GoldQuest Mining (GQC, TSX-V)
GoldQuest is off to a roaring start this month after performing very well in January when many Gold stocks were under some pressure…GoldQuest finally blasted through resistance in the low 40’s and climbed as high as 48 cents Friday before closing at 45 cents for a weekly gain of 7 cents or 18%…very bullish technicals, which John outlined in a chart earlier today, are in sync with this company’s strong fundamentals…we stated in December that GoldQuest is one of our top picks for 2011 and we’re even more certain of that after our conversation Thursday with newly appointed GQC Chairman Bill Fisher…Fisher, a professional geologist with over 30 years’ experience as a geologist and mining company executive, brings a very successful track record to this company (he became a director last summer and was named Chairman January 20) including eight years as CEO of GlobeStar Mining which got taken over by Perilya Ltd. late last year…during his tenure, GlobeStar developed, financed and built the Dominican Republic’s first copper mine at Cerro de Maimon…Fisher is very excited about GoldQuest’s La Escandalosa Property where drilling continues in an effort to expand the 43-101 inferred resource of 400,000 ounces…this is a flat-lying ore body and “the economics could be really quite compelling,” Fisher told us…it’s important to stress the 43-101 was completed on La Escandalosa at a very early stage and the possibility of a discovery of one million ounces or even more is possible as this is such an attractive geological target…the deposit is open at depth as well as to both the south and the north toward another discovery of Gold mineralization by the company at Hondo Valle, approximately 1.2 kilometres away…Gold at La Escandalosa occurs as a flat-lying stratiform zone at shallow depth with mineralization interpreted to be part of a larger intermediate sulphidation replacement-style system which has now been defined intermittently over a strike length of 2,100 metres…the source of the mineralizing fluids remains unknown at La Escandalosa, leaving open the possibility of the discovery of mineralization in structural feeder zones or perhaps in a porphyry copper-Gold type system…the 400,000 inferred ounces outlined so far are over a 25-hole section 350 metres long…successfully linking this central mineralized zone to the north and the south is what could take this deposit to the million ounce plus category which would allow for production of 100,000 ounces per year…no major infrastructure or political hurdles…the regulatory framework in the DR is conducive to mining…GoldQuest has many other targets of considerable merit throughout its large DR land package including Las Animas which has a 43-101 inferred resource of 129,000 ounces of Gold, 2.5 million ounces of silver, 106 million pounds of copper and 130 million pounds of zinc…GQC will be drilling Las Animas immediately after Escandalosa…that will be followed by a drill program at Jengibre, a promising target about 30 kilometres southeast of Escandalosa…in Spain, Goldquest holds the Toral zinc-lead-silver deposit which has an historical (non-43-101 compliant) resource of 5.4 million tonnes grading 9% zinc, 6% lead and 45 g/t Ag…a 43-101 on Toral is currently being completed and is due very soon…GoldQuest has also acquired a second polymetallic project in the area (Lago, just a 20-minute drive from Toral), and more details are expected upon approval from the Spanish government of a mineral rights application for the property… GoldQuest, which has nearly $4 million in the bank, is up 131% since we introduced it to our readers near the end of September…this is a stock that got as high as $1.80 ($100 million market cap) in mid-2007 on less than what it has now…February potentially could be very busy in terms of news flow for GoldQuest…the long-awaited announcement of a new President and CEO, a 43-101 compliant resource estimate for Toral, and initial drill results from Escandalosa could all come this month…GQC has all the ingredients to become a huge winner this year as the bull markets in Gold and the CDNX intensify…
Greencastle Resources (VGN, TSX-V)
Greencastle was up 2 pennies last week to 25.5 cents after a weak January when it dropped 31% from 36 cents to 24.5 cents…the stock hit a low of 22 cents last week where it appears to have bottomed out…a declining 50-day moving average (SMA) at 31.5 cents can be expected to provide resistance over the short term…a complete lack of news over the past two months is really what has caused Greencastle to drift lower…however, with approximately $6 million in working capital, three Gold properties and monthly cash flow from an oil royalty, it doesn’t take a rocket scientist to figure out that VGN is a bargain at current levels…volume has been low on the move down which confirms there’s nothing to be concerned about here…Greencastle will have its day in the sun again soon enough…the long-term chart remains very bullish with rising 100, 200 and 300-day moving averages (SMA) that are in no danger of reversing…it’s also interesting to note that President and CEO Tony Roodenburg, a large shareholder in VGN, has refrained from selling any of his holdings in recent months despite the fact the stock price more than tripled in value on high volume…this is different from past runs in the stock and adds further credence to our view that we haven’t seen the highs in this cycle yet from Greencastle – it’s poised for what we believe could be a massive breakout sometime during the first half of this year…Pinetree Capital has also accumulated more shares in Greencastle, so there’s every reason to be very optimistic regarding this company’s prospects in the days, weeks and months to come…Greencastle is up 82% since we added it back in to the BMR model portfolio three months ago…
Adventure Gold (AGE, TSX-V)
Adventure Gold continues to show some strength and climbed another 2 pennies last week to close at 48 cents….volume has picked up over the last 13 sessions after a low of 36 cents January 19, and the technicals are looking quite promising as John outlined in an updated AGE chart today…AGE released significant news January 20…the company got some free drilling on its Granada Eastern Extension Property as it reported that one of Gold Bullion’s holes (#85) was drilled entirely on Adventure Gold land (just inside the boundary) while three other holes (#78, #83 and #98) were collared north of AGE’s property but finished within it…this didn’t surprise us and it’s not an unusual event in the industry…it worked out well for both parties in this case, however – all the core from those holes has been given to AGE who will share results with GBB…this represents at least $100,000 of drilling and all AGE has to do is pick up the assaying costs…given GBB’s “hit ratio” on holes, it’s reasonable to assume that at least one of the holes (or partial holes) on AGE’s property could be of the “stellar” variety…with more results coming soon from Gold Bullion, we expect Adventure Gold could continue to firm up…they do hold small but strategic parcels of land around Granada (immediately to the south and the west in addition to the east) that could become part of a large open-pit…their claims hold significant potential value and they have drill assay results coming in without even doing their own drilling which they plan to start upon completion of their program at Pascalis-Colombiere…that property in the eastern part of the Val d’Or mining camp is heavily underrated in our view…a 2,500 metre drill program started at Pascalis-Colombiere last month and is testing the former L.C. Beliveau Mine at depth (below 300 metres) as well as near-surface parallel Gold structures to the west…Pascalis-Colombiere is just 1.5 kilometres east of Richmont’s (RIC, TSX) operating Beaufor Gold Mine which has produced over one million ounces in its lifetime…it’s safe to assume Richmont will be watching developments at Pascalis-Colombiere with interest…Adventure Gold’s property has significant upside exploration potential…the geological setting is favorable for the identification of new high-grade Gold bearing veins and structures or bulk-style ore shoots…there are many untested areas and excellent potential at depth…L.C. Beliveau was a very profitable former producer…if AGE can prove up something significant through extensions to this deposit, we see a potential deal with Richmont which would be the natural choice to bring the mine back into production…we first mentioned Adventure Gold to our readers in an article September 29, just a couple of days following the company’s announcement that it had acquired land at Granada, when the stock was trading in the low 20′s…we officially added AGE to the BMR model portfolio at 34 cents October 28, so the gain since then is 35%…Adventure Gold has been around only since late 2007 and we are impressed by the company’s solid portfolio of properties (19 in six strategic areas in Quebec and Ontario)…also of immediate interest is AGE’s partnership with Lake Shore Gold (LSG, TSX) on the Meunier 144 Property where deep drilling is currently testing the down plunge extension of Gold zones located at the Timmins and Thunder Creek deposits…the current initial deep drill hole onto the Meunier JV property is continuing…when completed it’s estimated the hole will provide a deep cut on the projected target area at about a vertical depth of 2,600 metres…this will enable shallower wedge cuts to be considered if significant mineralization is found to be present in this area…the initial deep hole was collared on LSG’s Timmins mine property last August and has now passed the 2,000 metre mark in depth…if this deep hole succeeds, AGE could absolutely explode…
Sidon International (SD, TSX-V)
Sidon traded in a narrow range last week between 12.5 cents and 14 cents, closing down a penny for the week at 13 cents…the stock is currently sandwiched between its rising 100-day moving average (SMA) at 17.5 cents and its rising 200-day SMA at 11.5 cents…this stock has shown clear trading patterns since last spring and has been quite volatile…however, the primary trend remains up and Sidon has consistently found support at or just above the 200-day SMA…BMR will be interviewing President and CEO Kamal Alawas in the near future but a date for that has not yet been confirmed…results are pending from drilling at Sidon’s Morogoro East Gold Property…the company reported zones of disseminated sulphides of pyrite and pyrrhotite as well as some chalcopyrite and arsenopyrite throughout all six holes drilled over intervals of 30 to 70 metres…we caution that visuals are not always reliable but there’s reason to be optimistic that Sidon could be on to something…the company is also trying to develop a placer operation at Morogoro and has also acquired ground near Canaco’s discovery…this company has come a long way since last March when we first introduced it to BMR readers at a nickel, and its new web site is just one more indication of how impressively Sidon has developed and matured…we see exciting possibilities for 2011…the company raised over $1 million through the exercise of options and warrants in November and December…
Seafield Resources (SFF, TSX-V)
Seafield appeared to reverse course last Tuesday when it fell as low as 42.5 cents and closed at its high of 47 cents on over two million shares…Seafield closed Friday at 46.5 cents, a loss of 1.5 cents for the week…we still view the overall trend since early December as very bullish and we’re expecting a significant turnaround this month, assuming more drill results come in… Seafield’s current market cap of approximately $68 million is very attractive as this company continues to work on building a substantial Gold resource at its Quinchia District properties in Colombia…on December 3, SFF announced a spectacular drill result from its Miraflores Property in Colombia and the stock rocketed to 77 cents…results are pending on nine more holes at Miraflores…given historical results, at least some of these holes should be very good…drilling now is taking place at Dos Quebradas, a property we believe gives Seafield its real “blue sky” potential at Quinchia… SFF reported December 8 that the first three holes had been completed at Dos Quebradas which is rich in porphyry targets over a wide area…DQ is just a few kilometres northwest of Miraflores…visual reports indicate that these three holes have similar styles of mineralization to an historical hole drilled by AngloGold that returned an interval of 39.5 metres grading 1.67 g/t Au…the potential of Dos Quebradas is evident from limited historical drilling and was confirmed by Seafield last year through soil geochemical surveys and magnetic surveys which are crucial to discovering hidden porphyries in areas of very little outcrop…Seafield also released results recently from trenching in one location from the southern end of the gold-in-soil anomaly that defines the northern extension of the Dos Quebradas porphyry…1.75 g/t Au was returned over 94 metres…Seafield has an excellent opportunity to develop a multi-million ounce Gold resource at its three major properties at Quinchia (Chuscal is the third property)…Seafield has in excess of $15 million in the bank to fund an aggressive program in Colombia…
SFF is down to 40 cents today 8th February) on large volume. I’m beginning to think the spectacular drill result from Miraflores was too good to be true? If Brent Cook’s interpretation was correct does Seafield have a feasible resource?
Comment by Andrew — February 8, 2011 @ 1:53 pm
What was Brent Cook’s interpretation? I did not see that?
thx greg
Comment by GREG — February 8, 2011 @ 5:26 pm
Brent Cook’s Exploration Insight: “Speaking of investment letter writers, I understand that the Midas Letter is calling Seafield Resources (SFF.TSX-V) the next Ventana, and advises that you grab as much as you can with both hands at under $1.00. Ventana Gold (VEN.TSX) has a 3.5 million ounce inferred gold resource in Colombia and is the subject of a takeover offer of approximately $1.5 billion. Seafield, or Ventana II if you prefer, announced a drill intersection of 449 meters grading 1.29 grams per tonne gold including 10 meters @ 2.87 g/t Au, and 23.95 meters @ 9.18 g/t Au. Within the higher grade section was a 2-meter interval grading 70 grams per tonne gold. SFF (~99 million shares outstanding and ~146 million fully diluted) popped from $0.23 to $0.57 on huge volume of 70 million shares after it opened for trading on Friday.
I reviewed the results and the well-written 43-101 after the drill hole announcement, and since I received a number of queries from subscribers, offer the following quick and dirty review of the Miraflores property in Colombia.
The property has seen a number of drill campaigns from several exploration companies, the most recent being B2 Gold, in 2007. The historical work, plus a report from the renowned economic geologist Richard Sillitoe concluded that Miraflores is a multi-phase magmatic-hydrothermal breccia. Meaning, the mineralization is confined to a fractured and broken pipe-like body formed by the injection of several magmas and hydrothermal fluids related to these intrusives. There are three alteration and mineralization phases, of which it appears that an early silica and base metal event is associated with the better gold mineralization. Drilling, mapping, and underground sampling have essentially defined the limits of the body at about 250 meters by 280 meters. Although the breccia body is open to depth, drilling suggests that the better gold mineralization is concentrated in the upper 250 meters or so. There is some evidence that a high grade core dipping to the southwest could extend the mineralization to depth in one direction.
In April 2010 SFF estimated an inferred resource, based on approximately ten drill holes and underground sampling, of 776,373 ounces grading 1.295 grams per tonne gold for the Miraflores breccia pipe. The resource report noted that the high grade mineralization within the body occurred mostly within a central core and was both erratically distributed and nuggety (localized very high grade gold that is difficult to model in a resource estimate). The highest grades (3 to 429 g/t Au) occurred in fault veins, and mineralization generally decreased towards the edges of the breccia body.
Our handy-dandy drill interval calculator (pictured below) reveals that, excluding the two higher grade intervals in DH-03, the SFF announcement of 449 meters grading 1.29 grams per tonne gold consists of 415 meters grading 0.798 grams per tonne gold plus the two high grade sections. Within the higher grade, 23.9 meter interval, there is a 2-meter section grading 70 grams per tonne gold. This narrow interval alone has a significant influence on the entire 449 meter interval, such that when excluded the grade drops to just under 1g/t Au for the remaining 447 meters. DH-03 went through the guts of the breccia pipe, and the drill results are representative of the deposit– basically they confirm the previous drilling and resource estimate. Hmm…this is not looking good.
(Fig. 1- Breakdown of Seafield’s 449 meters grading 1.29 g/t Au)
In summary, all the excitement is over a single drill hole that really offers minimal new information on a gold deposit that has been effectively defined by previous work. Miraflores is a discrete breccia pipe hosting a decent resource centered around a higher grade core. There may be the potential to add ounces at depth to the southwest as indicated by the deeper interval announced by SFF this week. It is difficult to tell how much of the resource could be economically mined because the deposit rests on the side of a steep hill; developing the deeper portions could entail the removal of a significant amount of barren rock (high strip ratio).
Although the upside to the Miraflores property may lie in as yet undiscovered or undrilled targets, that upside existed at $0.23, and has nothing to do with the 449 meters grading 1.29 grams per tonne gold or, the 415 meters grading 0.798 grams per tonne gold plus a couple of high grade intervals. This is not Ventana II, and Miraflores is not a large enough deposit to entice me. If other gold in soil anomalies on the property noted in an October 6 news release are the real sex to this play, then it is best to really look at the historical results and wait until SFF begins releasing additional data from those targets. Considering that a single drill hole through a known deposit caused over two-thirds of SFF’s outstanding shares to trade hands in one day, one has to wonder who made the better trade, buyers or sellers. Monday’s action should prove interesting.”
Comment by Andrew — February 8, 2011 @ 5:36 pm
Thanks, obviously B cook is not impressed, hope he is not right either I guess time will tell.
thx greg
Comment by GREG H — February 8, 2011 @ 9:01 pm
Brent Cook was also not impressed with Gold Bullion at 30 cents. I don’t care how he tries to play with numbers, the fact is that Miraflores is a confirmed 43-101 deposit that after Seafield’s 2010 drilling probably contains between 1 and 1.2 million ounces. However, both Cook and James West missed the point about Seafield. Miraflores, as we pointed out in our article when the results came out in December, is limited in its potential. What is going to drive Seafield is Dos Quebradas – this is the blue sky at Quinchia. It is a first-rate geological target, proven by historical drilling and Seafield’s pre-drilling exploration work last year. We’ve been saying this now for over a year. At the end of the day, it’s my prediction Seafield will prove up at least 5 million ounces at Quinchia – much of that from Dos Quebradas. Chuscal is also another interesting property. Those who understand and grasp the potential of Dos Quebradas should do extremely well with Seafield.
Comment by Jon - BMR — February 9, 2011 @ 6:29 am
Thanks Jon, your time and input is always much appreciated.
Comment by Andrew — February 9, 2011 @ 6:32 am
Thanks Jon for really expressing how you feel with conviction, we need more of that, and you are correct, in looking back you have always said the blue sky is in DQ
THANKS AGAIN FOR ALL OF YOUR RESEARCH AND HARD WORK AND PATIENCE WITH OUR SOMETIMES SILLY QUESTIONS AND DOUBTS.
Greg
Comment by GREG H — February 9, 2011 @ 6:57 am