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October 1, 2014

BMR Morning Market Musings…

Gold has traded between $1,205 and $1,217 so far today…as of 6:15 am Pacific, bullion is up $4 an ounce at $1,213…Silver has rallied 20 cents to $17.17…Copper is up 2 pennies at $3.06…Crude Oil has added 83 cents at $91.99 while the U.S. Dollar Index is up one-tenth of a point to 86.03…Friday’s U.S. jobs report will be key in determining whether the dollar’s current momentum will be stopped or if indeed the greenback will climb even higher…no major technical resistance is seen until the 88-89 area as our charts this week have pointed out…

The Dollar Index is on a record weekly run and enjoyed its strongest quarterly rise since 2008…this helped push Gold to its lowest close of the year yesterday, though it’s encouraging that bullion still remains above its June 2013 multi-year low given the strength in the greenback…given the extent of short positions and oversold conditions, the possibility of a very strong rally at some point this month clearly exists – exact timing of that is the issue…this (and a Venture recovery) may have to wait until there’s a near-term top in the Dollar Index…

Everything is relative, and the growing potency of the greenback arguably has more to do with weakness in foreign economies (Japan, euro zone) than robust U.S. growth…so the greenback is the best of a bad bunch of currencies right now, and perhaps for the foreseeable future…the Fed this month is expected to conclude its bond purchases and initiate short-term interest rate increases beginning by the middle of next year…by contrast, the ECB and Bank of Japan have signaled they intend to further loosen policy given slow growth and low inflation in those countries…this central bank divergence is quite striking, attracting inflows into the dollar and that in turn may also make U.S. stocks more attractive to overseas investors who stand to pocket currency translation gains…

Silver closed at its lowest level yesterday since March 26, 2010, though that was one of the best times ever to be a buyer of the metal…for the quarter, Silver was the biggest loser among precious metals, down a whopping 19%…next obvious major support is $16…Platinum fell 12%, Palladium shed 8% while Gold was off 6%…

The TSX Gold Index lost 17.6% of its value in September while the Venture was off 11.2%, closing yesterday at 909…

Brazilian markets are reeling at the prospect of a second term for President Dilma Rousseff, known for her counter-productive interventionist policies, and experts say the sell-off may not end anytime soon…the Brazilian real dropped to 6-year lows against the U.S. dollar this week, while the benchmark Bovespa index has tumbled over 5% since Monday…

Today’s Equity Markets

Asia

Pro democracy rallies in Hong Kong gained momentum as China’s week-long national day holiday kicked off today…now in its fifth day, the mass campaign has spread to the city’s Tsim Sha Tsui shopping district and continues to disrupt businesses…meanwhile, China’s official PMI for September came in unchanged from the previous month at 51.1…the data follows HSBC’s final PMI reading yesterday which was also unchanged from August…

Japan’s Nikkei average started the new month with a modest loss of 91 points…

Europe

European markets are down modestly in late trading overseas…Markit PMI data showed Germany’s manufacturing sector contracted for the first time in 15 months in September…

North America

Stock index futures as of 6:15 am Pacific are pointing toward a slightly negative open on Wall Street…U.S. private payrolls rose about in line with expectations in September, thanks to sharp growth in small business and service sector hiring, according to a report this morning…ADP and Moody’s Analytics said companies created 213,000 new positions, just ahead of estimates of 210,000…

CRB Index Chart Update

Commodities got clobbered in September but trend weakness actually goes back to late June as you can see on this 2.5-year weekly CRB chart (Reuters/Jeffries)…once the CRB is able to climb above its short-term downtrend line, then it’s probably safe to declare that a commodities’ recovery is under way…strong support between last year’s low (266.78) and the 275 area needs to hold…the bearish trend does appear to be weakening, based on the ADX indicator, but that doesn’t rule out somewhat lower levels from here and a strong test of key support…

CRB120

Calibre Mining (CXB, TSX-V) Update

Calibre Mining (CXB, TSX-V) has attracted a major new investor (Peter Lassonde) and is enjoying success in Nicaragua, so it’s not surprising the stock has been one of the best performers on the Venture since the spring…how it handles significant chart resistance this month at 15 cents will be interesting…below is an updated 2.5-year weekly chart…

On Monday, Calibre announced the next phase of exploration activities (25-line km ground magnetic survey and trenching) at its 100%-owned Montes de Oro Gold Project in the Siuna district…Montes de Oro is a promising high-grade skarn system…in addition to Montes de Oro, Calibre is actively exploring two extensive Gold systems in Nicaragua with partners B2Gold Corp. (the Minnesota Gold discovery) and Iamgold Corp. (the ongoing drill program at the Eastern Borosi Project)…

CXB

Precipitate Gold Corp. (PRG, TSX-V)

Somewhat lost in the fog of negativity in September was an important new discovery by Precipitate Gold (PRG, TSX-V) in its maiden drill program at the Ginger Ridge zone within the company’s 100%-owned Juan de Herrera project in the Dominican Republic (Tireo Gold camp)…while GoldQuest Mining (GQC, TSX-V) has been a disappointment in this area so far this year, Precipitate announced a drilling discovery just over a week ago that we suggest our readers check into…there was no point “chasing” PRG at the time, and we’re glad to see it has since pulled back from its 25-cent high to yesterday’s close of 18.5 cents…this one is worth keeping an eye on in the coming weeks and months…

Technically, PRG has a bullish tone to it with strong support between 15 cents and the rising 200-day SMA at 16.5 cents…

PRG4

Amarc Resources (AHR, TSX-V) Update

We last mentioned Amarc Resources (AHR, TSX-V) in August of last year when it was trading at a nickel…the company, associated with the Hunter Dickinson group, has a large property portfolio in British Columbia, so the good possibility of a “hit” somewhere has always existed…AHR’s top asset is the IKE Property (Cu-Mo-Ag) which is located in central B.C, the heartland of the province’s Copper mining industry…

Interestingly, AHR has been pushing higher since September 22, a few days after announcing the completion of a 9-hole, 5,400 meter drill program…speculators are obviously jumping in prior to assay results are expected within the next 2-3 weeks…the company has also picked up some additional ground adjacent to IKE…

Amarc broke above a long-term downtrend line at the beginning of this year, jumped as high as 11.5 cents and then retraced to the 6-cent area where it formed a strong base…a test of chart resistance around 15 cents this month, prior to assay results, wouldn’t be surprising given the current bullish trend as shown in this 3-year weekly chart…as always, perform your own due diligence…

AHR2

Discovery Ventures Inc. (DVN, TSX-V) Update

Also in resource-rich British Columbia, Discovery Ventures (DVN, TSX-V) continues to aggressively push ahead on several fronts with its Willa-Max high-grade Gold-Copper Project in the province’s southeast…among other developments, a surface exploration program commenced recently, and Micon International Ltd. is also updating and refining the geological modelling of the Willa resource…the interest in DVN since the spring has been driven by the obvious synergy of the the Willa combined with the Max mine and milling facilities Discovery negotiated to acquire at a bargain-basement price earlier this year…

A bad September for the Venture wiped 37% off the value of DVN which closed yesterday at 24 cents, slightly above a strong support level (23 cents) which was a breakout point in June…an overbought RSI(14) condition has been unwinding since DVN hit a 52-week high of 41.5 cents September 4…

DVN

Reservoir Minerals Inc. (RMC, TSX-V)

A weak overall market has been bringing down the strongest – Reservoir Minerals Inc. (RMC, TSX-V), which shares the high-grade Cukaru Peki Copper-Gold discovery with Freeport-McMoRan Copper & Gold Inc. (FCX, NYSE) in Serbia (part of the Timok Project with FCX), has shown a lot of technical deterioration over the last couple of months…it closed yesterday at $4.50, its rising 500-day SMA…

RMC has been pushed into oversold RSI(14) territory but the next key support level to watch is $4.00 as per the updated chart below…no news regarding Cukaru Peki since June…yesterday, the company updated investors on its 100%-owned Nikolicevo permit in the Timok magmatic complex…the permit is approximately 5 km east of the Cukaru Peki discovery…RMC had just over $40 million in working capital at the end of May…

RMC

Note:  John, Terry and Jon do not hold share positions in CXB, PRG, AHR, DVN or RMC.

15 Comments

  1. DBV 17.5 BID…THANK GOD MONTHEND IS OVER! BETTER YET, QUARTER YEAR END!

    Comment by STEVEN1 — October 1, 2014 @ 6:20 am

  2. With so much turmoil in the world, it’s no wonder that traders’ may
    think that September has 31 days. Anyway, some out there have undressed
    their windows & are buying into DBV, (up 0.035) & GGI, (up 0.04), that
    is at 12:25 p.m. Nfld time.

    Comment by Bert — October 1, 2014 @ 6:54 am

  3. Because i am showing my enthusiasm for PGX at these low prices,
    in no way, should anyone take it as if i am trying to influence
    others. I have no inside information nor do i always be correct
    when assuming anything.

    Comment by Bert — October 1, 2014 @ 7:46 am

  4. BLO… to be advised that the PP shares become free trading on Nov 1st… 15 million share come up… be prepared for a dump…. or sell on OCt 31 to buy back..
    Jon … thoughts on the strategy??

    Comment by Jeremy — October 1, 2014 @ 7:59 am

  5. wow, gold up 7$ and venture is looking like its going to break below 900pts. What gives?

    Comment by Tony T — October 1, 2014 @ 11:22 am

  6. BLO – A million shares traded today. Volume has been fairly heavy in the 16 to 18 cent range. They are very close reaching the prototype stage. What does the chart say? Is it ready for another leg up?

    Comment by Dan — October 1, 2014 @ 4:45 pm

  7. Hi Jeremy, would have responded sooner but I was traveling today. Volume solves all problems (or most of them). The issue regarding the BLO free trading shares was one I discussed at length in my due diligence meeting with Rav. What I’m pleased to see in the last couple weeks is a real uptick in volume, and that’s confirmation they’re on track in terms of their overall game plan and strategy. Obviously not all of those 15 million will come into the market, but a lot will over a number of weeks (I suspect quite a few individuals will actually hold on until 2015 to avoid the capital gains tax for this year). The good thing is that by November this thing could be enjoying more than enough volume on a daily basis (perhaps even some multi-million share days) to clean any PP stock out in a real hurry. That’s the key – volume. And when Americans really step into this, watch out. The number of participants in the financing, btw, was quite spread out – I believe about 75 individuals.

    Comment by Jon - BMR — October 1, 2014 @ 5:04 pm

  8. The following article was posted on SH, pay close attention to the last few lines, work will resume in 2015, 6 month wait, wonder were the share price will be.

    Hunting for a mining ‘ten bagger’ with a proven management team
    POSTED ON OCTOBER 01, 2014 BY JAMES FRASER
    CATEGORY PROSPER GOLD,

    Peter Bernier and Dirk Tempelman-Kluit of Prosper Gold. Here they are in 2011 winning the AME BC’s H.H. “Spud” Huestis Award Excellence in Prospecting and Mineral Exploration, after their Richfield Ventures, sold to NewGold for $500 million.

    Investors are abandoning two Canadian mineral exploration darlings of 2010 after a summer drill program turned up less than outstanding results. These investors may be forgetting that investing in mining is all about the people and exploration often requires repeated kicks at the can.

    Prosper Gold CEO Peter Bernier and geologist Dirk Tempelman-Kluit built BC gold explorer Richfield Ventures to a ~$500 million dollar takeover from New Gold (NGD.T) in April 2011. Richfield’s Blackwater property is now a key development asset in the New Gold pipeline and contains over 10 million ounces of gold.

    The duo returned to mineral exploration in British Columbia for their next venture, Prosper Gold, which raised $3 million at $0.50 with a half warrant at $0.75 in May 2014.

    The company put out news from the Summer 2014 exploration program on September 23rd which obviously didn’t meet investors’ expectations. Shares in Prosper have reached an all time low of 9 cents per share.

    Before forming Prosper Gold, management spent two years looking at over 200 projects, finally optioning the Sheslay project from Firesteel Resources (FTR.V). Prosper can earn up to an 80% interest in the property in the next couple years by making payments and occurring certain expenditures on the property.

    Prosper Sheslay Project regional map. (Image: Prosper Gold)

    As you can see from the above map the Sheslay project is in a prospective region of Northwestern British Columbia for copper-gold porphyry deposits. Initial drill holes are on par with similar deposits in the area in terms of grade. The Prosper team will now need to increase the size (tonnage) of the potential deposit with further drilling. The area will continue to see increased exploration as a new power line has been constructed up HWY 37 to power the new Red Chris mine of Imperial Metals (III.T). It is still early days at the Star project but it’s not out of this world to predict that Pete and Dirk can find another sizeable deposit.

    Pete Bernier, the company president and chief executive officer, comments: “In less than a year, the company has nearly tripled the drill data, and has grown exploration prospects laterally and to depth. As a result, Star has developed into one of British Columbia’s new copper-gold project districts, with several new targets defined for future drilling including Star North, Star East, Copper Creek and Pyrrhotite Creek.”

    Management are well aligned with shareholders with Mr. Bernier owning 4,375,000 common shares (~14%) and Mr. Tempelman-Kluit owning 3,685,714 common shares (~12%).

    As of 11:59pm ET September 30th, 2014
    Filing
    Date Transaction
    Date Insider Name Ownership
    Type Securities Nature of transaction # or value acquired or disposed of Price
    Sep 30/14 Sep 30/14 Bernier, Peter Direct Ownership Common Shares 10 – Acquisition in the public market 300,000 $0.085
    (soure Sedi.ca)

    Prosper Gold data:

    Share price: $0.09 (close on Oct 1,2014)
    Shares outstanding: 31,061,042
    Market cap: ~$2.8 million
    Of note for any potential Prosper investors is that it will be at least 6 months before they will be active working on the project again and they will need to raise significant money for the 2015 exploration program.

    Can Peter and Dirk unlock the geological potential of the Star project? Investors will have to see what happens in the 2015 exploration season.

    Company website: Prosper Gold

    * This is not investment advice. Always do your own due diligence.

    1 Vote

    Comment by Paul — October 1, 2014 @ 7:17 pm

  9. Picked up this from stockhouse

    A paragraph states that it will be 6 months before they are working at the Star again. This suggests that they have not followed their original plan outlined at the beginning of the year. If they have run out of money then there is little hope as raising new funds will be very difficult, unless the likes of Peter puts his own cash in. If that is the case then he will be picking up a bigger share of the company at a bargain price. Mmmmmm, who put out the appalling news release?

    Comment by Tom UK — October 2, 2014 @ 2:57 am

  10. Tom, the thing I find most curious about Prosper’s work at the Star is that, according to their NR, all of the first 19 holes were drilled within the confines (or slightly outside) of the known Star deposit (some minor step-outs to extend it a couple hundred meters to the north) but no drilling at Star North, Star East, or elsewhere. They took a very conservative approach and this was also against what they stated they were going to do—–the original plan was to drill Star North and Star East. Had they drilled and hit at Star North or on another large step-out, PGX certainly wouldn’t be sitting where it is now. Very strange that they drilled the way they did. Again, it wasn’t really the actual #’s from Star that drove this down. So many other factors involved. They’ve certainly surrendered leadership in the district to DBV and GGI.

    Comment by Jon - BMR — October 2, 2014 @ 3:25 am

  11. Could they be trying to get a 43-101 out for the main zone? They drilled around 6,000m and their original plan was 10,000m. The difference is largely due to the fact that they did not drill any of the other targets. As you say Jon, a couple of good hits on a new target would really make a change to their share price.

    It might be my suspicious mind, but I get the feeling that something is going on behind the scenes. Dirk declining an interview, a very poor NR that does not tell us what they are currently doing or planning to do and a drill program that did not follow their original plan. With all this muddled uncertainty, it’s no wonder the SP is taking a spanking.

    Comment by Tom UK — October 2, 2014 @ 4:05 am

  12. Possible, Tom. According to my calculations, there are now about 40 holes drilled into the central mineralized area at the Star, from Prosper’s work to that previously completed by Firesteel.

    Comment by Jon - BMR — October 2, 2014 @ 4:32 am

  13. JOn- thank you:) good info:)

    Comment by Jeremy — October 2, 2014 @ 5:47 am

  14. Jon

    would love to know what Regoci thinks about what Prosper has done or is doing? Im sure he has been paying close attention. Sure would be nice to hear something from Him and GGI.. and I am sure he has been paying attention to the way prosper has communicated and what has happened to their share price because of it…

    Comment by Greg — October 2, 2014 @ 5:55 am

  15. Greg, I spoke with Steve Tuesday afternoon before I left on my short trip…I can state unequivocally from my perspective that he’s very fired up, focused and determined to make some noise this month and move forward impressively on all fronts…I suspect we’ll be hearing from GGI (and DBV) very soon – I would predict next week…

    Comment by Jon - BMR — October 2, 2014 @ 6:01 am

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