CDNX And Gold
The CDNX lost 14 points this past week, dropping from 1681 to 1667, but this market is still in a very bullish state and any pullbacks should be embraced as buying opportunities as we saw Tuesday and again Friday.
The current bullishness of the CDNX was clearly in evidence Friday: Gold plunged by more than $20 an ounce and the Dow and the TSX were both off sharply, more than 100 points. Intra-day, the CDNX lost 33 points and fell to 1650 which seems to be a new support level. Immediately after touching 1650, buyers stepped into the market and drove the Index back up on strong volume to close at 1667 – just a 13-point drop on the day and less in percentage terms than the drop in gold or the major markets. Conclusion: Nothing changed Friday in terms of gold’s primary trend. As unsettling as these pullbacks can sometimes be, they have consistently proven to be buying opportunities. We’ve made a lot of money in recent months buying into these dips and recognizing that the primary trend with the Venture, precious metals and commodities in general is up.
Gold’s drop Friday caught some investors by surprise – it wasn’t something we were expecting either. But gold’s 14, 30 and 60-day moving averages, which recently reversed to the upside, continue to rise which should give strong support to this market above $1,130. This single day sell-off was probably healthy from a technical standpoint and we should see a renewed advance from here. The action in the CDNX Friday confirms that view, and even the TSX Gold Index posted just a modest 4-point drop Friday.
The BullMarketRun Portfolio
Gold Bullion Development (GBB, TSX-V)
Gold Bullion showed tremendous resilience Friday and refused to fall below 30 cents…the stock firmed up over the final half of the trading day and closed the week at 33 cents, a 5 cent jump from the previous Friday…an exploration update on Granada, including a Preliminary Resource Block Model, is expected sometime next week…it’s our view that the potential of Granada as a major bulk tonnage, open-pit deposit will really start to come into focus for investors when Gold Bullion releases its model – we’ve reviewed all the historical information on Granada, we spent three days on the property in March, and everyone has seen the results on Discovery Hole #17 in the NE…our research and our “gut instincts” tell us Granada is going to develop into a multi-million ounce deposit – yes, in the neighborhood of at least 5 million ounces – after more drilling which commences next month…it doesn’t take a rocket scientist to figure out the valuation this stock could have if that much gold is shown to exist at Granada…we consider, therefore, the current $34 million market cap to be a bargain…the gold at Granada is near-surface, there are no issues with the ore and recoveries have proven to be very high…the deposit is surrounded by excellent infrastructure and is located in what is considered to be the best jurisdiction in the world for mining and exploration…a much higher valuation for Gold Bullion can easily be justified if the market begins to assume, as we are, that the company is on its way to defining a multi-million ounce gold deposit…the other advantage investors have here is that this story is only going to get more interesting as there will essentially be no “dead time” between the exploration update expected next week and the start of major new drilling at Granada which is imminent…this is a story with intrigue and some serious legs…the news flow is going to be intense, so interest in this stock and this company is only going to build…as an investor, that’s the kind of situation you want to have exposure to…holding a core position that you don’t touch for at least six months makes a lot of sense with Gold Bullion…
Seafield Resources (SFF, TSX-V)
We had a very enjoyable long chat Friday night with Seafield President/CEO Tony Roodenburg and we encourage readers to listen to the 15-minute or so interview we posted with Roodenburg on the site Saturday…Seafield had a bit of a rough week and fell as low as 23 cents before closing Friday at 25 cents, a 3-cent drop from the previous Friday…the fundamentals are very much intact with this company and the share price weakness we saw this past week was do entirely, we believe, to the 5.8 million 12.5 cent shares from December’s financing that became free trading last Monday…now is clearly the time to be accumulating Seafield for the next major move up which we expect will really start to kick in by sometime in May, if not sooner…the company has already started exploration work at its Quinchia district properties in Colombia and drilling should commence within 4-6 weeks at Dos Quebradas…the late spring and summer are going to be extremely busy for Seafield in Colombia and we believe the stock will perform very well as a result…most of the cheap private placement stock from last year has been soaked up by the market…that “overhang” pressure will soon disappear, paving the way for another bullish move in the share price…the company is well financed and from a technical perspective, the stock has extremely strong support at current levels just above its 100-day rising moving average…the risk-reward ratio with Seafield right now is highly attractive…
Kent Exploration (KEX, TSX-V)
Smart money continues to accumulate large blocks of Kent in advance of the upcoming spinoff when Kent’s Gnaweeda Gold Project in Western Australia is vended into Archean Star Resources…the new company, which is being financed around 25 cents, is expected to start trading on the TSX Venture Exchange within a week or 2 after shareholder approval of the spinoff is granted at Kent’s AGM April 30th…Kent shareholders as of that date will receive 1 share in Archean Star for every 4 shares of Kent they own…still under some warrant pressure, Kent closed Friday at 18.5 cents, a 3.5 cent drop for the week…not only are we very bullish on the prospects for Archean Star, as explained on this site many times, but we expect Kent’s two remaining flagship properties – the Alexander River Gold Project in New Zealand and the Flagstaff Barite Property in northeast Washington State – to propel Kent higher after the spinoff…in otherwords, we don’t accept the argument that Kent’s value will decline with Gnaweeda taken out of its property potfolio…
Sidon International Resources (SD, TSX-V)
We haven’t said much about Sidon lately as we’ve been very busy with developments in other situations…we’re also content to see BMR readers continue to accumulate around current levels…this stock’s time will come soon enough…Sidon closed at 5 cents Friday, a 1 cent loss on the week…the company has signed a letter of intent to acquire an option to purchase an 80% interest in the Morogoro East Gold Property in eastern Tanzania…this is a high grade prospect and a property of considerable merit in an under-explored region…the stock has great liquidity and the current market cap is only $4 million…this situation reminds us a lot of Seafield and where it was just under a year ago…Sidon has great potential to develop into a huge winner for BMR readers….
Richfield Ventures (RVC, TSX-V)
Richfield has started a 25,000 metre drill program at its Blackwater Gold Project in central British Columbia, a program that will lead to a 43-101 by early next year…like Gold Bullion’s Granada, we believe Blackwater has excellent potential to develop into a world class bulk tonnage deposit…the stock has backed off from its March high of $2.25 and closed Friday at $1.89, a 6 cent loss for the week…Richfield’s 20-day moving average has surprisingly started to decline for the first time in 2 months which we’re not overly concerned about as all of its other moving averages are in bullish alignment…however, a near-term test of its rising 50-day moving average at $1.65 has to be considered a possibility and some stink bids around that area would probably be a smart idea…December’s 7 million share private placement between $1 and $1.20 became free trading this past week but we don’t consider that to be a major overhang issue…
Colombian Mines Corporation (CMJ, TSX-V)
The first 3 holes from CMJ’s Yarmualito drill program are currently in the lab and assays are expected within the next 10 days…regardless of those results, we’re very bullish on the prospects for this company which has such a large and attractive portfolio of properties in Colombia…from a technical standpoint, CMJ is clearly a buy right now – it’s sitting right at its 50-day rising moving average where it has traded at or above for the last 7 months since its spectacular run began…below that, there’s huge support at the 100-day SMA of $1…the stock is 25% off its yearly high of $1.62…if you subscribe to the theory of buying into weakness, CMJ looks like a wise and astute choice at $1.20…
North Arrow Minerals (NAR, TSX-V)
North Arrow has completed its recently announced 18 cent private placement (Venture Exchange approval was granted Friday) and we expect the company will very soon announce the start of drilling at its Beaverdam Lithium Project in North Carolina…we introduced North Arrow just recently at BMR at 18 cents and we like this company A LOT…it has lithium, diamond, base metal and gold interests…a quick look at NAR’s chart is very revealing…the stock closed Friday at 20 cents, testing its rising 20-day moving average…the rising 100-day SMA provides exceptional support at 18 cents, and the 200-day SMA has just now reversed to the upside…volume has started to pick up, so the technicals are telling us that good things are in store for North Arrow…with such an experienced and successful geological team led by mining legends Gren Thomas and Dr. Chris Jennings who have aggressive exploration plans at high quality projects, we have extreme confidence that this company will enjoy tremendous success this year…
Greencastle Resources (VGN, TSX-V)
Greencastle is the only stock in the BMR portfolio that’s actually down from when we initiated coverage…Greencastle finished the week at 13 cents on low volume…disappointing results from two wells drilled in southwestern Saskatchewan knocked this stock down to current levels where it’s essentially trading at cash value…for patient investors, this is the best time to be a buyer of Greencastle as it will recover and perhaps in spectacular fashion…for now, though, we see the stock stuck in a range between 12 and 14 cents…VGN has regular monthly cash flow of over $100,000 from its Primate royalties, some profitable investments in other companies including Seafield, and some potentially valuable gold properties in Nevada…
