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Visible Gold Mines (VGD, TSX-V)

Bulletin

It was a breakthrough week fundamentally and technically for Visible Gold Mines which surged 28%, gaining 7.5 cents to close Friday at 34.5 cents…we expect VGD to begin to garner much more attention in the days and weeks ahead after the company came out with exciting news Thursday regarding its optioned Wasa Creek and Wasa East Properties near Richmont Mines‘ (RIC, TSX) growing Wasamac deposit, unquestionably one of the best exploration stories on the Cadillac Trend right now…at BMR, we were “ahead of the market” with Gold Bullion and its Granada Gold Property in late 2009/early 2010, and we believe we’re ahead of the market again with the Wasamac situation and what’s developing there…not only is Richmont rapidly building its Wasamac deposit – an exploration update from RIC is expected by the end of the month – but the area around Wasamac has also been hugely under-explored…it’s also highly prospective…the Cadillac Fault, for example, runs right under the middle of the 650-hectare Wasa Creek Property…in addition, Visible Gold Mines‘ geologists believe they may have discovered some sort of connection between the Wasa Shear and the Cadillac Fault at Wasa East with that property right in between those two Gold-bearing systems…what impressed us the most about LBWC-11-03 at Wasa Creek was that it was essentially a “blind hole” – this property has been unexplored and on the first very hole VGD intersected several zones of significant Gold mineralization…of particular interest is the 16.4-metre mineralized shear zone which showed the same style of mineralization as the Wasamac deposit – close co-existence of Gold and pyrite disseminated in an altered shear zone…it’s still very early in the game for VGD at Wasa Creek but at least now they have a trail of mineralization to follow, and that’s important…assay results are pending for 6 of 7 holes completed to date, so the market has plenty to speculate about…two rigs are concentrating in the area around LBWC-11-03 with step-out holes being drilled to the east and west, and a north-south “wall” of holes being drilled to the east of LBWC-11-03 for 1.5 kilometres and past the Cadillac Fault…what VGD may hit on the either side of the Cadillac Fault will be interesting to see…meanwhile, VGD geologists have traced Richmont’s Wildcat Zone for more than 900 metres to the south to three claims that form part of the Wasa Creek Property…that’s where LBWC-11-08 was collared, roughly 1,000 metres south of the Wildcat Zone which is about 300 metres south of the north-dipping Wasamac Main Zone…given developments at Wasa Creek and Wasa East, news flow should be strong with VGD and some drama could quickly build…in addition, the company is expected to commence a major drill program very soon at its promising Joutel Project 150 kilometres north of Rouyn-Noranda…Joutel has us very excited given the presence of three former Gold mines on that property and two former copper mines immediately to the southwest…the best place to find a new mine is near an old mine, and VGD will be aggressively tackling Joutel…Visible Gold Mines‘ senior geologist is Robert Sansfacon who’s highly regarded in the industry…he honed his skills for many years as a project manager for Lac Minerals and is blessed with an incredible understanding of structure…he’s a major reason we added VGD to the BMR model portfolio last spring…he was involved in the discovery of Osisko’s (OSK, TSX) massive Canadian Malartic deposit, and we’re convinced he’s going to make a discovery for Visible Gold Mines…technically, VGD is looking very strong with rising 10, 20 and 50-day moving averages…it has momentum, along with $6 million in working capital, and is being driven by a story that has some serious “legs”…

Cadillac Mining (CQX, TSX-V)

Sellers hit Cadillac hard in last Monday’s market drop, sending CQX as low as 9.5 cents, but the stock recovered later in the week and closed Friday at 12.5 cents (unchanged for the week) on the strength of Visible Gold Mines‘ news regarding Wasa Creek and Wasa East…VGD optioned those properties from Cadillac last December…with a market cap of just $3.4 million, CQX certainly offers significant upside potential simply given its current deal with VGD which allows CQX to retain a 40% interest in Wasa Creek, Wasa East and the entire Lucky Break/Cadillac Break Projects…what could really cause CQX to explode, however, is if it’s able to raise some cash and put its 100%-owned seven Wasa claims adjoining the northern portion of Richmont’s Wasamac Property into play…that’s what CQX has to do for the benefit of its shareholders…the company had a glorious opportunity to raise cash and build shareholder value earlier this year because of Wasamac and failed to do so…now they have another opportunity…second chances don’t come often in life but Cadillac management has been blessed with one in this instance, and hopefully they take advantage of it…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 explore Goldstrike in the right way…the best solution in our view is for Cadillac to cut a deal with another company for exploration of its Wasa claims and the natural partner for that appears to be VGD which has all the money and expertise necessary to unlock the value of those claims and create excitement in the market…Cadillac could let others do all the heavy lifting at and around Wasamac and then focus its energies on developing the Goldstrike Project…

Abcourt Mines (ABI, TSX-V)

Abcourt was up a penny last week, closing at 11.5 cents Friday…the stock fell as low as 9.5 cents (support) during Monday’s sell-off before rebounding…ABI faces stiff overhead resistance with a declining 100-day moving average (SMA) at 13.5 cents and a declining 200-day SMA at 15 cents…if you’re bullish on Silver and Zinc prices, however, which we are, you have to love this play as the current market cap ($17 million) really doesn’t take into account the value of the company’s Abcourt-Barvue Silver-Zinc deposit near Val d’Or…ABI is ripe for an eventual takeover given the value of its assets and management’s obvious inability to unlock that value which is why we still view this company with considerable interest…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…the company released more results from Abcourt-Barvue August 2 including 2.1 metres grading 422.35 g/t Ag…drill results to date should significantly upgrade and increase all-category reserves and resources, most of which can be mined by open-pit…four years ago, GENIVAR produced a very positive feasibility report for the project which showed robust economics…more drilling will take place at the property this year…the rig was temporarily moved to the Vendome Property (Gold, Silver, Copper, Zinc) approximately 13 kilometres south of Abcourt-Barvue where 4 holes were drilled to confirm historical data…results were announced last Monday and included 33 metres grading 1.69 g/t Au…more results were released July 5 from the company’s Elder-Tagami Gold Property near Rouyn-Noranda including 8.50 metres grading 3.71 g/t Au…that was from the Tagami area to the north which 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 2 pennies for the week at 19.5 cents after dropping to 16 cents, slightly below its cash value, last Monday and Tuesday…the 100-day moving average (SMA) has flattened out at 19.5 cents but a breakout above the still-rising 200-day SMA at 23.5 cents is what we’re watching for to confirm that a new uptrend is underway…as far as the fundamentals go, our gut feeling is that something is cooking here – President and CEO Tony Roodenburg has been quiet for too long…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 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 a couple of months ago…he’s now 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 VGN forward and boost shareholder value, but we’re confident Roodenburg will do it – sooner or later…Greencastle’s market cap of $9 million means the stock is now trading just 3 cents per share above its cash value…history shows that whenever VGN is near cash value, a terrific buying opportunity has opened up though investors must be patient…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 strong working capital, three Gold properties (including land near the Blackwater Project and a couple of very good Nevada properties) and monthly (albeit declining) 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 encouraging with rising 200 and 300-day SMA’s (the 200-day will start declining if something doesn’t develop by the end of this month)…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 during the last half of this year…Pinetree Capital also accumulated more shares in Greencastle late last year, so there’s every reason to be very optimistic regarding this company’s prospects…Greencastle is up 39% since we added it back in to the BMR model portfolio last October…

Sidon International (SD, TSX-V)

Still nothing new to report here…we’re all entitled to have one dog in our portfolio and Sidon is that dog for us at the moment, though it did increase five-fold for us last year and still holds potential…things remain very quiet on the Sidon front with the stock down half a penny last week at 3.5 cents on a mild uptick in volume…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…there has been no news from the company since March 14 – they effectively “sat out” the correction in the CDNX – 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 6 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 4 deeper holes with results for those still pending…what the initial 6 holes have given Sidon, however, is a better understanding of the Morogoro geological structure which would 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 is not encouraging…the climb back up won’t be easy and the company potentially may have to look at a consolidation of its capital…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 $4.9 million…