BullMarketRun first uncovered Seafield Resources (SFF, TSX-V) nearly a year ago when it was trading by “appointment only” between a nickel and 7 cents. The company has gone through a fundamental transformation since then, an event we correctly anticipated, with a very significant exploration move into Colombia. The stock exploded to a high of 35.5 cents in late February when it probably got a little too far ahead of itself (we advised traders to take profits). For the past two months Seafield has consolidated between a yearly low of 16 cents, just above its rising 300-day moving average, and 22.5 cents. For both fundamental and technical reasons, Seafield in our view is now ready for another powerful move to the upside. It closed Friday at 19 cents and has never looked better as a speculative opportunity than it does right now. We finally have a clear understanding of what Seafield has assembled in Colombia – its 67 square kilometer Quinchia Project was presented very thoroughly and powerfully Friday afternoon (June 25) when Seafield unveiled a new web site. A major drill program at Quinchia is also ready to start.
Seafield, whose largest single shareholder is Yamana Gold (YRI, TSX), is developing three projects (Colombia, Ontario and Mexico) but Quinchia in Colombia is its flagship project where most of the company’s expenditures will be directed toward through the balance of the year.
Keep in mind as you read the facts below that Seafield’s current market capitalization is only $18 million.
Already, Seafield is sitting on 1.6 million ounces of gold (800,000 43-101 inferred compliant at Miraflores and 800,000 ounces historical non-compliant at Dos Quebradas) at Quinchia which features three major projects (Miraflores, Dos Quebradas and Chuscal) in addition to a large and relatively unexplored area that holds major blue sky potential. In total, Seafield’s land package covers 67 square kilometers and is located less than 10 kilometres south of Medoro Resources’ (MRS, TSX-V) Marmato Deposit which contains a current measured, indicated and inferred resource of 9.7 million ounces (Medoro’s market cap is $300 million).
What we see unfolding at Quinchia is this: At least three or four separate deposits that together give Seafield a multi-million ounce resource that acquisition-hungry Medoro Resources then goes after in a takeover of Seafield. That’s speculative on our part but a very possible scenario. It’s important to point out that the two key players in Seafield’s Colombian venture and acquistions are the same individuals who assembled Medoro’s Marmato land package – Ian Park and Stewart Redwood. Both know this area of Colombia like the back of their hand. They’re also going after more property for Seafield.
There is excellent potential to expand the current resources at Miraflores and Dos Quebradas, and a third Seafield project at Colombia that looks very interesting is Chuscal.
Miraflores (open to the west and at depth) is three kilometers southeast of Dos Quebradas which has excited geologists with its potential going northeast (for several kilometers). About three kilometers south of Miraflores is Chuscal where underground sampling indicates the existence of a large porphyry system as explained in a report posted Friday on Seafield’s new web site. Some small scale mining is currently taking place at Chuscal, similar to Miraflores, and “significant geochemical anomalies have been outlined at Chuscal over a large magnetic anomaly” – to the best of our knowledge these are new details on Chuscal provided Friday afternoon on Seafield’s web site (the company is currently finalizing the Chuscal option).
The Quinchia district features excellent infrastructure with Pan American highway access, three international airports, electricity, and new access to the Pacific Coast on a railway line currently under construction. All Seafield projects are below 2100 metres in elevation. While it’s not Quebec, Colombia is still regarded as a good jurisdiction for mining and exploration.
Timeline of Revealing Recent Events With Seafield:
The signs of a possible imminent major move in this stock are very evident:
May 13, 2010
Seafield firms up and trades an all-time record 10 million shares in a single day – significant new “players” have obviously entered the market, loading up on free-trading cheap stock;
May 28, 2010
Seafield announces a proposed private placement of up to 14,285,714 shares at 17.5 cents with a two-year full warrant at 25 cents to raise gross proceeds of up to $2.5 million. “The offering is expected to close on June 4, 2010.” Sounds pretty much like a bought deal – some of the same players who picked up free trading stock May 13 are likely involved in the PP;
June 11, 2010
Seafield announces the closing of an oversubscribed PP – 16,863,171 units at 17.5 cents for gross proceeds of $2,951,055. Brokers’ warrants are also issued. Approval of the financing is granted a few days later by the Exchange;
June 22, 2010
Seafield announces the granting of 2.6 million stock options at 17.5 cents and the hiring of investor relations (Dean Stuart of the Boardmarker Group out of Calgary), an unusual move for President and CEO Tony Roodenburg;
June 25, 2010
Seafield unveils a brand new web site and for the first time provides pictures from Quinchia in addition to a very informative 24-page power point presentation. Again, an unusual move for Roodenburg who in the past has resisted expenditures in this area. The Seafield “promo machine” is ramping up.
We certainly can’t disagree with the following statement in the Seafield Power Point Presentation:
“Considerable upside in share price compared to other Colombian plays.”
Then There’s The Elora Factor
Seafield’s highly prospective Colombian assets are enough to potentially send this stock much higher. But a big boost could also come very quickly from Seafield’s promising Elora Gold Property which is strategically positioned in the Gold Rock Mining camp of northwestern Ontario near Dryden.
Elora is a classic Archean shear hosted deposit that has delivered some very encouraging results for Seafield including 7.54 g/t Au over 12.19 metres. Seafield will be doing some more work on Elora later this year but in the meantime there’s a company called Manitou Gold (MTU, TSX-V) that’s drilling like crazy right beside Elora (immediately adjacent) at the former Big Master Mine.
Manitou was just listed on the TSX Venture Exchange in March and has raised $5 million for drilling and exploration in the Gold Rock mining camp – it acquired a large land package from Goldcorp Inc. (G, TSX) which holds slightly more than 10% of Manitou.
Initial drill results from Big Master are imminent – the first five holes were completed at the end of May and sent in for assaying. Samples from the Big Master No. 1 trend returned assay results of 80.1 grams per tonne gold proximal to the shaft area, 52.4 grams per tonne gold from the Helena Shaft area and 93.2 grams per tonne gold midway between the two shafts. This structure has been prospected along a distance of 1,020 metres and has returned numerous high-grade gold assay results. In addition the historic operator followed the structure with a 407-metre-long drift on the 183-metre level. Along the Shaft No. 2 gold trend, assay results of 26.7 grams per tonne gold were returned. A third parallel system was identified in the prospecting program and returned assay results of 11.4 grams per tonne gold.
With a major drill program underway, Manitou has an excellent chance of a high-grade “hit” which could have significant implications for Seafield.
Technically Speaking – Seafield Is Ready To Rock
BMR’s technical analyst examined Seafield’s bullish-looking chart in a separate piece posted earlier today. Below are some key “big picture” technical reasons this stock appears poised for a major move:
- On Friday Seafield broke above its 50-day SMA for the first time since April;
- Seafield’s 20-day SMA has swung positive for the first time since March;
- The stock has spent the last 2 months consolidating just above its rising 300-day moving average (16 cents) where it has incredible support;
- The 200-day SMA is still rising with no threat of reversing, confirming the stock remains in a long-term uptrend.
John goes into more specifics on Seafield’s chart so please check out his excellent analysis.
Conclusion
There has never been a better time, in our view, to be a Seafield shareholder. The Seafield story may have gotten a little bit ahead of itself earlier this year. But now, the reverse seems to have occurred – the stock price is actually now trailing the current fundamentals in our view. The company has locked up an impressive land package, immediately adjacent to Medoro, which could easily host three or more one million-plus ounce deposits. A major drill program should be commencing anytime now and the company appears to be ready to start telling its story to the world. There is much more upside potential than downside risk at 19 cents.
Note: The writer holds shares in Seafield Resources. Please read the BMR disclosure/disclaimer under “Independent Research And Analysis”. No fee or compensation of any kind has been paid to BMR for this report.
