Visible Gold Mines (VGD, TSX-V)
Visible Gold Mines (VGD, TSX-V) continues to struggle and hasn’t posted an “up” week since the end of March…we see a powerful story emerging here, however, so we would encourage our readers to remain patient with VGD and if possible take advantage of the current weakness…the trigger for a reversal in this stock is going to be the company’s Joutel Project which, mark our words, should generate plenty of excitement…Joutel is a joint venture between VGD and Agnico-Eagle Mines (AEM, TSX) with VGD acting as the operator…several high priority drill targets are being finalized, work begins on the ground within a couple of weeks and the property will be drilled aggressively through the balance of the year…selling in VGD in recent weeks has been technically driven and unrelated to the fundamentals and what’s about to happen on the ground – hence we see a major opportunity at the moment with this company’s market cap not much above its cash value of $6.5 million…recently we posted an interview with VGD President and CEO Martin Dallaire which went into considerable detail regarding Joutel…it’s a massive project with multi-million ounce potential…it’s also a significant former producer that Agnico-Eagle mined from three zones between 1974 and 1993…Joutel was closed prematurely as Agnico-Eagle turned its attention to its huge LaRonde Mine…the theory is that there are extensions to the Joutel deposits as well as potential undiscovered zones elsewhere on that large land package (it’s more than 10 times the size of Granada)…Joutel is a geologist’s dream with a great story and it was Agnico-Eagle that actually approached VGD to take on this project through a joint venture – that’s the confidence they have in Visible Gold Mines’ geological team, in particular senior geologist Robert Sansfacon who was instrumental in the discovery of Osisko’s (OSK, TSX-V) Canadian Malartic deposit…”When we picked up all the Joutel boxes and maps from the Agnico-Eagle exploration offices, it took us two pick-up trucks for all the data,” Dallaire told us…”We were flooded with data but we love it because we have the capacity to analyze all of it and bring some fresh ideas to the project…the trend is very large and there’s a lot of potential for many new mines in the area”…Dallaire, an engineer and entrepreneur from Rouyn-Noranda, understands the mining industry and what an exploration company needs to do to succeed and build shareholder value…he’s fluently bilingual, presents himself extremely well and knows how to run a business and make money…he thinks big but is focused…he has also recruited some key people including Sansfacon who honed his skills for many years with Lac Minerals…in short, Dallaire has put something together you don’t often see in the junior speculative market – a powerful dynamic of business, geological and marketing expertise with a strategic plan to rapidly build value…the company’s niche and sole geological focus is northwestern Quebec where it has acquired several promising land packages, mostly west and north of Rouyn-Noranda…Dallaire is taking an aggressive approach to exploration and he’s targeting under-explored areas and past producing mines where major new extensions are possible…
Cadillac Mining (CQX, TSX-V)
Cadillac was unchanged for the week, closing at 10 cents on continued light CDNX volume…this is a company with tremendous potential given its property packages but management has yet to demonstrate an ability to make things happen in the market and create shareholder value…we are frustrated but remain patient for now because the possibilities with CQX are still incredible, especially considering the current market cap which is just $2.5 million…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 a year ago 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…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 as possible…management’s delay in doing so has been frustrating and has led to a substantial drop in CQX’s share value…the company is also cash poor and needs to raise some money…we give CQX 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…the best solution in our view is for Cadillac to cut a deal with another company for exploration at Wasamac and the natural partner for that appears to be 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, however they decide to proceed…
Abcourt Mines (ABI, TSX-V)
Abcourt continues to be unloved at the moment and dropped another penny last week to 11 cents…volume has dried up significantly and ABI hasn’t enjoyed a 1 million+ share day since May 16…the drop-off in volume is actually a good sign as that’s what typically occurs near the end of a decline…Abcourt has traded in a narrow range between 10.5 and 13 cents over the last 34 sessions…the stock, which now has 149 million shares outstanding for a market cap of $16.4 million, is ripe for a takeover given the value of its assets which is why we still have an interest in it…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) is now in decline and will provide resistance for now around 16 cents while the declining 50-day is at 13 cents…it’s going to take some significant news or bullish new overall market sentiment to drive ABI through resistance over the next month or two, so investor patience will be required here…the company released more results from its Abcourt-Barvue Silver-Zinc Property June 13 including 20 metres grading 108.33 g/t Ag and 1.49% Zn, and 4.5 metres grading 239.43 g/t Ag and 2.00% Zn… metres grading 300.99 g/t Ag and 3.05% Zn in AB-11-24, and 10 metres grading 129.48 g/t Ag drill results to date should significantly upgrade and increase all-category reserves and res0urces…more drilling will take place at Abcourt-Barvue later this year…the rig was just recently moved to the Vendome Gold-Silver-copper-zinc property approximately 13 kilometres south of Abcourt-Barvue…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…
Greencastle Resources (VGN, TSX-V)
Greencastle was up half a penny last week at 17.5 cents on very light volume of just 77,000 shares…the company released its Q1 financials June 9 which show working capital of 16.4 cents per share ($7.5 million)…oil royalties have declined significantly – just $212,000 for the first three months of 2011 vs. $355,000 over the same period a year ago which underscores the need for VGN to make some major changes as Primate just isn’t the cash cow it used to be…the fact Tony Roodenburg is no longer at the helm of Seafield Resources (SFF, TSX-V) is a positive development in our view for Greencastle…Roodenburg had been trying to ease his way out of Seafield since 2009 without much success until last month…he’ll now be able to focus almost exclusively on Greencastle which has been a favorite project of his for many years…we suspect he’s going to take a serious look at spinning out the oil assets or the Gold assets into a separate company…something needs to happen here to move this company forward and boost shareholder value…Greencastle’s market cap of $8 million means the stock is now trading just half a penny above its cash value…history shows that whenever this occurs in VGN, a terrific buying opportunity has opened up though investors must be patient…it’s interesting to note that the stock’s rising 500-day moving average (SMA) and its 1000-day SMA, which has flattened out, have converged at 17 cents where there is exceptional support… Greencastle tripled over a six-week period from late October to early December…since the beginning of January, though, the stock has struggled due mostly to impatient investors frustrated with the lack of news…patience is definitely required with VGN or one shouldn’t invest in it…over the years the successful strategy with Greencastle has been to accumulate on weakness when the stock is near cash value and then sell into strength when something develops…with $7.5 million in working capital, three Gold properties (including land near the Blackwater Project) and monthly cash flow from an oil royalty, it doesn’t take a rocket scientist to figure out that Greencastle does offer excellent value at current levels…the long-term chart remains very encouraging with rising 200 and 300-day SMA’s that are in no danger of reversing at the moment…it’s also important to note that Roodenburg, a large shareholder in VGN, refrained from selling any of his holdings during the late 2010 run-up in the share price…this is different from past bullish 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 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…Greencastle is up 21% since we added it back in to the BMR model portfolio last October…
Sidon International (SD, TSX-V)
Still very quiet on the Sidon front…the company hasn’t been able to recover yet from its fall in March, one day after the CDNX correction began, on poor drill results from its Morogoro East Gold Property in Tanzania…the stock was up half a penny last week thanks to a couple of decent volume days, closing at 3.5 cents…there has been no news from the company since March 14 when it announced a proposed private placement at 8 cents and an option to acquire an 80% interest in a 50-square kilometre property adjacent to Canaco’s (CAN, TSX-V) Handeni discovery in Tanzania…the six shallow holes drilled in December at Morogoro East failed to produce significant results, the best hole showing 3 metres grading 1.7 g/t Au…the company has drilled four deeper holes with results for those still pending…what the initial six holes have given Sidon, however, is a better understanding of the Morogoro geological structure which will aid in any future drilling…exploration, especially at such an early stage, is never easy and disappointing early results don’t necessarily mean a property doesn’t hold excellent potential…the company is also trying to develop a placer operation at Morogoro…there is certainly the possibility of better days ahead for Sidon but the lack of news and the continuing weakness in the share price is not encouraging…from a technical standpoint, the stock has fallen to a support area and is in deeply oversold territory…the climb back up, however, won’t be easy and the company may have to look at a consolidation of its capital on a 1-for-5 basis at least…Sidon ran as high as 26.5 cents last winter but is now off a penny-and-a-half since we introduced it to BMR readers just over a year ago at a nickel…the company currently has approximately 140 million shares outstanding for a market cap of $5 million…
