Gold Bullion Development (GBB, TSX-V)
“Turnaround time” has arrived for Gold Bullion Development…GBB, which successfully tested its 35-cent March low in mid-May, gained 4 pennies last week to close at 44 cents, its highest closing price since the beginning of May…the stock’s 50-day moving average (SMA) has flattened out and is now just beginning to reverse to the upside, a sure sign that higher prices are on the way…in addition, the 20-day SMA is poised to reverse to the upside this coming week…so there are very encouraging indications that after more than three months of weakness, GBB is getting ready to roar once again which coincides with the release of the initial 43-101 for the LONG Bars Zone, expected sometime during the third quarter…the market is a forward-looking machine and the GBB market won’t wait until after the 43-101 comes out before reacting…the company’s current market cap of $70 million puts a value of just $23 an ounce on Gold in the ground at Granada if one were to assume the 43-101 will outline approximately 3 million ounces in the measured, indicated and inferred categories…that’s just a hypothetical number on our part at the moment but whatever number GENIVAR comes up with, we believe it should exceed the 2.4 to 2.6 million ounce conceptual figure that Gold Bullion gave in April of last year…based on all the drill results to date, this appears to be shaping up as a half-gram deposit with a higher grade starter pit and massive volume…it’s all about volume at Granada which is why the drills have to keep turning and why we want to see more than just two rigs in the LONG Bars Zone which has such incredible potential…Gold Bullion released fresh drill results from Granada May 12 which were consistent with previous numbers…hole #173 was the star of the batch of 25 holes…it provided additional evidence that the north and northeastern parts of the Eastern Extension are highly intriguing…#173 cut 80 metres grading 1.36 g/t Au within a total intersection of 363 metres of 0.35 g/t Au…a 1-metre section of high-grade (89.83 g/t Au) was hit near the bottom of the hole below 300 metres…#173 was collared approximately 115 metres northeast of #55 and 100 metres east-northeast of #108, two stellar holes released last fall…this is critical – assays are still pending on 9 holes (165, 168, 178, 183, 241, 243, 246, 254, and 257) north of #55 drilled over an east-west distance of about 250 metres and a north-south distance of 200 metres…results from those nine holes will go a long way toward confirming just how prospective these parts of the Eastern Extension are…#241 is the most northerly of those holes…meanwhile, hole #200 in the southeast portion of the Eastern Extension (northeast of discovery hole #86) returned an impressive interval of 48.50 metres grading 1.68 g/t Au within a total intersection of 210.5 metres of 0.44 g/t Au…results from the second most northerly hole drilled north of the Preliminary Block Model suggest more drilling is definitely required in that area…hole #31 hit a modest 18.5 meters grading 0.64 g/t Au close to surface (36 to 54.15 metres) and another 28 metres grading 0.59 g/t Au between a depth of 125 to 153 metres…where’s there’s smoke, there’s fire, and our theory is that there could be a significant trail of mineralization running north of the Preliminary Block Model and connecting with what has been discovered over the northern part of the Eastern Extension…six more holes (213, 214, 215, 217, 221 and 224 and 224) from the southwest portion of the Preliminary Block Model returned mixed results – we were hoping to see a couple of exciting holes from that area but that hasn’t materialized yet…overall, Gold Bullion continues to hit long intersections of lower grade mineralization over a wide area at Granada…this is a massive project with much more drilling required but the multi-million ounce model that Frank Basa has in mind remains intact…the 43-101 resource estimate should reassure investors and give this play more focus and a big lift…drilling is also underway now in LONG Bars Zone 2 near the old Aukeko Property (2 kilometres east of Phase 1 discovery hole #17) and if Gold Bullion is able to connect these two zones, look out…GENIVAR’s Nicole Rioux, the head geologist for Granada, is genuinely excited about the Aukeko area and she is normally quite conservative in sizing things up…a couple of excellent results from this area could really ignite this play and based on all the historical information we have reviewed from “LONG Bars Zone 2″, the chances of a “hit” in this area have to be considered very good…
Cadillac Mining (CQX, TSX-V)
Cadillac fell to a yearly low of 8.5 cents Friday before quickly snapping back to close at 14 cents, a 4-penny increase for the day and the week…this is a company with tremendous potential given its property packages but management has so far shown an inability to comprehend or gauge the market and create shareholder value by “seizing the moment” and taking advantage of the opportunities they have been blessed with…we remain patient for now because the possibilities with CQX are still incredible, especially considering the current market cap which is just $3.5 million even after Friday’s jump…not often does a company get the kind of opportunity that Cadillac was handed (and still has)…CQX holds a 100% interest in a very strategic piece of property that adjoins Richmont Mines‘ (RIC, TSX) Wasamac deposit, 15 kilometres west of Rouyn-Noranda…the principal Gold structure hosting mineralization at Wasamac dips northerly onto the seven claims held by Cadillac…Richmont started drilling Wasamac in the spring of last year and steadily ramped up its drilling due to excellent results…in February of this year, Richmont reported a nearly five-fold increase in resources (from 285,000 to 1.4 million ounces) at Wasamac…as a result RIC has been one of the best performing Gold stocks on the TSX this year…throughout the past year since Richmont started drilling Wasamac, and in particular over the last five months, Cadillac management has completely failed its shareholders by doing essentially nothing (or the wrong things) to take advantage of Richmont’s success at Wasamac…BMR brought the Wasamac situation to the attention of its readers in December…investors got excited about the story and the potential of Cadillac’s “Wasa” claims…the stock ran to 50 cents by early January and the market was clearly eager to see Cadillac pursue this project as quickly and vigorously as possible…in this business, it’s critical to “seize the moment” and take immediate advantage of opportunities like this when they present themselves…the company easily could have leveraged the Wasamac situation into a major financing anywhere between 25 to 40 cents (they began the year with only about $200,000 in the bank)…in order to take advantage of any opportunity, a company must be well-financed and Cadillac management absolutely dropped the ball during the first quarter of this year when they did have a chance to raise at least $1 million (potentially much more) and failed to do so…we give the company credit for securing an excellent project (Goldstrike) in Utah on fabulous terms but several million dollars is going to be required to tackle Goldstrike in the right way…Cadillac has fallen from a high of 50 cents in early January to a yearly low of 8.5 cents last week…there is no excuse for that and management has only itself to blame…after talking about getting a drilling program going at Wasamac “in the near future” shortly after their mid-February AGM, Cadillac has reversed course and stated in a news release May 16 that it needs more information from Richmont’s work before drilling for down-plunge extensions of the Wasamac main, #1 and #2 zones…President and CEO Victor Erickson’s heart is with the Utah project, not with Wasamac…in retrospect, that has been demonstrated in many ways over the last six months…Erickson would have to admit that himself…the only solution, then, in our view, is for Cadillac to cut a deal with another company for exploration at Wasamac and the natural partner for that is Visible Gold Mines (VGD, TSX-V) which last December entered into a JV with CQX on its other Rouyn-Noranda area properties…VGD has all the money and expertise necessary to unlock the value of Cadillac’s Wasa claims…Cadillac could let others do the heavy lifting at Wasa and then focus its energies on developing the Goldstrike Project…talk is cheap – the onus right now is on Cadillac to show investors that it can “walk the walk” and make things happen…
Abcourt Mines (ABI, TSX-V)
Abcourt closed unchanged last week at 13 cents…an overall market turnaround is welcome news for ABI which is down 28% since the CDNX correction started March 7…the stock, which now has 149 million shares outstanding for a market cap of $19.4 million, has found support at current levels and should begin to firm up given strong fundamentals and an aggressive exploration program at two properties…ABI’s decline from a 52-week high of 25.5 cents in late March was brought on by the closing of a financing (35 million units at 18 cents), a sharp drop in Silver, overall CDNX weakness, and selling by MineralFields Group…ABI’s 100-day moving average (SMA) has now started to decline and will provide resistance for now around 17 cents…the 200-day SMA is still rising, however, and is currently sitting at 16 cents…the company released more results from its Abcourt-Barvue Silver-Zinc Property last week including 4.9 metres grading 300.99 g/t Ag and 3.05% Zn in AB-11-24, and 10 metres grading 129.48 g/t Ag and 3.12% Zn in ABI-11-27…drill results to date should significantly upgrade and increase all-category reserves and res0urces…the 10,000 metre drill program continues…the last set of results from the company’s Elder-Tagami Gold Property near Rouyn-Noranda came out May 16…mineralization continues to expand to the west and the east of the former underground Elder Mine which is now being dewatered…the Tagami area to the north, meanwhile, has untapped potential including some higher grades…the latest NI-43-101 resource estimate of 216,000 ounces was released in the summer of 2009…the possibility of Abcourt expanding that resource beyond 500,000 ounces certainly exists given the encouraging results to date (look what Richmont has done at Wasamac)…the heavy accumulation that began in Abcourt in December was no fluke in our view…this is a company with significant assets that could justify a substantially higher valuation…nearly 60 million shares of ABI changed hands on the CDNX in December and January – record volume for this stock, accompanied by a price jump from 14.5 cents…while the stock price is now slightly below that level, the record volume in ABI since late last year (take a look at a 10-year chart) is still a very bullish sign…Abcourt has been under significant accumulation and our best guess is that some savvy players like the assets in the ground…continued drilling success and higher prices for Gold, Silver and zinc would be exciting developments for this stock which has a history of major moves…from mid-2005 to early 2006, Abcourt rocketed from 15 cents to nearly $1.40…
Currie Rose Resources (CUI, TSX-V)
Currie Rose exploded to the upside Friday in a technical breakout that we were expecting…the stock broke through resistance in the high teens and closed at 22 cents, a gain of 4.5 pennies for the day and a nickel for the week…CUI’s 50-day moving average (SMA) has reversed to the upside and the fact that the 100-day SMA is very close to reversing is going to add more fuel to the fire…what’s causing the excitement, in our view, is that news is likely just around the corner as the company gets set to start a major new drill program in northwest Tanzania where it holds some outstanding properties in the prolific Lake Victoria Greenstone Belt…of particular interest is Currie Rose’s Sekenke Project…Sekenke has “blue sky” written all over it and it’s why we decided to start following this company when it was trading around a dime last fall…CUI will soon be drilling Sekenke for the very first time…it covers nearly 300 square kilometres and surrounds and runs in between two former high grade Gold mines including Tanzania’s original major producer…we should get an even better picture of the potential of Sekenke when Currie Rose releases results from a recent (and perhaps still ongoing) extensive ground-based and airborne geophysical program as well as satellite imagery…previous exploration work by Currie Rose has yielded excellent results…the company has already identified a highly prospective structure (12 km x 800 metres) within a shear zone on the margins of a large granite intrusion that hosts numerous quartz reefs of the same type and even larger than those that developed at the nearby historic mines…as often is the case, chances are that much was overlooked at and around the former mines which were in operation during the first half of the 20th century…in addition to Sekenke, which has to be regarded as its flagship project, Currie Rose’s Mabale Hills Project also holds considerable promise…while its Tanzanian properties are the market’s major focus, Currie Rose could also benefit over the summer from continued good exploration news out of Trueclaim Exploration (TRM, TSX-V) which is currently conducting an 8,000 metre drill program at the Scadding Gold Property near Sudbury…Trueclaim, which continues to release encouraging assay results, has earned a 51% interest in Scadding and can acquire a full 100% interest by completing a feasibility study, paying $2 million to Currie Rose, and giving Currie Rose a 3% net smelter royalty…CUI announced a joint-venture deal January 25 with Australian-based Liontown Resources for Currie’s Jubilee Reef Gold Project in Tanzania…CUI’s focus is on the Sekenke and Mabale Hills Projects, so finding a partner for Jubilee Reef made sense…the deal commits Liontown to at least 5,000 metres of drilling at the property this year which will give Currie Rose a minimum of 23,000 metres of drilling at all of its properties in 2011…while Currie Rose has had its market cap shaved in half, from a high of nearly $40 million late last year to the current $19.5 million, what hasn’t changed is the quality of this company’s project portfolio which remains as high as ever…Currie Rose has all the cash it needs ($2 million) to complete an initial major round of drilling (10,000 metres) beginning next month, so there will not be any dilution of the stock at current levels as confirmed by President and CEO Harold Smith…
Richfield Ventures (RVC, TSX-V)
Richfield, moving of course in step with New Gold Inc. (NGD, TSX), was up another 64 cents last week to close at $9.02…it has climbed for five consecutive trading days after bottoming out at $8.00, just below its supporting 50-day moving average (SMA), May 19…on May 10, Richfield announced more positive drill results from its Blackwater Project in central British Columbia including 378 metres grading 1.09 g/t Au over the northern section which Silver Quest Resources (SQI, TSX-V) holds a 25% interest in (this northern part is looking very interesting and Silver Quest broke out late last week to close at 95 cents Friday)…of course at the beginning of April, Richfield announced a plan of arrangement with New Gold for a takeover of Richfield (in NGD stock) valued at that point at $10.38 per RVC share or $550 million…the drop in New Gold’s share price has been a reflection of overall market weakness and the market responding to the upcoming share dilution required for the deal…there are, however, enormous benefits down the road for NGD once Blackwater gets into production…we had been speculating on a potential buyout of Richfield for some time…the proposed deal is certainly a very positive fit for New Gold whose New Afton Project in the interior of British Columbia, not far from Blackwater, is on target to start production by the middle of next year…New Gold sees some obvious synergies between the two deposits…Richfield recently outlined approximately 4 million ounces of Gold in the indicated and inferred categories at Blackwater in a NI-43-101 resource estimate released March 2…the New Gold deal is expected to close next month (no competing offers for Richfield have yet been made)…New Gold recently released its first quarter results which showed continued solid growth, lower costs and earnings of six cents per share…the company expects to double its cash flow when production begins at New Afton next year…Richfield is up 652% since we introduced it to BMR readers in December, 2009, at $1.20…the Blackwater Gold District is still full of opportunity for investors and we encourage readers to check out the web site, www.BlackwaterGoldDistrict.com…
