

Does this story have “legs”, as they say in the business?  You bet it does.

The map below, which was released today by VGD in conjunction with the news, shows the prolific Cadillac Fault going right through the middle of the Wasa Creek Property.

A few kilometres to the northeast of LBWC-11-03 is the Francoeur Mine.  A few kilometres to the northwest of this hole is the Wasamac deposit.  Visible Gold Mines is drilling in a rich geological environment, so one cannot discount the possibility of another major discovery in this area.

While it’s still very, very early in the game for VGD at Wasa Creek and Wasa East, this company has our attention more than ever after today.  We’ll be following developments at Wasamac and the surrounding area with intense interest and in greater detail as the summer continues.

Today’s news from Visible Gold Mines came out near the end of the trading day but the stock responded quickly and gained 7 cents to close at 34 cents on total volume (all exchanges) of 261,000 shares.  From a technical perspective, VGD is looking very strong with rising 10, 20 and 50-day moving averages.  It started a new uptrend last month, gaining 49% in July.  We’re now approaching mid-August and VGD seems to have caught fire again.  Things could become even more interesting next week when Visible Gold Mines is expected to provide an update on the Joutel Project, 150 kilometres north of Rouyn-Noranda.

Richmont had another banner day despite Gold’s drop.  RIC, which reported strong second quarter results Tuesday, closed at $9.02 for a gain of 26 cents.  It’s one of our favorite producers with a growing production profile and a superb deposit shaping up at Wasamac.

Note: Jon and John hold positions in both Visible Gold Mines and Richmont Mines.  Terry does not.

BMR Morning Market Musings…

Gold has pulled back after breaching the $1,800 level for the first time ever yesterday…as of 7:00 am Pacific, the yellow metal is down $30 an ounce at $1,765…it has been as low as $1,757 this morning…Silver is $1.17 lower at $38.12, Copper has gained a dime to $4.02, Crude Oil is off 50 cents at $82.39 while the U.S. Dollar Index has declined slightly to 74.77…Spot Gold climbed as high as $1,814 yesterday before encountering some profit-taking in part due to the announcement that the CME Group is raising margin requirements by 22.2% for trading Gold futures on the Comex Division of the New York Mercantile Exchange…of course this applies to both long and short positions…there’s no question that Gold is overextended technically at the moment but it’s in a “Perfect Storm” that could last for many more months, so any pullbacks like we’re seeing now are likely to be short-lived and greeted by hungry buyers which will limit Gold’s downside…a big part of what’s going on here is that the market has lost confidence in governments across the board (not just the United States where President Obama has been incapable of providing any economic leadership)…there was a great quote on Gold in the Globe and Mail this morning from Fred Sturm, chief global strategist at Mackenzie Financial, who stated, “Gold is the best address in a bad neighborhood”…Sturm is a veteran resource fund manager and believes the yellow metal could be “on the cusp” of a spectacular rally given concerns about U.S. and euro zone debt levels…”If the financial stress continues, we could enter into that phase soon” when Gold goes through a parabolic spike like the Nasdaq did in 1999 and early 2000…”All currencies are losing value around the world, and Gold is the only effective currency that is gaining valuee”, he told the Globe and Mail…noted market historian Don Coxe belives the Gold rally is primarily driven by fear, not greed…”Gold is gradually becoming recognized as a necessary investment for those with wealth to conserve who who do not assume that the political classes in the U.S. and Europe will display sustained statesmanship”…despite rising prices, precious metals demand in India, the world’s biggest consumer of bullion, continues to soar…jewelry manufacturers note that Gold is likely to see further increased demand with the festival and wedding season around the corner….it has been a wild month of August in the markets…through yesterday the Dow is down 12% for the month, the Nasdaq has fallen 13.6%, the TSX has fallen just 6% while the CDNX has declined 11.5%…Gold, meanwhile, has gained 10% after closing July at $1,627…French President Nicolas Sarkozy has given his finance and budget ministers one week to come up with new measures to cut a crippling debt burden as concerns mount over prospects for growth and the country’s ability to meet its deficit reduction targets…three main credit rating agencies have reaffirmed the country’s triple-A status but many investors are concerned that Europe’s debt crisis could spread to France, the region’s second-largest economy…below is a chart on the “Shadow Gold Price” from www.usfunds.com (calculated by QB Asset Management) that all Gold bulls will love…according to Erste Research, “QB Asset Management’s “Shadow Gold Price (SGP) divides the U.S. monetary base by U.S. official Gold holdings, the same formula actually used during the Bretton Woods regime to fix the exchange value of the dollar at $35 U.S. per ounce…the SPG would be the theoretical price of Gold today were the Fed to depreciate the U.S. Dollar to a level that would cover systemic bank liabilities…the current Shadow Gold Price would just under $10,000 U.S., more than five times what Gold is trading at right now…

Richmont Mines (RIC, TSX-V), one of our favorite smaller producers, got a strong write-up from National Bank yesterday through its Daily Bulletin…NB reiterated its “outperform” rating for RIC and noted that second quarter earnings (16 cents per share) exceeded their estimate…”We continue to view Wasamac and Monique to be the biggest areas of upside for Richmont“…at BMR, we believe Wasamac is one of the best-kept secrets along the Cadillac Trend and could turn out to be a multi-million ounce deposit that dramatically transforms Richmont into a much bigger producer…Richmont currently has five rigs at Wasamac in an effort to upgrade and expand resources…also active in the immediate area with three drill rigs is Visible Gold Mines (VGD, TSX-V)…we are very bullish on VGD given its Wasamac-area plays that were optioned from Cadillac Mining (CQX, TSX-V) last December…VGD will also be going to work soon on its very promising Joutel Property…the company has partnered with Agnico-Eagle Mines (AEM, TSX) on that project which is 150 kilometres north of Rouyn-Noranda…Richmont hit $9.02 in early trading but is currently off 14 cents at $8.62 with the decline in the TSX Gold Index…VGD closed at its rising 50-day SMA of 27 cents yesterday and continues to look solid from a technical perspective…the CDNX appears to have stabilized after dropping as low as 1676, an important support area, on Monday…the Index jumped 41 points yesterday, albeit on relatively light volume, to close at 1752…through the first 30 minutes of trading this morning, the CDNX is up another 3 points at 1755…exploration season is in full swing and a tsunami of drill results is expected over the next couple of months and that, combined with the possibility of even higher Gold prices, has the potential of turning the CDNX around in a hurry…global events of course will have a major impact on the CDNX but there’s nothing like a major discovery to get investors excited…in North America, key areas to keep an eye on are the Yukon, northern British Colombia, northwest Quebec, and the western United States…Kaminak Gold’s (KAM, TSX-V) Coffee Project in the White Gold District is looking strong and the stock rocketed back to the $4 level yesterday after finding support near its rising 200-day moving average (SMA)…the bounce-back in Kaminak, Atac Resources (ATAC, TSX-V) and other plays in the Yukon illustrates the keen interest in this region and its huge upside exploration potential given results to date and the record amount of money that’s going into the ground there…we haven’t mentioned Goldex Resources (GDX, TSX-V) yet this month…John continues to like what he sees in the stock technically…it closed up a penny-and-a-half yesterday at 8.5 cents where it’s trading so far this morning…volume is still strong with this play and assay results are pending from the recently completed drill program at the company’s El Pato Property in Guatemala…Prodigy Gold (PDG, TSX-V) found support at its rising 300-day moving average (SMA) Monday and looks very attractive in the low-to-mid-40’s…the company released more encouraging drill results August 4…a full feasibility study for the proposed open-pit project at Magino is scheduled for early next year…BMR is arranging a site visit to check out Adventure Gold’s (AGE, TSX-V) promising Pascalis-Colombiere Gold Property near Val d’Or…a 43-101 is in the works for this former producer which could draw the interest of bigger companies in the area…AGE dropped as low as 40.5 cents Tuesday…it’s currently up a penny at 44 cents…this is a well-managed company with an impressive pipeline of projects led by Pascalis-Colombiere…

August 10, 2011

BMR Morning Market Musings…

Volatility continues in the markets…Gold, though technically very overbought as John’s charts have shown, continues to surge higher given the “Perfect Storm” that seems to have formed around the yellow metal…as of 9:15 am Pacific, Gold is up a whopping $48 an ounce at $1,792…it has been as high as $1,799 over the last few minutes, breaking yesterday’s all-time high of $1,781…Silver has climbed $1.62 to $39.33,  Crude Oil is up 79 cents at $80.09…Copper is off 6 pennies to $3.91 while the U.S. Dollar Index is up three-quarters of a point to 74.74…the Dow is down 350 points but the TSX and the Venture Exchange are in positive territory…the CDNX has gained 21 points to 1733…yesterday’s statement by the Fed that it will keep interest rates near zero until mid-2013 was yet another boost for Gold to go along with a host of other reasons for owning the precious metal at this time…”When you have a metal that has three or four distinct reasons why it has headed higher, it is very difficult not to be bullish in that environment,” stated Mitsui Precious Metals analyst David Jollie this morning…”Given how far and how quickly we’ve run up, the move seems somewhat overextended…But this is a market where people are worried, they’re concerned about risk, and Gold has certainly benefited strongly from its safe-haven status”…while it’s starting to become a “focal point” in the minds of many investors, Gold is still far from being in a “bubble stage” – the percentage of world assets invested in Gold is still miniscule…the average person on the street just doesn’t have exposure to it at the moment…at some point, Gold is going to go parabolic and quality Gold stocks are going to go along for the ride just like the “dot com” plays in the late 1990’s…what’s particularly interesting right now is that if the U.S. and euro zone economies slow even more than expected, and global growth overall pulls back, the cost “inputs” for producers in particular are going to come down rather significantly at the same time that the Gold price remains strong and perhaps shoots much higher…we’re beginning to see that now with the drop in oil prices to $80 a barrel…these cost inputs have been suppressing interest in Gold stocks but that could dramatically change….we’ll see what happens…investors would be wise, therefore, to hold positions in certain quality producers with growing production profiles and strong earnings momentum, in addition of course to advanced-staged exploration plays with strong upside potential…on the producer side, New Gold Inc. (NGD, TSX) which recently swallowed up Richfield Ventures and its Blackwater deposit in central British Columbia, is one of our favorites…New Gold is an aggressive company that’s consistently beating analysts’ expectations and keeping costs down…it should really shine in an even higher Gold price environment…the New Gold chart is incredible when you look at it from a multi-year perspective, and it’s also looking very favorable over the immediate term as John outlines…as of 9:15 am Pacific, NGD is up 69 cents to $11.44…

Richmont Mines (RIC, TSX) came out with solid earnings yesterday, as we expected, and July-August-September will be an even more profitable quarter for the company…Richmont, by our calculations, is likely on pace to earn at least 90 cents per share this year (44 cents per share for the first half of 2011) and it’s currently trading at only about 9 times that figure at $8.41 per share (up 57 cents and threatening to break out on the charts)…monthly production of approximately 7,000 ounces of Gold is expected to increase by 40% early next year to 10,000 ounces per month once the Francoeur Mine reaches full commercial production…in addition, the company is enjoying major exploration success with its Wasamac and Monique properties…five rigs are currently drilling at Wasamac which has multi-million ounce potential in our view…the market hasn’t yet caught on to the significance of Wasamac and how it will transform Richmont into a 250,000 ounce per-year producer…Richmont has been one of the best-performing stocks on the TSX this year and we expect that trend to continue…what’s quite amazing is that there are now eight drill rigs in operation at Wasamac or in the immediate vicinityVisible Gold Mines (VGD, TSX-V) announced July 21 it has three rigs at its Lucky Break Project, concentrating on its Wasa Creek Property which adjoins part of Richmont’s Wasamac Property to the south and west…so Wasamac is definitely emerging as a major exploration area with Richmont focusing on growing its 1.4 million ounce deposit (NI-43-101, all-category resources) and Visible Gold Mines sniffing around the perimeter…VGD is up half a penny at 29 cents with a solid-looking chart…Wasamac is right off the main highway, about 15 kilometres west of Rouyn-Noranda, and was a producer in the 1960’s…Probe Mines (PRB, TSX-V) came out with more solid drill results from its Borden Lake Project near Chapleau, Ontario, including 77 metres (near-surface, 10 to 87 metres) in hole #66…Borden remains open in all directions and a 43-101 resource calculation is being prepared…PRB is a dime higher at $1.50…keep a close eye on developments in the Yukon…Kaminak Gold (KAM, TSX-V) is very strong this morning after releasing some results from its Coffee Project…the stock dropped as low as $3.25 during Monday’s panic selling and is currently up 46 cents at $3.88…Golden Predator (GPD, TSX) could bed a gem with its Brewery Creek Project in the Yukon and is off a penny at the moment at $1.18…Pacific Ridge Exploration (PEX, TSX-V), drilling its Mariposa Project in the Yukon, is strongly supported by its rising 50-day SMA at 42 cents…it’s currently off a penny-and-a-half at 45.5 cents, well down from its recent 52-week high of 68 cents…Canaco Resources (CAN, TSX-V), developing its Handeni Project in Tanzania, touched its rising 500-day moving average (SMA) this morning…Canaco expects to release an initial NI-43-101 resource estimate for Handeni early next year…while the company continues to deliver encouraging results from Handeni (seven rigs are currently drilling Magambazi), the stock price has been hit hard with the recent sell-off in equities…Canaco slid to $2.50 in early trading but is currently up 16 cents at $2.76…John “kicked the CAN” around this morning, producing a chart that shows a very strong support band between $2 and $2.50 with CAN bouncing off the top end of that band in trading today…

August 9, 2011

BMR Morning Market Musings…

Gold surged to another record level overnight as it pushed $64 higher to $1,781 before pulling back to $1,720…as of 8:45 am Pacific, the yellow metal is up $22 an ounce to $1,739…all eyes are on the Fed today as policymakers are meeting with a statement due at 11:15 am Pacific…equity markets are up in early trading on hopes the Fed will offer some reassuring words…Silver is off 94 cents to $38.09…Crude Oil has gained 34 cents to $81.65, Copper is unchanged at $3.98 a pound while the U.S. Dollar Index is down one-fifth of a point to 74.63…investors bought 950,000 ounces of Gold through exchange-traded funds yesterday, the largest inflow since February, 2009, according to Edel Tully, precious metals strategist at UBS…dealers said sales of coins and small bars to European investors yesterday were the highest so far this year…“Everything the Gold bulls predicted is coming true,” said Matthew Turner, precious metals strategist at Mitsubishi…”The euro zone is under severe stress, government debt from Greece to the U.S. is being called into question and most central banks see the solution as expanding the money supply”…Gold has jumped by as much as 20% since the beginning of July…adjusted for inflation, however, Gold’s record remains well below its 1980 peak, which translates to nearly $2,500 in today’s money…analysts have revised up their forecasts in the wake of recent events…JP Morgan is predicting Gold could reach $2,500 by the end of this year…at the moment, as we see it, Gold is unquestionably technically overbought…however, there do appear to be new dynamics at play in Gold as it has broken out of a long-term trend channel…the top of Gold’s previous upsloping channel can now be expected to provide support – in otherwords, we could very well see $1,670 before $1,800 but the overall “big picture” for Gold remains exceptionally bullish

One of the companies that will benefit tremendously from higher Gold prices is Richmont Mines (RIC, TSX), one of our favorite smaller producers, which reported strong second quarter earnings this morning of 16 cents per share based on an average Gold price of $1,460 CDN during Q2…an average Gold price of $1,600 CDN over the second half of this year should give Richmont the potential to earn anywhere from 80 cents to $1.00 per share for 2011…the company reaffirmed its 2011 production target of 80,000 to 85,000 ounces…commercial production at the company’s Francoeur Mine, 25 kilometres west of Rouyn-Noranda, is expected to begin by early next year…Francoeur will add 3,000 ounces per month to Richmont’s production, lifting RIC over the 100,000 ounce mark in Gold sales for 2012…meanwhile, the company has five drill rigs now operating at Wasamac, a rapidly growing deposit between Rouyn-Noranda and the Francoeur Mine…we’ll have more on Wasamac tomorrow…Wasamac is unquestionably one of the busiest areas along the Cadillac Trend at the moment…Visible Gold Mines (VGD, TSX-V) has three rigs on its optioned Wasa Creek Property in the immediate vicinity of the Wasamac deposit, so this is definitely an area to watch closely…VGD, like Richmont, has held up well during this market weakness with strong support at its rising 50-day moving average (SMA) of 27 cents…the CDNX dropped as low as 1676 yesterday where it has support…as of 8:45 am Pacific, the Venture has gained 40 points to 1722…John updates the CDNX chart for us this morning and shows the various near-term support and resistance levels…

Currie Rose Resources (CUI, TSX-V) is up half a penny at 16 cents…this stock has shown great support in the mid-teens this year and the company is in the process of drilling its two major projects (Sekenke and Mabale Hills) in Tanzania…both hold excellent potential…CUI has pulled some stellar results before out of Mabale Hills and that’s where the current program started early last month…drill targets are being finalized for Sekenke which surrounds and runs in between two former high grade Gold mines…this promising property has never been drilled by Currie RoseSilver Quest Resources (SQI, TSX-V) is up 8 cents to 92 cents…the company, in conjunction with operator New Gold Inc. (NGD, TSX), released results this morning from 11 holes on the Davidson claims (northern portion of the Blackwater deposit)…hole #179 was outstanding (278 metres grading 2.78 g/t Au) while hole #176 returned a 35-metre section grading 2.37 g/t Au…drilling continues in an effort to build on the 43-101 indicated and inferred resources at Davidson totaling 1,360,000 ounces…SQI has a 25% interest in that project and of course is also very active in the Yukon…Adventure Gold (AGE, TSX-V) is off a penny-and-a-half at 43.5 cents…AGE’s yearly low is 36 cents and given how its Pascalis-Colombiere Gold Property is shaping up, we see tremendous support for this play – and a great opportunity – around current levels…the company has approximately $3 million in working capital at the moment and several other projects on the go…

August 8, 2011

BMR Morning Market Musings…

Gold took off above $1,700 an ounce overnight to another new record high of $1,716.50 on the Spot Market…as of 8:30 am Pacific, the yellow metal is holding above $1,700…it’s currently $44 higher at $1,707…Silver has pulled back somewhat after climbing above $40 an ounce – it’s up $1.01 at the moment to $39.33…Copper is 13 cents lower (an 11-week low) at $4.00 a pound, Crude Oil is off $3.54 to $83.34 while the U.S. Dollar Index is firmer despite S&P’s credit downgrade…the greenback is one-third of a point higher at 74.74…Morgan Stanley continues to favor Gold…supportive influences of course include the U.S. debt downgrade late Friday by Standard & Poor’s, softer U.S. economic data that adds to expectations that monetary policy will remain accommodative for an extended period (with the possibility of “QE3”), and euro zone debt worries…“We continue to strongly recommend exposure to Gold, not only as a consequence (of) the events of the past week, but also through next year, which reflects our conviction that heightened demand for safe-haven commodities will be sustained by lingering investor concern over sovereign debt and growth risks in the U.S. and Europe, all occurring amid historically low real interest rates,” Morgan Stanley stated…borrowing costs for Spain and Italy tumbled today as the European Central Bank intervened to buy the countries’ respective bonds and try to stabilize financial markets…Spanish borrowing costs also dropped, the 10-year bond yield falling 72 basis points to 5.32%…when a stock market plunge starts making headlines on the TV news and on the front pages of every newspaper (i.e., this morning:  Crisis of Confidence Grips Markets“, “Bad Day Ahead For Wall Street“, “Global Shares Sink After Downgrade“, “U.S. Stocks Ready To Tumble After Downgrade“), that’s typically when you know a bottom is likely very close at hand…it’s one of the best indicators of all and one of the smartest strategies is to go in the opposite direction of the herd…not surprisingly, equity markets got slammed right off the bat this morning but seem to be stabilizing…Gold producers are doing terrific today (lower oil prices are also helping them) but many of the speculative juniors are hurting…the CDNX is off another 108 points to 1704 after declines of 112 and 42 points, respectively, Thursday and Friday…that kind of a steep plunge – 13.5% in 3 days – is what is often seen at a market bottom but what we’re also looking for is a powerful bull hammer reversal…RSI(14) and Stochastics each show the Index is in very intense oversold conditions so this is just not a wise time to fall victim to fear and throw quality stocks overboard…some investors however are doing that anyway but that’s what makes a market…one potential bottom, if it’s not 1700, could be just above 1600 where the Index ran into resistance in early 2010…in fact, that’s also very close to a 50% retracement of the entire gain from late 2008 to early March of this year…this is not a re-run of 2008 in our view…rising 300 and 500-day moving averages are still firmly in place for the CDNX…there are several interesting situations for bottom-fishers to keep an eye on…the Yukon will produce more excitement as the summer progresses and some of the best plays there have been knocked down considerably…they include Golden Predator (GPD, TSX) which has demonstrated strong support around $1.00…Kaminak Gold Corp. (KAM, TSX-V) which has fallen below support at $4.00 and could test the $3.00 level…Silver Quest Resources (SQI, TSX-V) which is now in the mid-80’s which was a strong resistance area during the spring…Pacific Ridge Exploration (PEX, TSX-V), Ethos Capital (ECC, TSX-V) and Northern Tiger (NTR, TSX-V) are also quality situations…of course the leader of the pack, searching for a Carlin-style discovery, is Atac Resources (ATC, TSX-V) which is down a dollar per share at $7.15…savvy traders/investors in conditions such as this will look for extreme oversold conditions in individual stocks and patiently wait for panic-stricken sellers to hit a bid and perhaps even a “stink bid”…Prodigy Gold (PDG, TSX-V) has been knocked down to 40 cents and it’s at its lowest RSI(14) level since its 2011 bottom in January…Romios Gold (RG, TSX-V) is a quality exploration play in the Galore Creek area of British Columbia which we first mentioned when it was trading around 40 cents…it rocketed as high as 65 cents July 26 and is now back down to 45 cents…we’ll be focusing a lot in the coming weeks on northwest Quebec (we’re visiting the Rouyn-Noranda region again soon) where there are several very interesting advanced exploration plays…Richmont Mines (RIC, TSX) growing Wasamac deposit, 15 kilometres west of Rouyn-Noranda, has yet to be fully recognized by the market…of course Richmont is also a cash-rich producer with two mines in operation at the moment and a third (Francoeur, near Wasamac) expected to be in commercial production by early in the first quarter of next year…RIC has powerful earnings momentum and its Q2 financials could come any day now…Visible Gold Mines (VGD, TSX-V) is actively drilling in the Wasamac area and recently announced that three rigs were on its Wasa Creek Property…so something could be cooking for VGD near Wasamac…both Richmont and Visible Gold Mines are up this morning in this down market…of course we continue to be very bullish on Gold Bullion Development’s (GBB, TSX-V) Granada Gold Property…Adventure Gold’s (AGE, TSX-V) has been enjoying great success with its Pascalis-Colombiere Gold Property near Val d’Or and yet the stock is trading not far off its 2011 low…

Interesting quotes from the weekend…

“Our currency is not AAA, and in recent months the performance of our government has not been AAA, but our debt is AAA”…”I can go out drinking all night, but if I’ve got a printing press, my debt is good.” – Warren Buffet

“This is not an issue of credit rating…the United States can pay any debt it has because it can always print money to do thatthere’s zero probability of default…what I think the S&P (downgrade) did was to hit a nerve…it’s hit the self-esteem of the United States, the psyche…and it’s having a much profounder effect than I conceived could happen.” – Alan Greenspan

Independent Research and Analysis of Emerging Junior Resource Companies: Speculative, Undervalued, Home Run Opportunities in Today’s Markets

Welcome to our site, or at least the initial version of it!  BMR has been online for nearly two years and strictly through word-of-mouth we have built a loyal following. 

We’re continuing with our plans to ultimately build a very unique investment and money-management resource site that goes considerably beyond what we have now.  While we focus a lot on the Gold market and trends in the global economy, and of course the technical health of the TSX Venture Exchange (CDNX), an important component of this site will always be original research on small and undiscovered junior resource companies, mostly in the Gold exploration space, 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.  However, investors must understand that these are still highly speculative situations and entail considerable risk, volatility and unpredictability.  Our stock coverage is for informational and entertainment purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. Always perform your own due diligence and please read our disclaimer at the bottom.

We use a combination of fundamental and technical factors in determining the value and potential of a stock.  In terms of fundamentals we look for a company with a superb project supported by strong management.  Management must possess integrity, solid ethics and a determination to succeed and build shareholder value.

At BullMarketRun (BMR) we approach the handling of money from a biblical perspective and this is an important topic we will be sharing with our readers (and listeners) as the site continues to develop. The Bible teaches so much about money and how to handle it and invest it –  there are literally thousands of verses on how we should handle the money and possessions that God entrusts us with.  By examining the life of Jesus and reading the Word of God, we can all become fully equipped to be successful investors and handle money wisely in order to make it work for us.  If it’s the other way around –  if you’re a slave to money by being in debt for instance, or if you don’t respect the value of money and spend it foolishly –  you’re in trouble and you’ll never be blessed financially.  We have a God who thinks big – He created the universe – and He wants us to think big  in every area of our lives.  When we handle money from a Biblical perpective (His money that we have been given stewardship of) He will bless our financial decisions and an increase of tenfold or a hundredfold is always possible.  This all begins, of course, with a personal relationship with Jesus Christ by accepting Him as your Lord and Savior and putting Him at the throne of your life.  It is the most important decision you’ll ever make.

God Bless,

Terry Dyer

Owner/Publisher, www.BullMarketRun.com

Disclaimer:

BullMarketRun.com (BMR) is completely independent from any companies it covers.  BMR accepts no compensation of any kind from any groups, individuals or corporations for coverage of any company mentioned on this site.  We accept no advertising either.  Our stock coverage is for informational and entertainment 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 Advisers. 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 Adviser 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.

The Week In Review And A Look Ahead: Part 3 Of 3

Visible Gold Mines (VGD, TSX-V)

After coming off its best monthly performance of the year, a 49% gain, VGD pulled back modestly last week and closed down 6.5 cents at 27 cents, its rising 50-day moving average (SMA)…this is one stock in the BMR model portfolio that seems to have considerable overall technical and fundamental momentum at the moment…the company reported July 21 that it has three rigs at its Lucky Break Project, concentrating on its newly-named Wasa Creek Property which is immediately adjacent to Richmont Mines‘ (RIC, TSX) Wasamac Property west of Rouyn-Noranda…three drill rigs on that relatively small property suggests to us that’s something’s up…an interesting August appears to be in store for VGD, no matter what the overall market decides to do…technically, VGD has shown it’s in a new uptrend which could easily gather fresh momentum in the days and weeks ahead with higher trading volumes (necessary to push through resistance around 40 cents) as the news flow potentially intensifies with the Lucky Break Project and picks up with Joutel…VGD has a first-rate land package in northwest Quebec (over 20,000 hectares, west and north of Rouyn-Noranda) and investors are beginning to see things start to come together for the company on the exploration front…VGD is in the midst of a 40,000 metre drill program and we’re intrigued by the July 21 news release…the optioned Wasa Creek Property is south of the north-dipping Wasa Shear which is responsible for Richmont’s significant and growing Wasamac deposit but it’s just north of the prolific Cadillac Fault that also runs through the area…geologically, therefore, the chances of a discovery are very real…the fact that VGD has put three rigs at Wasa Creek suggests they may have been encouraged by core visuals (significant visible Gold?) but nothing to that effect was stated in the news release…the company also announced July 21 that its Joutel Project, a joint venture with Agnico-Eagle Mines (AEM, TSX), has an eastern extension with a 6-kilometre strike length that exhibits similar lithologies to the previously mined Telbel, Eagle and Eagle West deposits at Joutel…VGD has identified several promising drill targets and a drill program is expected to start there this month…we added VGD to the BMR model portfolio several months ago when it was trading around 40 cents in part because of the quality of this company’s projects, its aggressive approach to exploration, and the team of people it has on the ground and in the front office…the company’s senior geologist is Robert Sansfacon who’s a genius at understanding structure…he honed his skills for many years in the exploration division of Lac Minerals and was involved in the discovery of Osisko’s (OSK, TSX) Canadian Malartic deposit, now the largest Gold mine in the country…Sansfacon is determined to make a discovery for VGD and if anyone can, it’s him…he sees great potential with the company’s projects along a 2o+ kilometre stretch of the Cadillac Break west of Rouyn-Noranda, where drilling continues, but he’s particularly anxious to start drilling Joutel which is 150 kilometres north of Rouyn-Noranda…a geologist from another company we spoke to recently called this a “fabulous” project…Joutel is a significant former producer that Agnico-Eagle mined from three zones between 1974 and 1993…the operation was closed prematurely as AEM turned its attention to its huge LaRonde Mine…the theory is that there are additional potential undiscovered deposits on this 500+ claim land package, and the area VGD will be targeting initially is the eastern portion of Joutel which has not been fully explored and has similar geological signatures to the previously mined deposits to the west…Joutel is a geologist’s dream with a great story…”When we picked up all the Joutel boxes and maps from the Agnico-Eagle exploration offices, it took us two pick-up trucks for all the data,” VGD President and CEO Martin Dallaire told us in a recent interview…”We were flooded with data but we love it because we have the capacity to analyze all of it and bring some fresh ideas to the project…the trend is very large and there’s a lot of potential for many new mines in the area”…Dallaire, an engineer and entrepreneur from Rouyn-Noranda, understands the mining industry and what an exploration company needs to do to succeed and build shareholder value…he’s fluently bilingual, presents himself extremely well and knows how to run a business and make money…he thinks big but is focused…he has also recruited some key people including Sansfacon…in short, Dallaire has put something together you don’t often see in the junior speculative market – a powerful dynamic of business, geological and marketing expertise with a strategic plan to rapidly build value…the company’s niche and sole geological focus is northwestern Quebec where it has acquired several promising land packages, mostly west and north of Rouyn-Noranda…on July 28, the company released a very positive NI-43-101 report on its Stadacona-East Property to support the initial inferred resource estimate of 163,000 ounces announced last April…more drilling is about to begin at Stadacona-East… Dallaire is taking an aggressive approach to exploration and he’s targeting under-explored areas and past producing mines where major new extensions are possible…armed with over $5 million in working capital, Visible Gold Mines is well positioned to make things happen in northwest Quebec…

Cadillac Mining (CQX, TSX-V)

Cadillac bucked the overall market trend last week, climbing as high as 15 cents and closing Friday at 12.5 cents for a weekly gain of a penny…volume of 265,000 last Monday was the heaviest since March…there is resistance in the 15 to 16-cent area as recent trading has demonstrated but it likely wouldn’t take much volume at this point to finally push through that…this continues to be a company with tremendous potential given its property packages and tight share structure – all that’s missing for another potential powerful surge is a game plan from Cadillac management for handling its very strategic claims at Wasamac…we have remained patient with CQX because the possibilities with this company are still incredible, especially considering the current market cap which is just $3.2 million…not often does a company get the kind of opportunity that Cadillac was handed (and still has)…CQX holds a 100% interest in a very strategic piece of property that adjoins Richmont’s Wasamac deposit, 15 kilometres west of Rouyn-Noranda…the principal Gold structure hosting mineralization at Wasamac dips northerly onto the seven claims held by CadillacRichmont started drilling Wasamac over a year ago and steadily ramped up its drilling due to excellent results…in February of this year, Richmont reported a nearly five-fold increase in all-category 43-101 resources (from 285,000 to 1.4 million ounces) at Wasamac…as a result RIC has been one of the best performing Gold stocks on the TSX this year…BMR brought the Wasamac situation to the attention of its readers in December…investors got excited about the story and the potential of Cadillac’s “Wasa” claims…the stock ran to 50 cents by early January and the market was clearly eager to see Cadillac pursue this project as quickly as possible…management’s delay in doing so has been frustrating and has led to a substantial drop in CQX’s share value…the company is also cash poor and needs to raise some money…we give CQX credit for securing an excellent project (Goldstrike) in Utah on fabulous terms but several million dollars is going to be required to tackle Goldstrike in the right way…the best solution in our view is for Cadillac to cut a deal with another company for exploration at Wasamac and the natural partner for that appears to be Visible Gold Mines (VGD, TSX-V) which last December entered into a JV with CQX on its other Rouyn-Noranda area properties…VGD has all the money and expertise necessary to unlock the value of Cadillac’s Wasa claims…Cadillac could let others do the heavy lifting at Wasa and then focus its energies on developing the Goldstrike Project…talk is cheap – the onus right now is on Cadillac to show investors that it can “walk the walk” and make things happen, however they decide to proceed…

Abcourt Mines (ABI, TSX-V)

Abcourt fell in sympathy with the overall market last week and closed at 10.5 cents, down a penny for the week…the stock has shown very strong support at 10.5 cents since last December – in fact, it hasn’t dropped below that level during that time…ABI still faces stiff overhead resistance with the 100-day moving average (SMA) at 14 cents and the 200-day SMA at 15.5…both SMA’s are declining…if you’re bullish on Silver and Zinc prices, however, which we are, you have to love this play as the current market cap ($15.6 million) really doesn’t take into account the value of the company’s Abcourt-Barvue Silver-Zinc deposit…ABI is ripe for an eventual takeover given the value of its assets and management’s apparent inability to unlock that value which is why we still view this company with considerable interest…ABI’s decline from a 52-week high of 25.5 cents in late March was brought on by the closing of a financing (35 million units at 18 cents), a sharp drop in Silver, overall CDNX weakness, and selling by MineralFields Group…the company released more results from Abcourt-Barvue August 2 including 2.1 metres grading 422.35 g/t Ag…drill results to date should significantly upgrade and increase all-category reserves and resources, most of which can be mined by open-pit…four years ago, GENIVAR produced a very positive feasibility report for the project which showed robust economics…more drilling will take place at the property later this year…the rig was just recently moved to the Vendome Property (Gold, Silver, Copper, Zinc) approximately 13 kilometres south of Abcourt-Barvue…more results came out July 5 from the company’s Elder-Tagami Gold Property near Rouyn-Noranda including 8.50 metres grading 3.71 g/t Au…that was from the Tagami area to the north which has untapped potential including some higher grades…the latest NI-43-101 resource estimate of 216,000 ounces was released in the summer of 2009…the possibility of Abcourt expanding that resource beyond 500,000 ounces certainly exists given the encouraging results to date (look what Richmont has done at Wasamac)…the heavy accumulation that began in Abcourt in December was no fluke in our view…this is a company with significant assets that could justify a substantially higher valuation…nearly 60 million shares of ABI changed hands on the CDNX in December and January – record volume for this stock, accompanied by a price jump from 14.5 cents…while the stock price is now slightly below that level, the record volume in ABI since late last year (take a look at a 10-year chart) is still a very bullish sign…Abcourt has been under significant accumulation and our best guess is that some savvy players like the assets in the ground…continued drilling success and higher prices for Gold, Silver and zinc would be exciting developments for this stock which has a history of major moves…from mid-2005 to early 2006, Abcourt rocketed from 15 cents to nearly $1.40…

Greencastle Resources (VGN, TSX-V)

Greencastle was down 2.5 pennies for the week at 17.5 cents, just slightly above its cash value…the 100-day moving average (SMA) has flattened out at 19.5 cents but a a breakout above the still-rising 200-day SMA at 23.5 cents is what we’re watching for to confirm that a new uptrend is underway…as far as the fundamentals go, our gut feeling is that something is cooking here – President and CEO Tony Roodenburg has been quiet for too long…the company released its Q1 financials June 9 which show working capital of 16.4 cents per share ($7.5 million)…oil royalties have declined significantly – just $212,000 for the first three months of 2011 vs. $355,000 over the same period a year ago which underscores the need for VGN to make some major changes as Primate just isn’t the cash cow it used to be…the fact Roodenburg is no longer at the helm of Seafield Resources (SFF, TSX-V) is a positive development in our view for Greencastle…Roodenburg had been trying to ease his way out of Seafield since 2009 without much success until a couple of months ago…he’s now able to focus almost exclusively on Greencastle which has been a favorite project of his for many years…we suspect he’s going to take a serious look at spinning out the oil assets or the Gold assets into a separate company…something needs to happen here to move VGN forward and boost shareholder value, but we’re confident Roodenburg will do it – sooner or later…Greencastle’s market cap of $8 million means the stock is now trading just a penny above its cash value…history shows that whenever VGN is near cash value, a terrific buying opportunity has opened up though investors must be patient…Greencastle tripled over a six-week period from late October to early December…since the beginning of January, though, the stock has struggled due mostly to impatient investors frustrated with the lack of news…patience is definitely required with VGN or one shouldn’t invest in it…over the years the successful strategy with Greencastle has been to accumulate on weakness when the stock is near cash value and then sell into strength when something develops…with strong working capital, three Gold properties (including land near the Blackwater Project and a couple of very good Nevada properties) and monthly (albeit declining) cash flow from an oil royalty, it doesn’t take a rocket scientist to figure out that Greencastle does offer excellent value at current levels…the long-term chart remains encouraging with rising 200 and 300-day SMA’s (the 200-day could start declining if something doesn’t develop by the end of this month)…it’s also important to note that Roodenburg, a large shareholder in VGN, refrained from selling any of his holdings during the late 2010 run-up in the share price…this is different from past bullish in the stock and adds further credence to our view that we haven’t seen the highs in this cycle yet from Greencastle – it’s poised for what we believe could be a massive breakout sometime during the last half of this year…Pinetree Capital also accumulated more shares in Greencastle late last year, so there’s every reason to be very optimistic regarding this company’s prospects…Greencastle is up 25% since we added it back in to the BMR model portfolio last October…

Sidon International (SD, TSX-V)

Still nothing new to report here…we’re all entitled to have one dog in our portfolio and Sidon is that dog for us at the moment, though it did increase five-fold for us last year and still holds potential…things remain very quiet on the Sidon front with the stock up half a penny last week at 4 cents on relatively light volume…the company hasn’t been able to recover yet from its fall in March, one day after the CDNX correction began, on poor drill results from its Morogoro East Gold Property in Tanzania…there has been no news from the company since March 14 – they effectively “sat out” the correction in the CDNX – when it announced a proposed private placement at 8 cents and an option to acquire an 80% interest in a 50-square kilometre property adjacent to Canaco’s (CAN, TSX-V) Handeni discovery in Tanzania…the 6 shallow holes drilled in December at Morogoro East failed to produce significant results, the best hole showing 3 metres grading 1.7 g/t Au…the company has drilled 4 deeper holes with results for those still pending…what the initial 6 holes have given Sidon, however, is a better understanding of the Morogoro geological structure which would aid in any future drilling…exploration, especially at such an early stage, is never easy and disappointing early results don’t necessarily mean a property doesn’t hold excellent potential…the company is also trying to develop a placer operation at Morogoro…there is certainly the possibility of better days ahead for Sidon but the lack of news is not encouraging…the climb back up won’t be easy and the company potentially may have to look at a consolidation of its capital…Sidon ran as high as 26.5 cents last winter but is now off a penny since we introduced it to BMR readers just over a year ago at a nickel…the company currently has approximately 140 million shares outstanding for a market cap of $5.6 million…

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