Gold has traded between $1,130 and $1,146 so far today…as of 8:00 am Pacific, bullion is down $13 an ounce at $1,132…Silver is off a dime at $14.88…Copper is off 3 cents at $2.48…Crude Oil is down 58 cents at $50.33 while the U.S. Dollar Index has edged one-fifth of a point higher to 97.78…

Gold prices are headed for a 6th straight day of losses, the longest rout since November…options trading this week has demonstrated the current bearishness…the 5 options contracts with the most volume on Wednesday, for example, were all bets on price drops…it’s reasonable to expect that Gold will test the bottom of a downsloping flag around $1,100 on John’s regular 2.5-year weekly chart we post at least once a week…given the drop in the loonie, Gold in Canadian dollar terms has been performing much better, and that’s why a producer like Richmont Mines (RIC, TSX) is actually up nearly 8% this week (through yesterday)…

Gold Downside Limited – HSBC

Although the climate for Gold remains negative, analysts at HSBC say the metal’s weakness may be limited, even if they expect short-term losses…n a research note yesterday, they pointed out that imminent interest rate hikes, low inflation, the stronger dollar, equity markets as well as subdued geopolitical risks are all weighing on Gold.  “These factors make further Gold losses likely, in our view, at least in the near-term,” they stated.  “But EM buying from China and India has just very recently perked up…so the downside appears limited and we expect bargain hunting to consistently pare losses.”

China Gold Reserves Up 57% Since 2009

In its first disclosure in 6 years, China has revealed that it has increased its Gold reserves 57%, overtaking Russia to become the country with the 5th-largest hoard (the U.S. has the largest reserves at 8,133.5 tons according to data from the World Gold Council)…China has boosted its bullion assets to 1,658 metric tons (53.31 million fine troy ounces), the People’s Bank of China said in a statement today…that’s an increase from 1,054 tons (33.89 million fine troy ounces) in 2009, when it last updated the figures…some analysts had speculated China might actually hold reserves well in excess of 2,000 metric tons, so the updated number today is a disappointment to some…nonetheless, it’s obvious China has been stockpiling Gold as part of its plan to diversify its foreign-exchange reserves…policymakers are pressing to add the yuan to the International Monetary Fund’s basket known as the Special Drawing Right, which includes the dollar, euro, yen and British pound…

China is pushing hard for a greater role for its currency globally, and that means greater transparency is critical – hence the decision to update the world now as to its current Gold reserves…

Platinum prices have fallen to their lowest level since February 2009, dipping slightly below $1,000 per ounce as investors continue to lose faith in the fundamental demand outlook…output from South African Platinum producers has been rising this year after crippling strike action in 2014…in addition, Chinese jewellery consumption has been soft, while indications of a slowdown in the global car industry, which uses the metal in catalytic converters, is also undermining sentiment toward the metal, according to various analysts…

Today’s Equity Markets

Asia

China’s Shanghai Composite jumped 134 points or 3.5% overnight to finish the week at 3957, about 100 points below key resistance…is this just a “dead cat bounce” or the actual beginning of a major turnaround in the Shanghai after a 30% plunge to cleanse temporarily very overbought conditions?…we’ll likely find out in the coming weeks…the Shanghai really needs to push through the 4050 level to prove this might not be a “sucker’s rally”…

Europe

European markets were mixed today…the ECB re-opened financial lifelines to Greece following its approval of reforms in a fraught parliamentary vote…

The British pound has enjoyed its best week against the euro since 2011…Bank of England governor Mark Carney has spent the week preparing UK investors for higher interest rates, saying the time for such a move will become much clearer by the end of the year…the central bank’s key interest rate has been stuck at 0.5% since March 2009…

“The need for the bank rate to rise reflects the momentum in the economy and a gradual firming of underlying inflationary pressures,” Carney stated in a speech yesterday…

North America

The Dow is off 70 points as of 8:00 am Pacific…in Toronto, the TSX has lost 118 points while the Venture has retreated 4 points to 635…

Economists anticipate that the housing market will mitigate the drag on the U.S. economy from a struggling manufacturing sector…U.S. housing starts rebounded strongly in June, in line with expectations, and building permits surged to a near 8-year high…

U.S. consumer prices rose for a 5th straight month in June as the cost of gasoline and a range of other goods increased, further signs of firming inflation that could strengthen the Fed’s case for an interest rate hike by year-end…the Labor Department said this morning that its Consumer Price Index rose 0.3% last month after increasing 0.4% in May…last month’s increase pushed the year-on-year CPI rate into positive territory for the 1st time since December…has the energy-driven disinflationary trend reversed?…too early to tell just yet, and Crude prices are vulnerable to a fresh slide, but a report Wednesday showed producer prices rose in June for a 2nd straight month…

NASDAQ Ready To Surge?

It has been a good week for the NASDAQ…John’s Wednesday chart showed a rapidly growing opportunity of a new high in the index, and that’s what has occurred with the index hitting 5196 in early trading today with the biotech and tech leading the way…Google (GOOG, NASDAQ) has surged by more than 10% after reporting better than expected earnings yesterday…

The NASDAQ is on track to confirm an important breakout today above Fib. resistance at 5132…

The Venture’s 39-Week Cycle

We’ve shown this on several occasions before – the Venture’s really odd but obvious 39-week cycle going back nearly 15 years…roughly every 39 weeks, there’s a trend reversal as you can see in this weekly chart below (the blue vertical lines define each 39-week period)…what this is telling us right now is that an important bottom could form in the Venture during very early September, with a reversal at that point to the upside going into the end of the year…note the current RSI(14) downtrend line from the 2014 high…the next 39-week cycle is when this downtrend line should be overcome…

Deveron Resources Corp. (DVR, TSX-V) Update 

We believe we’ve uncovered something quite intriguing here, and we have mentioned it before at lower prices…now it’s looking even more interesting…Deveron Resources (DVR, TSX-V) is one of the few companies on the Venture that hasn’t obliterated its share structure over the last 2+ years, and it has been a top-performing stock over the last few months despite no news…the chart tells us there are expectations for some developments here – Deveron only has 11.8 million shares outstanding, and out of that the public float is only around 3 million shares…so this is a “tight” deal trading above its late 2012 IPO price (25 cents) with strong financial backing – an attractive vehicle for a smart entrepreneur to making something happen…

This 2.5-year weekly chart shows a confirmed breakout above 25 cents with 2 measured Fib. resistance levels…this obviously isn’t a big volume play given the small float, but the share structure gives it very explosive upside potential in the event there is the right news to drive it…

DVR is off 2 pennies at 27 cents as of 8:00 am Pacific…

Tribute Pharmaceuticals Inc. (TRX, TSX-V) Update

A non-resource play that has been a spectacular performer this year…John warned about the overbought conditions that emerged last month, but an “unwinding” of that has occurred and Tribute Pharmaceuticals (TRX, TSX-V) is once again attempting to push through Fib. resistance just below $2.10…

TRX is down 2 cents at $2.05 through the 1st 90 minutes of trading…

BitGold Inc. (XAU, TSX-V) Update 

Hard to put a value on this one, which is one reason why there has been so much intrigue surrounding BitGold (XAU, TSX-V) – and why it’s so important to follow the technicals with this particular play…

XAU has been volatile, racing strong out of the gate in May to $8 a share from $2.35 in 5 days, and then retracing to strong support at the Fib. 23.6% level…recently, it has broken out and is now resting the top of cup resistance at $6.50…

XAU is down 22 cents at $6.00 as of 8:00 am Pacific…

Walker River Resources Corp. (WRR, TSX-V) Update 

Walker River Resources (WRR, TSX-V) has shown some life this week, trading as high as 3.5 cents with more than 2 million shares changing hands yesterday…keep in mind, 2-cent paper from the March financing is now free-trading, so there’s a process involved in terms of cleaning that up…the company has yet to announce the start of drilling at its promising Lapon Canyon Property in Nevada…we’ll be watching events very closely when they do…

Technically, key near-term resistance for WRR is 3.5 cents…

WRR is unchanged at 2.5 cents as of 8:00 am Pacific…

Note:  John and Jon both hold share positions in DVR and WRR.

Gold has traded between $1,141 and $1,148 so far today, hitting an 8-month low…as of 10:00 am Pacific, bullion is down $4 an ounce at $1,145…Silver is off 8 cents at $15.01…Copper is up a penny at $2.51…Crude Oil is 29 cents lower at $51.12 while the U.S. Dollar Index has climbed one-third of a point to 97.64…

The Gold market may come to depend on emerging market physical demand even more than usual as other investment demand lags, and this EM demand should pick up in the months ahead, according to HSBC…

“Indian Gold demand has been weak, as denoted by a steep discount to world prices in Mumbai and other Indian Gold trading centers,” the bank stated…as of yesterday, the discount on Gold had narrowed to $4 from $6, suggesting a mild recovery in demand. “The improved monsoon and better prospects for a good harvest and hence potentially greater demand for Gold from the rural sector may have played a role in the narrowing of the discount,” HSBC stated…

Time for a little humor this morning after all the serious events so far this week…

The “Quote Of The Day” goes to Calgary-born Texas Senator Ted Cruz, running to be the Republican nominee for U.S. President, who was speaking at the Delivering Alpha conference presented by CNBC and Institutional Investor:  “You want to sum up this race in one simple meme? It’s one we tweeted out,” Cruz added. “Reaganomics, you start a business in your parents’ garage; Obamanomics, you move into your parents’ garage.”

Meanwhile, a reader with an obvious sense of humor (and perhaps some sort of message regarding situations we see pop up in the mining industry?) sent us this “Toddler Property Laws” declaration this morning (anyone with a young child will especially appreciate this):

Rhodium Roars Back

The best asset over the past week is a metal many people have never even heard of – Rhodium…one of the rarest precious metals, Rhodium has soared 29% in the 5 days through yesterday, beating every single stock in the MSCI World Index, all currencies and major commodities, according to Bloomberg…while the market for rhodium is tiny and doesn’t trade on an exchange, a fund that holds the physical metal rose 23% since July 9, and shares of producers climbed…

Low prices are attracting companies that use Rhodium for catalytic converters in cars, according to Jonathan Butler, a precious-metals strategist at Mitsubishi Corp. in London…the metal plunged to an 11-year low earlier this month on forecasts that South Africa, the biggest producer, is increasing production at the fastest pace in 2 decades…

The 5-day advance in Rhodium was the biggest in 6 years…before this month’s rebound, the metal had fallen almost 50% since August 2014…

What Minerals Could Be On Pluto?

An important discovery on Pluto as mankind’s 1st close-up look at the far-away planet did not disappoint yesterday…:the pictures showed ice mountains on Pluto about as high as the Rockies and chasms on its big moon Charon that appear 6 times deeper than the Grand Canyon…

Especially astonishing to scientists was the total absence of impact craters in a zoom-in shot of 1 otherwise rugged slice of Pluto…that suggests that Pluto is not the dead ice ball many people think, but is instead geologically active even now, its surface sculpted not by collisions with cosmic debris but by its internal heat, the scientific team reported…

New Horizons’ cameras can see features as small as a city block…this probe will also examine what minerals are present on Pluto and its moon Charon…

Breathtaking in their clarity, as you can see above, the long-awaited images were unveiled in Laurel, Maryland, home to mission operations for NASA’s New Horizons, the unmanned spacecraft that paid a history-making fly-by visit to the dwarf planet on Tuesday after a journey of 9½ years and 3 billion miles…it got as close as 12,500 km and grabbed a huge volume of data…

“I don’t think any one of us could have imagined that it was this good of a toy store,” principal scientist Alan Stern said at a news conference…he marveled, “I think the whole system is amazing…the Pluto system IS something wonderful.”

John Spencer, also a scientist at the Southwest Research Institute, called it “just astonishing” that the 1st close-up picture of Pluto didn’t have a single impact crater….Stern said the findings suggesting a geologically active interior are going to “send a lot of geophysicists back to the drawing boards.”

Spencer told journalists that the first close-up image of Pluto’s surface showed a terrain that had been resurfaced by some geological process – such as volcanism – within the last 100 million years…this active geology needs some source of heat…previously, such activity has only been seen on icy moons, where it can be explained by “tidal heating” caused by gravitational interactions with a large host planet…

“You do not need tidal heating to power geological activity on icy worlds.  That’s a really important discovery we just made this morning,” said Dr. Spencer…

U.S. Dollar Index Update

Fed Chair Janet Yellen’s Congressional testimony that started yesterday gave dollar bulls encouragement, and the Dollar Index appears to be gearing up for another test of major resistance in the high 90′s as you can see in John’s updated 9-month daily chart below…the U.S. economy can’t really afford to have another major breakout in the greenback, so it’ll be interesting to watch how this plays out as the quarter progresses…

Meanwhile, Republican Sen. Pat Toomey said today, during an interview on CNBC’s “Squawk Box“,  it’s “unbelievable” that interest rates remain so low and it’s time to end the Federal Reserve’s “subjective” moving of the goal post…

“The Fed no longer has credibility, and you can see that. The divergence between the futures markets and the Fed’s own projections about what they’re going to do about interest rates—this is a huge problem,” Toomey stated.

Crude Oil Update

WTIC is desperately trying to hold within a key Fib. support band between $51.72 and $54.08…a now declining 50-day moving average (SMA) is putting fresh pressure on Crude Oil prices, though RSI(14) has recently bounced off previous long-term support…still, a confirmed technical breakdown here below $52 is a real possibility and that would set the stage for a test of the Fib. support at $48.70…below that, next support is $44…

Canadian Dollar-CRB Comparative Chart

The Canadian dollar has fallen below some key support at 78, following the Bank of Canada’s rate cut yesterday, and the prospect of a 70-cent dollar at some point down the road certainly can’t be ruled out given the bearish overall technicals…quite simply, the loonie just hasn’t bottomed yet…

That raises another question – given the close correlation between the Canadian dollar and the CRB Index, will the CRB retest key support at the 200 level (post-Crash low)…it’s currently at 216…

Today’s Equity Markets

Asia

China’s Shanghai Composite gained 18 points overnight to close at 3824 while Japan’s Nikkei rose 137 points to 20600…

Europe

European markets were up strongly today after the Greek parliamentary vote followed by the ECB extending its emergency funding for the stricken country’s banks…Greece’s Parliament last night passed austerity measures needed to secure a fresh bailout, but a rebellion within the ruling Syriza party is testing whether Prime Minister Alexis Tsipras can hold his government together…the measures, which include steep spending cuts and tax increases, were approved by 229 lawmakers in the country’s 300-seat Parliament…Greek anti-establishment protesters threw stones and dozens of petrol bombs at police in front of parliament on Wednesday before a key vote on a bailout deal, in some of the most serious violence in more than 2 years…

North America

The Dow is up 38 points as of 10:00 am Pacific…in Toronto, the TSX has climbed 57 points while the Venture is down 3 points at 640…Walker River Resources (WRR, TSX-V), which has an excellent chance at a discovery in Nevada, is a volume leader this morning, up a penny at 3 cents on total volume (all exchanges) of more than 2 million shares…no announcement yet on the start of actual drilling at Lapon Canyon…Temex Resources (TME, TSX-V) is up sharply this morning on a superior offer from Lake Shore Gold (LSG, TSX) – another sign there is good value out there in the industry…

B.C. Reports Large Budget Surplus

B.C. Finance Minister Mike de Jong announced yesterday that the province’s budget surplus hit $1.68 billion, significantly higher than the original forecast of $184 million…he announced the $1.5 billion surplus increase for the 2014-2015 budget as he released the government’s public accounts numbers for the fiscal year that ended in March…

“We are better positioned than virtually any other jurisdiction in the country,” De Jong said about B.C.’s budget. “No one else is looking at these numbers.”

The province’s economy grew 2.6% in the past year, which is slightly better than the national average of 2.4%, he said…

Total debt has increased to $63 billion, but debt-servicing costs are dropping and saving “hundreds of millions of dollars a year,” de Jong said…B.C.’s debt-ratio costs are 17.5%, with only Newfoundland and Labrador, Saskatchewan and Alberta lower, while Quebec and Ontario are at 49%…

Integra Gold Corp. (ICG, TSX) Update 

So far this year, Integra Gold (ICG, TSX-V) has completed 49,650 m of diamond drilling in 113 holes at its Lamaque South Gold Project near Val d’Or with up to 8 drill rigs operating on multiple targets…1 drill rig is currently operating at the Parallel Zone with the plan to ramp things up again with 4 to 5 drills fully operational at Lamaque by September…

Technically, the recent decline in the Venture has sent ICG into a strong area of support in the mid-to-upper 20’s (the rising 200-day SMA is 26.5 cents)…

ICG is unchanged at 28 cents as of 10:00 am Pacific…

Niogold Corp. (NOX, TSX-V) Update

With Sean Roosen and Robert Wares at the helm, it’s hard to believe that Niogold Mining (NOX, TSX-V) won’t remain a leader in this market…drilling continues to uncover high-grade shoots surrounded by lower-grade halos that characterize the wider, mineralized shear zones at Niogold’s 100%-owned Marban deposit in northwest Quebec…10 days ago, the company announced preliminary leach test results showing average recoveries around 88% to 89%, comparable to Canadian Malartic ore under similar leach times and cyanide consumption levels…

Technically, NOX has performed exceptionally well in turbulent markets since the beginning of last year…look at the steady uptrend in the 2+ yearly chart below…consistently, NOX has found strong support at its rising 200-day SMA, currently 34 cents…

Excellent possibilities here for the balance of 2015 and a breakout above key resistance at 44 cents…a more robust resource model for Marban appears to be on track for later this year…

NOX is down a penny at 39 cents as of 10:00 am Pacific…

Note:  John and Jon both hold share positions in WRR.

 

Gold has traded between $1,142 and $1,156 so far today…as of 9:00 am Pacific, bullion is down $10 an ounce at $1,145 after some bearishly interpreted remarks this morning from Fed Chair Janet Yellen…Silver is off 35 cents to $15.02…Copper is flat at $2.51…Crude Oil is 89 cents lower at $52.15 while the U.S. Dollar Index has added half a point to 97.12…

Gold came under mild pressure immediately following the release of a prepared text for Yellen’s speech to Congress as she begins 2 days of testimony before lawmakers, initially before the House Financial Services Committee (started at 7:00 am Pacific) and then tomorrow afternoon before the Senate Banking Committee…

Yellen said the U.S. central bank was on a path to raise short-term U.S. interest rates this year as the domestic economy improves even against a backdrop of global threats, largely sticking to a script she laid out in a speech last week…

“If the economy evolves as we expect (our emphasis), economic conditions likely (our emphasis) would make it appropriate at some point this year to raise the federal-funds rate target, thereby beginning to normalize the stance of monetary policy,” Yellen said in a prepared text for her semi-annual testimony to Congress.  “Indeed,” she added,  “most participants in June projected that an increase in the federal funds target range would likely become appropriate before year-end.”

We’ll see if the Fed actually has the courage later this year to hike rates for the 1st time since 2006 – we doubt it has the will, especially given uncertainty in the global economy and the negative affects of a strong dollar…ironically, the higher the dollar climbs on speculation of a rate hike, the less likely a near-term rate hike becomes…

Did China Inflate Growth Figures?

China’s economy allegedly grew 7% on year in the April-June period, unchanged from the previous quarter but slightly better than estimates from Reuters for a 6.9%  rise…a spokesperson for the country’s statistics bureau insisted that the figure was accurate (of course), denying accusations that it was inflated, Reuters reported…other data released today showed June industrial output and retail sales also beating forecasts…we know the Chinese government is manipulating equity markets in that country…why should we not expect that they are also manipulating economic growth figures, especially at this sensitive time?…

Today’s Equity Markets

Asia

China’s Shanghai Composite slipped 119 points overnight to close at 3806 despite news yesterday that 2 Chinese funds – China Asset Management and Harvest Fund Management – are ready to buy stocks after raising $6.4 billion each sparked speculation that the money might be from government-backed institutions, Reuters reported…

Japan’s Nikkei added 78 points to close at 20463…

The Bank of Japan today slashed its outlooks for country’s economic growth and inflation, reflecting slowing exports and output amid a tepid overseas economic recovery, while maintaining its large-scale monetary easing policy…the BOJ said after the end of a 2-day monetary policy meeting that it now expects the economy to grow 1.7% in this fiscal year, down from the 2% forecast in late April, and consumer prices to rise 0.7% and 1.9% in fiscal 2015 and 2016, respectively, below the bank’s target of achieving 2% inflation in the first half of fiscal 2016…

Europe

European markets were up slightly today…

Amid a fractious political environment in Greece, Prime Minister Alexis Tsipras has defended the 86 billion euro ($95.2 billion U.S.) bailout deal, saying the deal he struck with lenders at the weekend was necessary to avoid exiting the euro…legislation on widespread reforms and spending cuts must be passed by the Greek parliament by tonight for Greece to secure its 3rd bailout…hardliners in Tsipras’ Syriza party who oppose more cuts are expected to defect during the vote…

North America

The Dow is up 7 points as of 9:00 am Pacific…the manufacturing sector in the New York region appearst to be finding some momentum in July as it managed to reversing the losses seen last month, slightly beating expectations, according to the latest data from the New York Federal Reserve…the general business conditions index in the Empire State manufacturing survey rose to to a reading of 3.9 in July, compared to June’s reading of negative 2%..

Bank of Canada Rate Cut

In Toronto, the TSX has climbed 73 points while the Venture is flat at 645…NexGen Energy (NXE, TSX-V) is up a penny at 86 cents, and has confirmed a breakout (re: John’s chart Monday) above Fib. resistance at 83 cents…

Bank of Canada governor Stephen Poloz cut the central bank’s trendsetting interest rate today by 25 basis points to 0.50%, a move that was generally expected among forecasters…Poloz also joined most analysts in predicting the economy fell back into a recession in the first 2 quarters of 2015 – the first time that has happened, “technically” at least, in 6 years…

NASDAQ 1-Year Weekly Chart

The NASDAQ is currently 11 points higher at 5116 and is looking increasingly bullish as it flirts with Fib. resistance at 5131…appears a breakout above this level is in the works…

Doubleview Capital Corp. (DBV, TSX-V) Update

We expect to have a fresh update by tomorrow on our continuing research into the Sheslay district situation after last week’s blockade and interruption of drilling at Doubleview Capital’s (DBV, TSX-V) Hat Project…as DBV stated, it’s reviewing all of its options to resume drilling as quickly as possible…armed with multi-year exploration and drilling permit MX-1-872, DBV has the full legal authority to resume drilling and BMR has confirmed this through government sources…

Public statements by Tahltan Central Council President Chad Day are inconsistent with many facts as we have already laid out, which is actually a disservice to his own Tahltan Nation…in our view, he is clearly using one of Canada’s premier exploration hotspots to strong-arm the province into a deal with the Tahltan Nation on a broad land use agreement covering all of Tahltan territory…this puts an even greater stamp of value on the prolific Sheslay district, a fact that Doubleview and Garibaldi Resources Corp. (GGI, TSX-V) shareholders need to appreciate…

We fully support the Tahltan Nation’s right to a sustainable future in their traditional territory…we have met many wonderful Tahltan people during our 2 years of coverage of the Sheslay district and its potential to become a new world class mining camp to the benefit of both the Tahltan and all British Columbians…

However, we have deep concerns over Chad Day’s militant actions (as even a growing number of Tahltan do), and if you share those concerns we strongly suggest you contact the following (our readers can make a difference here…we encourage you to pick up the phone and contact the B.C. government departments listed below – they do like to hear from the public – and lend your support to both Doubleview and Garibaldi, and district landholders in general)…

Kate Mussgrove – Executive Administrative Asst. For Mines & Mineral Resource Division:  1.250-952-0470

In addition, MARR (B.C. Ministry of Aboriginal Relations and Reconciliation):  1.250-847-9289

Below is an updated 2-year weekly DBV chart…strong technical support has been underpinning DBV since last week’s blockade news…note the horizontal channel in place since the beginning of the year…

DBV is unchanged at 13 cents as of 9:00 am Pacific…

Richmont Mines Inc. (RIC, TSX) Update

Richmont Mines (RIC, TSX) is holding steady this morning…of course there is some weakness in Gold in U.S. dollars but not Canadian, and that’s important regarding Richmont – exceptionally strong fundamentals and technicals with this exclusively Canadian producer…

On Monday, Richmont reported record quarterly performance metrics at its Island Gold mine (northern Ontario) of 14,997 ounces of Gold produced and an average daily mill throughput of 787 tonnes per day during the 2nd quarter of 2015…on a consolidated basis, the corporation’s second quarter 2015 Gold production totaled 26,314 ounces and Gold sales attained 27,566 ounces…this generated consolidated revenues of $40.6-million during the 3-month period, a new quarterly record for the corporation…

Richmont has a very healthy balance sheet including a cash balance of approximately $78 million as of June 30th, compared with $70.7 million at the end of March…

Technically, it appears RIC is poised to gain traction above a bullish downsloping flag as you can see on this 4-year weekly chart…

RIC is off 2 pennies at $4.09 as of 9:00 am Pacific…

Klondex Mines Ltd. (KDX, TSX) Update

Klondex Mines (KDX, TSX) has been another strong performer in the weak Gold price environment over the last year, given its high-grade operation in Nevada, and many analysts jumped all over this one to the point where overbought technical conditions emerged during Q2 as KDX surged to a multi-year high of $3.50 last month…a healthy pullback has been underway since then…a retreat to the nearest Fib. support level could occur, or at least a test of the rising 100-day moving average (SMA) around $3.00…

KDX is unchanged at $3.25 as of 9:00 am Pacific…

Cannabix Technologies Inc. (BLO, CSE, BLOZF, OTC) Update

The company that stands to benefit enormously from the growing social acceptance of marijuana is Cannabix Technologies (BLO, CSE) which has been extremely volatile since debuting on the CSE early last summer…development of BLO’s groundbreaking technology – a marijuana breathalyzer – is proceeding methodically (though never quickly enough for investors) with an alpha protoype recently unveiled…the company continues to work toward a beta version acceptable for 3rd party testing to assess the operability and measurement precision of the device for use by law enforcement…

BLO raced from a low of a nickel late last year to a high of 77 cents in February…it plunged to strong support in the mid-teens in late June and then put in a bullish engulfing reversal pattern, as John demonstrated, after an intra-day low of 13 cents June 24 followed by a strong close at 17 cents…

What’s encouraging about this updated chart (based on U.S. currency, OTC listing) is the move above resistance at the bottom of the flag…the key with BLO has been to take advantage of the high volatility in this play, and accumulate during periods of weakness and oversold conditions…

BLO is up a penny on the CSE at 21 cents as of 9:00 am Pacific…

Note:  John and Jon both hold share positions in DBV and GGI.  Jon holds a share position in BLO.

Gold has traded between $1,152 and $1,160 so far today…as of 10:50 am Pacific, bullion is down $4 an ounce at $1,154…Silver has retreated 16 cents to $15.34…Copper is off 2 pennies at $2.51…Crude Oil has reversed higher, up 60 cents at $52.80 while the U.S. Dollar Index has fallen one-third of a point to 96.66 on disappointing U.S. retail sales numbers…

Holdings in global Gold ETFs are showing tentative signs of stabilizing, as flows turned positive yesterday for the 1st time since June, according to UBS…most of the buying came from SPDR Gold Shares, the world’s largest Gold ETF…SPDR’s website shows an inflow of 1.49 metric tons of Gold yesterday…UBS says although the total flow of 65,000 ounces globally “is not a substantial volume, it more or less offsets the net outflow from last week.”

So far this month, Gold ETFs have declined by a total 114,000 ounces, continuing the trend from May, UBS stated. “Year to date, ETF positions are essentially flat,” UBS says. “We continue to expect Gold ETFs to show a modest recovery this year.”

Oil Update  

WTIC has reversed its earlier losses after Tehran and 6 global powers reached a landmark nuclear deal that left sanctions on Iran in place for now, continuing to limit its Crude exports…how the Republican controlled U.S. Congress will view this agreement will be quite fascinating to know…

The Oil market will be looking out next for an industry group report due later today that will indicate supply-demand for U.S. Crude…the American Petroleum Institute’s report for last week will land ahead of official Crude inventory data due tomorrow from the U.S. government…

Saudi Arabia has borrowed $4 billion from local markets in the past year, selling its first bonds for 8 years as part of efforts to sustain high levels of public spending amid weak Oil prices…Fahad al Mubarak, the governor of the Saudi Arabian Monetary Agency, said the government would use a combination of bonds and reserves to maintain spending and cover a deficit that would be larger than expected…Saudi Arabia needs an Oil price of $105 a barrel to meet planned spending requirements, but the average price for the year is estimated at $58 a barrel, he said…it’s believed that if the government continues business as usual and draws done like this it will deplete reserves faster than expected, by the end of 2018 or early 2019….in the late 1990‘s, domestic debt had risen to about 100% of GDP in Saudi Arabia…that figure had fallen to only about 1.6% of GDP at the end of 2014…

Today’s Equity Markets

Asia

The “Dangerous” Shanghai Composite

A few analysts are comparing the current situation with the Shanghai Composite to that of the Dow evolved in 1929…we’re not ready to draw that comparison yet, but the Shanghai certainly isn’t out of the danger zone after authorities threw everything they could at this market since last week to prop it up from the key 3400 support level…government manipulation like that has the potential to backfire – traders also sense “desperation”…

The bounce up from 3400 wasn’t surprising, especially given the very oversold conditions that emerged on short-term charts after the 30% slide…what we believe has been occurring in recent days is a “B” wave correction to the upside that should encounter stiff resistance around 4055…then, watch out…this rally is weak given the flat RSI(14)…at the very least it’s reasonable to expect a retest of the 3400 area, and perhaps a panic among Shanghai investors if the index can’t hold that level…keep in mind, margin levels are still very high in this market…

The Shanghai closed down 44 points overnight at 3926…

Europe

European markets were mixed today with Greece and Iran in focus…there are concerns that Greek Prime Minister Alexis Tsipras could face a revolt from his own party over the terms of the 86 billion euro ($95.2 billion U.S.) bailout deal…

North America

The Dow is up 62 points as of 10:50 am Pacific…U.S. retail sales unexpectedly fell in June as households cut back on purchases of automobiles and a range of other goods, another sign the economy is a little wobbly…the Commerce Department said this morning that retail sales slipped 0.3% last month, the weakest reading since February…May’s retail sales were revised down to show them rising 1% instead of the previously reported 1.2% jump…economists polled by Reuters had forecast retail sales rising 0.2% last month…

In Toronto, the TSX is up 47 points while the Venture has added 2 points as of 10:50 am Pacific…

Tahltan-Sheslay District-Doubleview Capital Corp. (DBV, TSX-V) Update – Another Bombshell

The facts continue to pile up that Tahltan Nation President Chad Day is engaging in a public misinformation campaign while using the dynamic Doubleview Capital (DBV, TSX-V) Hat Project discovery and the prolific possibilities of the Sheslay district in general as weapons of leverage against the B.C. government over a broader Tahltan territory land use agreement that Day is hoping to seal with the province, as we outlined yesterday…is this “economic terrorism?”…you be the judge…don’t forget, a long-term employee of the Tahltan (THREAT project manager, involved in land use issues for the Tahltan, abruptly resigned last month)…there are clearly internal Tahltan divisions over Day’s militant actions…

This morning, we begin to take a closer look at the news release put out by Day a week ago while he made his 1st-ever visit to the Hat Property with a group of selectivity chosen activist Elders to stage a blockade (a “media show”) to interrupt drilling at a key moment for DBV…the illegal blockade was also, in effect, a blockade against other Tahltan as 3 of the 4 members of the Tahltan Services drilling team were Tahltan…1 of them speaks out this morning in another BMR exclusive…

Day’s July 8 News Release

“TCC President Chad Day also issued an open letter to the Province and a junior mining company Doubleview,” the July 8 news release stated, “reminding them of the Tahltan Nation’s requirement (our emphasis) that all mining activity in the Sheslay stop.”

Note that in his May 21 letter, the 1st time he ever raised objections to exploration in the district, Day stated, “We respectfully request (our emphasis) that you refrain from proceeding with any mineral exploration activities in the region while we work to negotiate formal arrangements with the province” (he didn’t send this letter to Teck Corporation by the way, and the letter has also now been removed from the Tahltan website)…

Last week’s news release continued, “The TCC has repeatedly asked (our emphasis) for Doubleview’s drilling rig to be removed because the Tahltan Nation strongly opposes mineral exploration in the area surrounding the Sheslay River” (“repeatedly” gives the impression of a process that has carried on for a considerable period when, in fact, May 21 was the 1st time Day ever raised any concerns)…

Furthermore, what exactly does Day mean by the “area surrounding the Sheslay River”?…keep in mind, the Hat discovery is approximately a whopping 18 km southeast of the Sheslay River (the river itself by existing B.C. laws is already protected)…

Of course, as we pointed out yesterday, Day has no credibility when he states the Tahltan oppose mineral exploration in the general district because this was certainly never made known by the Tahltan during the various permitting processes…in addition, the Tahltan, through their business arm – the Tahltan Nation Development Corporation (TNDC) and other exploration-related services – have actually been active participants in the ramping up of drilling and other work in the area over the last 2 years with no objections (not even from Day – until May 21 – after he was elected TCC President in July of last year)…heck, even Day’s uncle, Roderick (Roddy) Day, is one of the Tahltan who has enjoyed the benefits of employment from this exploration…

Then there are the historical facts – all the Tahltan exploration and development-related activity in the district going back more than half a century including the building of the Golden Bear mine road in the late 1980‘s that led to the past-producing Golden Bear high-grade Gold mine east of Garibaldi Resources‘ (GGI, TSX-V) Grizzly Project…there was also a bridge built over the Sheslay River (yes, the infamous Bridge Over The River Sheslay) to help connect the access road to that mine…the Tahltan carried out regular maintenance on that access road as well, earning income from their work…

“Traditionally,” Day’s news release continued, “Sheslay was occupied by the western Tahltan people. There are grave sites for many of the Tahltan clans here (our emphasis) and the whole area was occupied and used. Today, Sheslay remains an important cultural, spiritual and traditional use area to the Tahltan people.”

We’re going to explore that rich statement above in more detail in the days ahead, beginning this morning, as it commands some serious attention, though no one is disputing that Doubleview, Garibaldi and others – including Teck which hasn’t been singled out by Day – are exploring in Tahltan traditional territory (that’s different from any legal title)…of course DBV and GGI have the full legal authority to drill as they’ve received multi-year permits from the B.C. Ministry of Energy & Mines and the Tahltan were included in the consultation process as required…

Significantly, of course, no objections to Hat or Sheslay district exploration were raised by the Tahltan or Day until late May following fresh results from the Hat (H-23) and public disclosure by Doubleview on April 21 that “the company believes that the Hat property may be host to a major, world-class deposit.”

On the subject of burial sites, which Day’s news release implies exist perhaps all over the Hat Property, click on the arrow below to listen to a portion of an exclusive BMR interview with a Tahltan driller who has extensive experience drilling at the property and was part of the crew that was shut down last week…

Click on the arrow to listen:

A Call To Action

If you’re as fed up as we are with Chad Day’s antics which are in reality embarrassing his own people – we’ve met many wonderful Tahltan individuals, and we fully support the Tahltan Nation’s right to a sustainable future – we suggest you contact MARR (B.C. Ministry of Aboriginal Relations and Reconciliation)…a spokesperson for the B.C. Ministry of Energy & Mines recommended to BMR that citizens interested in the Sheslay district controversy contact MARR, which has also indicated it enjoys hearing from concerned individuals…so go for it…

MARR Contact Person:  Fred Oliemans, Smithers office:  1.250.847.7289

Gold In Canadian Dollars

Typically, we look at Gold in U.S. dollars…today, an updated 2.5-year weekly Gold chart in Canadian currency…given the drop in value of the loonie, Canadian producers with their cost structures in line (helped by weak Oil prices) are doing very well with Gold currently around $1,475 CDN…

A symmetrical triangle has formed in this chart – watch for a potential confirmed breakout above this triangle and Fib. resistance at $1,471…in general, these are bullish technicals for Gold when expressed in Canadian currency…

Claude Resources Inc. (CRJ, TSX) Update

Claude Resources (CRJ, TSX-V) has stabilized this morning after dropping 5% yesterday on news that the company is temporarily suspending underground mining operations at its Seabee Gold mine in northern Saskatchewan due to nearby forest fires (8 km away)…however, production from the mill has not been affected, and the facility will continue to operate…CRJ currently has a stockpile of approximately 10,000 tonnes of ore available on surface, representing 12 days of production…the company also confirmed that at this time it expects to meet its production guidance for the year…

Like Richmont Mines (RIC, TSX), Claude has been a stellar performer since last year thanks to improving fundamentals…technically, it’s sort of “teetering on the edge” of some important support – RSI(14) and the price uptrend line in place since last summer…in the worst-case scenario, we see Fib. support holding at 55 cents which is also just above the rising 200-day moving average (SMA)…

CRJ is up a penny at 66 cents as of 10:50 am Pacific…

Reservior Minerals Inc. (RMC, TSX-V)

Another high-quality situation that should be on everyone’s radar screens – Reservoir Minerals (RMC, TSX-V)…

Reservoir, which had $35 million in working capital as of the end of February, is in a JV with Freeport-McMorRan (FCX, NYSE) at its Timok Project in Serbia…the major is the operator (assuming all expenses) and an $18.7 million U.S. budget was approved to advance this project in 2015…

Reservoir climbed as high as $7.43 last year before falling by more than half as the overall market tanked in Q4…very oversold conditions (September to early November) mirrored the overbought conditions that emerged in February/March 2014 when it was a good time to take profits…

RMC has regained its footing and appears to be gearing up for a solid finish to 2015 over the next 5-and-a-half months…

Buy pressure is steadily increasing, the stock successfully broke above its downtrend line, and the 200-day SMA is also starting to reverse to the upside…

RMC is up a penny at $4.41 as of 10:50 am Pacific…

Tribute Pharmaceuticals Canada Inc. (TRX, TSX-V) Update

John gave the correct warning signal when high-flying Tribute Pharmaceuticals (TRX, TSX-V) hit and briefly surpassed Fib. resistance at $2.09 while in a very temporarily overbought state…TRX found support at the $1.70 level and is regaining momentum…a confirmed breakout above the nearest Fib. resistance ($2.09) would be another bullish development here…

TRX is down 2 cents at $1.90 as of 10:50 am Pacific…

Note:  John and Jon both hold share positions in DBV.

Gold has traded between $1,150 and $1,165 so far today…as of 11:15 am Pacific, bullion is down $7 an ounce at $1,156…Silver is off 13 cents at $15.49…Copper is 2 cents higher at $2.53…Crude Oil is flat at $52.57 while the U.S. Dollar Index has jumped more than three-quarters of a point to 96.83…

Gold-mining companies are “far more prepared” for lower prices than the markets may perceive, according to a report issued today by analysts from BMO Capital Markets.  “Our view is that the precious-metal miners as a group are far more prepared for lower Gold and Silver prices than the market perceives.  However, the stark reality is that some precious-metal miners are better prepared than others to weather lower metal prices.

“The analysis of FCF (free cash flow) breakeven price suggests that 50% of the Gold miners generate free cash flow below $1,150 (U.S.) with an average FCF breakeven Gold price of $1,135 for 2016E,” the report stated.   “Excluding dividends, the FCF breakeven Gold price for the miners declines to $1,070/oz in 2016E.

“Companies with the lowest FCF breakeven Gold price include RandGold (GOLD-LSE), Lakeshore Gold (LSG-TSX), Tahoe (THO-TSX) and Primero (P-TSX).”

Over the next 5 years, the outlook for Gold producers looks to be more positive with 86% of the miners expected to achieve a FCF breakeven Gold price below spot Gold, BMO reported.

Gold Comparative Chart In U.S. Dollar, Euros, CDN Dollar

Below is a 17-month weekly Gold chart showing how the yellow metal has performed vs. the U.S. dollar, the euro, and the Canadian dollar…

Gold is down just 6% vs. the U.S. dollar during this period, despite a record run by the greenback that began in the summer of last year…bullion has appreciated substantially when measured in euros (up 14.5%) and in Canadian dollars (up almost 12%)…

Certain Canadian Gold producers look particularly attractive considering bullion has climbed moderately in Canadian dollar terms while Crude Oil prices (major cost component) have declined substantially…

Near Total Capitulation By Greece

Some tough medicine to swallow for far-left Greek Prime Minister Alexis Tsipras whose strategy with euro zone leaders appears to have backfired…another Marxist gets a lesson in how the real world works…

Euro zone leaders said they would give Greece up to 86 billion euros ($96 billion U.S.) in fresh bailout loans as long as the Tsipras government manages to implement a round of punishing austerity measures in the coming days…

The rescue deal was hammered out after 22 hours of tense negotiations between the currency union’s leaders and finance ministers, and requires the Greek government’s near-total surrender to its creditors’ demands…but it gives the country at least a fighting chance to hold on to the euro as its currency…

“The deal is hard,” Mr. Tsipras admitted after the summit, warning that the measures required by creditors will send the country’s economy further into recession…

Euro 1.5-Year Weekly Chart

The euro is down just over 1% today following news of the deal with Greece…technically, the euro has been flirting with a breakout above the downtrend line you see below but so far just hasn’t been able to gain traction above this important resistance…this week could be key, especially with RSI(14) essentially resting at its uptrend line – which way will it go?…

Today’s Equity Markets 

Asia

China’s Shanghai Composite rallied again overnight, climbing 93 points to close at 3971…strong chart resistance at 4055…Japan’s Nikkei average clawed back above the 20000 level after adding 310 points or 1.6%…

Europe

European markets breathed a sigh of relief and closed strongly higher today after negotiators reached a deal over a 3rd bailout for Greece…

North America

The Dow has surged 188 points as of 11:15 am Pacific…in Toronto, the TSX has climbed 140 points while the Venture is 2 points higher at 643 as it tries to stabilize after touching its December low last week…

Venture Long-Term Chart

RSI(14), the ADX indicator, -DI and +DI levels are consistent with historical extremes witnessed on the Venture…could conditions become even more extreme?…anything is possible, but this 16-year weekly chart is conclusive in the sense that this is indeed a period in the market cycle when certain high quality juniors can be accumulated for a fraction of what they may trade at some point down the road…we’re seeing the mirror image of conditions that existed in late 2010/early 2011, yet almost everyone wanted to keep chasing the market higher at that point…

NexGen Energy Ltd. (NXE, TSX-V) Update 

NexGen Energy (NXE, TSX-V) is developing a world class Uranium asset with a rapidly growing discovery at its Rook 1 Project where 5 rigs are now turning as part of a 25,000-m, $9 million summer drill program that commenced just over a month ago…while Fission Uranium’s (FCU, TSX-V) discovery is at much shallower levels with impressive grades, NXE‘s Arrow Zone has churned out some exceptional grades at depth…

Many assays from the 2014 and 2015 drilling seasons have reported grades ranging between 0.13% and 66.80% U3O8 with grades between 1.5% and 5.0% U3O8 intersected regularly across substantial intervals…1.0% U3O8 is the equivalent of 23.5 g/t Au on a dollar per tonne basis (using U.S. $45 lb. U3O8 and U.S. $1,300/oz Au)…

Recent overall market weakness opened some fresh opportunities with NXE as it backed off in a healthy fashion from its all-time high of 90 cents June 29, finding support as expected in the low 70’s…

NXE is now threatening to break out above Fib. resistance at 83 cents…it’s up 2 pennies at 85 cents as of 11:15 am Pacific…

Equitas Resources Corp. (EQT, TSX-V) Update

A junior explorer with a good chance of success during the 2nd half of this year is Equitas Resources (EQT, TSX-V)…in mid-May, Equitas released encouraging results from a VTEM plus airborne survey completed on its Garland Property, 30 km southeast of the Voisey’s Bay mine in Labrador…9 areas of conductivity prospective for Nickel-Copper sulphides have been identified with most responses at the very limit of, or significantly deeper than, detection limits of historic surveys…this is certainly a speculative play to watch closely over the next several months…exploration on the target areas is expected to commence shortly…evaluation of the anomalies will include mapping and prospecting, 30 line km of large-loop EM surveys, and up to 4,000 m of diamond drilling…

Since the discovery of the Voisey’s Bay deposit in the early 1990’s, small parcels of Garland have been owned by 9 separate companies…this is the first time that this large property has been consolidated under 1 owner…

On June 24, EQT announced the appointment of Raymond Goldie to its board of directors…Goldie is currently a vice-president and senior mining analyst with Salman Partners Inc…2 days later, the company announced it has arranged a non-brokered private placement of 6 million its at 8.5 cents per unit for total gross proceeds of $510,000 (closing is still pending)…

EQT has been in a gradual uptrend since its restructuring late last year as you can see on this 2+ year weekly chart…the uptrend line and the rising 200-day SMA at 8 cents are providing strong support…

Silver Short-Term Chart

Interestingly, Silver plunged below Fib., chart and downtrend line support in the mid-$15.50‘s during the recently completed week, but recovered to close Friday at $15.57…it needs to make a convincing move past this area to the upside in the near future, or risk going lower again…one can make a good argument that the strong support in the mid-$15.50‘s will indeed hold, and the bullish “W” in the RSI(14) is very encouraging…

Seasonality factors are also in Silver’s favor at the moment…

Silver Long-Term Chart

An explosive push higher (eventually) – is this actually a scenario that could unfold in Silver over the next couple of years?…quite possibly, given the look of this 34-year monthly chart, though at the moment it’s hard to understand all the factors that could come into play to generate the kind of “Wave 5” move that appears to be in the works here…

It seems quite possible that the bottom of “Wave 4” came late last year when Silver briefly plunged to just above $14 an ounce…RSI(14) has managed to hold support which goes back to 2001…

Sell pressure continues to remain very strong, however, as shown by the CMF – amazingly, at levels not seen in nearly 25 years since the low of $3.51…this intense sell pressure at the moment, which could continue for a while yet, should therefore be viewed in a larger context as a bullish contrarian indicator…this doesn’t necessarily mean that Silver has hit rock bottom, however…

Note:  John and Jon do not hold share positions in NXE or EQT.

Something that’s of little or no value isn’t worth fighting for – hence, last week’s fascinating dust-up in resource-rich northwest British Columbia speaks volumes as a Tahltan activist group led by TCC President Chad Norman Day blockaded Doubleview Capital’s (DBV, TSX-V) Hat Project discovery in the prolific Sheslay district.  As DBV reported, the company is reviewing all of its options as it works toward a resumption of drilling at the Hat as quickly as possible.

In a political way, this illegal blockade confirmed what a multitude of geologists and a couple of highly respected geoscientists (from different companies) have been speculating about for more than 2 years now – that this large area of the Stikine Arch has a strong probability of hosting a series of world class Cu-Au porphyry deposits like “pearls on a string” across a minimum 30-km long NW/SE trending mineralized corridor after a total of 50 completed drill holes in the district since the spring of 2013, combined with a plethora of valuable historical data going back more than half a century.  One or more high-grade Gold deposits is also possible, several geologists believe, around the edges of one of these porphyry systems or somewhere at considerable depth.  Northwest B.C. is a geological wonder.  And the fluid “throughput” in this particular district has been remarkable according to the experts.

Keep in mind, there were also Tahltan blockades and protests as the world class Red Chris deposit, on the same trend about 120 km to the southeast, matured to its current mine stage (it has just become the 6th mine to open in B.C. since 2011).  Day cleverly steered the Red Chris situation for the Tahltan, and managed to negotiate an “historic” agreement between the Tahltan Nation and mine owner Imperial Metals (III, TSX) earlier this year, not long after the fallout over the Mount Polley spill.

A “Monster” Of A Hat

In the Sheslay district, it’s important to note that nothing has been proven up yet on any property in terms of NI-43-101 resources (no estimates completed so far), but some back-of-the-envelope calculations do light up the imaginations of many.  Defining a high-grade starter area will be key.

The Hat is leading the way at the moment with a Gold-rich Copper porphyry system now interpreted to extend well beyond the company’s original significant discovery reported in January 2014.  DBV President and CEO Farshad Shirvani mortgaged his house to drill those key holes during a major early winter cold snap in November 2013 (he should have won Prospector-of-the-Year, but that opportunity may yet come).

Also of growing interest is the yet-to-be-drilled Grizzly Project.  It covers a whopping 284 sq. km (Garibaldi Resources, GGI, TSX-V) and has prime targets scattered throughout with astonishingly similar structures and geophysical and geochemical signatures as the adjoining Hat and Star properties.

It may seem convenient for him to say this, but GGI President and CEO Steve Regoci, who has found success for Garibaldi in Mexico, is a genuine huge believer in the Sheslay district and recently referred to the Hat as a “monster” following the release of an updated interpretation of the system by Doubleview on July 2.

Stopped In Mineralization…Due To A Blockade!

How often has this ever occurred?  In what must have been a dramatic moment, the Tahltan group pictured below stopped drilling of H-25 at the Hat late last Tuesday while the hole was in a zone of Gold-Copper porphyry mineralization at a depth of 270 meters as reported by DBV – very significant, perhaps, because H-25 was a whopping 1-km step-out to the northwest of the Lisle Discovery Zone.  That’s what turned DBV into a 10-bagger and sparked a district staking rush early last year (subsequent rounds of drilling have produced even better results than discovery holes H-8 and H-11).

The Issue

So what is the Hat/Sheslay district protest all about?  The district is primarily in Tahltan territory, and there is no question the Tahltan have important interests at stake.  It’s incumbent upon the companies working in the area to deal with all First Nations cooperatively and respectfully.  That goes without saying, and at BMR we have no patience anymore for junior resource companies who “drop the ball” and snatch defeat from the jaws of victory, whatever the issues might be.  In this case, however, we stand firmly on the side of Doubleview, Garibaldi and others in the district who are having to deal with chaotic actions as part of a certain agenda.

Industry and government officials and of course investors have every reason to be shaking their heads at statements made by Day since he started the Sheslay Circus with a May 21 letter that was posted on the Tahltan website and delivered to 3 companies including of course Doubleview: 

“Our Elders have provided consistent direction about the critical need to protect the Sheslay now and for future generations,” Day wrote in his letter.  “Our people have been clear that mining in the Sheslay will not be tolerated, and the Tahltan Nation does not support mineral exploration activities occurring in this area.”

Oh, really?  The Tahltan’s actions and inactions, however (including Day’s), tell a much different story.  And why is it that Teck Corporation (TCK.B, TSX), which has been carrying out exploration at the large Eagle Project contiguous to the southern boundary of the Grizzly, didn’t receive a letter? 

History

1.  Exploration in the district dates back at least 6 decades, a period during which the Tahltan actively participated in exploration activities in the area and even helped build and maintain important infrastructure to enable development – i.e., the Golden Bear mine access road and the bridge over the Sheslay River to connect to the past producing high-grade Golden Bear Gold mine east of the Grizzly (of course there’s also the Sheslay airstrip where you can probably land a WestJet plane in an emergency – we’ll get to that on another day).

Permits Granted

2.  There was no Tahltan opposition to the multi-year exploration and drill permits issued to Doubleview, Garibaldi or others by the B.C. Ministry of Energy & Mines, so these companies have the full legal authority to drill.  First Nations consultation is a requirement to receive a “NOW” permit, and the Tahltan had multiple opportunities to voice their concerns.  Day’s answer to this is that they were not “properly” consulted.

It’s noteworthy that in late April of this year, Doubleview announced that it had received an “expanded 5-year exploration and drilling permit” from the Ministry.  The Tahltan were consulted on the amended or “expanded” permit, and it passed through their land management division.

Garibaldi received its 5-year exploration and drilling permit during the 2nd half of last year (after Day’s election as TCC President), and Prosper Gold’s (PGX, TSX-V) expanded permit was awarded in early 2014.

All this under the watchful eyes of the Tahltan.  Are we to believe that a bunch of people were just simply asleep at the switch?  They weren’t.  Some were actually very focused on trying to make money off this hot exploration play as about $10 million has been invested in the district since 2013.

Tahltan Does The Drilling

3.  The real difficult question for Day to answer, given his strange claim that the Tahltan Nation does not support mineral exploration in the area, is why Tahltan Drilling Services has been allowed to drill every single hole so far at the Hat Property?  And why have other Tahltan-related exploration services companies been carrying out work in the district?

Up until the end of last month, as announced at the Tahltan AGM during the first weekend of July, Tahltan Drilling Services (formed around 2009) was under the majority (51%) control of the TNDC, the business arm of the Tahltan Nation.

The fact that the Tahltan drilled the first couple of dozen holes at the Hat, even holes after Day was elected TCC President including H-23, is as big of an endorsement of exploration in the district as one could give – it’s not good enough to simply state that there’s a “separation” between the business arm of the Tahltan and “leadership”.

As it states on the TNDC website, TNDC is a 3-decade old business corporation owned by the people of the Tahltan Nation through the Tahltan Band, the Iskut Band and the Tahltan Central Council.

Hole 23, Revised Hat Model, & Day Goes Into Action Mode

Day’s “light bulb” moment in late May was no coincidence, in our view.  Importantly, his uprising over the Sheslay district did not start until after results from DBV‘s hole 23 (a game-changer) and public release of powerful new geological conclusions regarding the size potential of the dynamic Hat system from an exceptional DBV technical team led by Dr. Abdul Razique, who Shirvani smartly recently recruited from Copper giant Antofagasta (known to be looking for a big project in B.C.).

As far as the blockade is concerned, it came just 5 days after DBV’s critical July 2 news release and the announcement of a major step-out – 1 km – from the Lisle Discovery Zone.  And just as Garibaldi is gearing up to drill the Grizzly for the first time ever for a potential 3rd important discovery in the area.

Leverage, Leverage, Leverage 

Day leveraged a special opportunity, given market conditions and Imperial Metals‘ troubles over Mount Polley, to cut what apparently is a favorable agreement for the Tahltan with respect to the operation of the Red Chris mine.  Both sides should be winners, really, but Day came out of that looking strong and that was good for him and his people.  Score one for The Kid.

“Government and industry understand that the First Nations people need to benefit when these things are built,” Day was quoted in a recent Vancouver Sun article.  “But with the Tahltan, it actually makes a lot of sense to partner with us because we have the capacity, we have the work ethic, we have the experience.”

Dr. Razique has a fascinating model for the Hat, and it seems Day has his own very interesting model for creating “unique” partnerships between the Tahltan and resource companies.

Our conclusion is that what’s really happening here is a high-stakes game of Chad Day “leverage” against both the provincial government and Doubleview, and of course against Garibaldi and other participants in the Sheslay district.

It’s no secret Day is hoping to strike a deal as quickly as possible on a broad-based land management agreement between the Tahltan and the province, and using a high-impact exploration play with major potential like the Hat Project and the Sheslay district in general could be viewed as an astute strategy, as long as he doesn’t slip on a few banana peels of course.

As he stated in his May 21 letter, “The Tahltan Central Council is currently engaged in government-to-government negotiations with the Province of British Columbia to reach a long-term approach to land planning, management and decision-making throughout Tahltan territory where the Tahltan Nation plays a central role.”

So, Minister Bennett and Premier Clark, how does it feel to get the “Sheslay Squeeze” from a rising 28-year-old star, fresh out of the University of Victoria?

Within the Tahltan, there do appear to be internal divisions over land management “strategy”, and it’ll be interesting to see how Day deals with this.  As we reported last week (information that was confirmed on the Tahltan website), the Tahltan’s very amicable long-time manager of land management issues, Nalaine Morin (Project Manager for THREAT, a division of the TCC), abruptly resigned last month.

Money, politics and power – that’s what’s really driving all of this.  That’s the world we live in.  And you can’t take a major discovery in B.C., as mining-friendly as it is, and turn it into a mine without going through a lot of “noise”.

Consequently, investors should be more convinced than ever of the immense potential mineral wealth that Doubleview is uncovering at the Hat, that GGI believes exists at the Grizzly, and could be found elsewhere along the Sheslay mineralized corridor which is clearly one of the country’s most promising mineral districts.

Note:  John and Jon both hold share positions in DBV and GGI.