Visible Gold Mines (VGD, TSX-V)
Visible Gold Mines has momentum right now and we expect that to continue, especially with the Wasamac area west of Rouyn-Noranda garnering more attention as a very important new Gold story along the Cadillac Trend…Richmont Mines (RIC, TSX) released more stellar results from its growing Wasamac deposit last Tuesday including 7.28 g/t Au over 31.4 metres (true width) in the Main Zone…that helped propel Richmont to a new all-time high of more than $11 per share while buyers stepped up to the plate with VGD, lifting it as high as 39.5 cents Wednesday on one of its best volume days ever (1.1 million shares)…the stock pulled back to support in the mid-30’s and closed Friday at 35.5 cents for a gain of 1 penny for the week…Wasamac keeps looking better all the time and Richmont has once again expanded its drill program there with five rigs currently on the property…what’s highly significant for Visible Gold Mines is that much of the area around Wasamac (15 kilometres west of Rouyn-Noranda) has been under-explored…VGD controls a dominant land position there and is also the most aggressive driller besides Richmont…in addition, VGD has some early results to prove it’s not drilling into cow pasture…VGD hit several zones of significant Gold mineralization on its very first hole at Wasa Creek (LBWC-11-3) as announced August 11…8 other holes were completed as of mid-August and assays are pending on all of those…what impresses us the most about LBWC-11-03 is that it was essentially a “blind hole” – this property has been virtually ignored in terms of any previous exploration and on the very first hole, VGD hits Gold…of particular curiosity is the 16.4-metre section that shows 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…the market has plenty to speculate about with a lot more assays coming…you have to like the fact the prolific Cadillac Fault runs right under the middle of the 650-hectare Wasa Creek Property…as well, VGD 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…given developments at Wasa Creek and Wasa East, along with the Joutel Project of course, news flow should be strong with VGD and some drama could quickly build…at the moment VGD has to be considered the most exciting play in the BMR “stable”…a 7,500-metre, Phase 1 drill program at Joutel should be starting soon…we love this property because three former Gold mines (one open-pit, two underground) and two former copper mines are within the immediate vicinity of where VGD will be drilling, just a few kilometres to the northwest and the southwest, respectively…it’s hard to imagine there aren’t more deposits in the area, ones that simply weren’t discovered in the 70′s, 80′s and 90′s…and we can’t think of a better geologist to find one or more new deposits there than Robert Sansfacon whose re-interpretation of Canadian Malartic helped Osisko (OSK, TSX) nail down a 10 million+ ounce monster…Sansfacon is challenging some previous geological assumptions concerning Joutel and he’s applying a new model, taking a structural approach rather than a stratigraphic one as Agnico-Eagle (AEM, TSX) did previously…two-thirds of the Phase 1 drilling will test the extension of a northwest-southeast mineralized structural pattern that based on geophysical surveys appears to strike directly southeast of Agnico-Eagle’s past-producing Telbel, Eagle and Eagle West mines for two kilometres and may extend farther to the former village of Joutel and beyond…the Joutel mines gave birth to Agnico-Eagle, and the major would love nothing more than to see this old mining camp come back to life…if anyone can make that happen, it’s Sansfacon who’s highly regarded in Quebec mining circles…technically, VGD has a very bullish chart pattern and John will be updating the VGD chart for us by Tuesday morning…Visible Gold Mines has $6 million in working capital and is being driven by some exploration stories that appear to have serious “legs”…think big, everyone, because this one could turn out to be VERY big…
Cadillac Mining (CQX, TSX-V)
Cadillac enjoyed a positive week, thanks to the Richmont news, gaining 4 pennies or 40% to close at 14 cents…volume jumped to 632,000 shares last from 227,000 shares the week before…Wasamac is hot and Cadillac must seize the opportunity now…with a market cap of just $3.8 million, CQX certainly offers major 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 put its 100%-owned seven Wasa claims adjoining the northern portion of Richmont’s Wasamac Property into play, either by raising cash and exploring it themselves or finding a joint-venture partner…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…Victor Erickson and Audre Audet are smart mining people and have done an admirable job protecting the company’s tight share structure…this is not their own private company, however, and they owe it to their shareholders, for whom they serve, to build value and not let the company treasury run dry…
Abcourt Mines (ABI, TSX-V)
Patience continues to be the name of the game here and will be for a while yet…Abcourt was up half a penny last week at 11 cents…ABI faces stiff overhead resistance with a declining 100-day moving average (SMA) at 12.5 cents and a declining 200-day SMA at 14.5 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 ($16.4 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…we love the assets…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 August 9 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 fell 2 pennies last week to close at 15.5 cents (market cap is now below cash value) on very light volume…the declining 100 and 200-day moving averages (SMA) at 19 and 23 cents, respectively, will provide stiff technical resistance until news or a dramatic change in the markets alter the dynamics…the company released its June 30th financials Thursday which show working capital of $7.3 million or 16 cents per share…our gut feeling is that something is cooking here…President and CEO Tony Roodenburg has been quiet for too long, but knowing the conservative Roodenburg he may wait until the markets regain momentum before he launches into anything in a major way…the fact Roodenburg is no longer at the helm of Seafield Resources (SFF, TSX-V) is a positive development in our view for Greencastle…he had been trying to ease his way out of Seafield since 2009 without much success until a few 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 and we’re confident Roodenburg will do it, sooner or later…Greencastle’s market cap of $7 million means the stock is now trading half a penny below its working capital…history shows that whenever VGN is trading right around its working capital, a great 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 very modest) 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 strong support zones and a still-rising 300-day SMA…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 runs in the stock and adds further credence to our view that we haven’t seen the highs in this cycle yet from Greencastle…the stock is up 11% since we added it back in to the BMR model portfolio last October…
Sidon International (SD, TSX-V)
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…there was finally some news from Sidon last week but not the news investors were hoping for as the company announced it will be late in filing its year-end (April 30) financials…the same thing happened earlier this year with a related company, Kokanee Exploration (KOK, TSX), and the matter was resolved and Kokanee is back on track with some apparent new players…Sidon 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 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 apparently drilled some deeper holes but investors haven’t seen results yet…what the initial 6 holes have given Sidon, however, is a better understanding of the Morogoro geological structure which could 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 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 lack of good 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 or even a new group to come in and take things over…Sidon ran as high as 26.5 cents last winter but is now off 2.5 pennies since we introduced it to BMR readers in the spring of last year at a nickel…it fell another penny last week to close at a new 52-week low of 2.5 cents…the company currently has 137 million shares outstanding for a market cap of $3.4 million…
20 Comments
VGD
BMR – Think big, everyone, because this one could turn out to be VERY big.
Bert – I’m thinking big all the time my buddy ! but until you change the word
COULD in the above sentence to WILL, i remain dubious. I understand
your position, although at times i feel you know more than you are
letting on. For now, i prefer to wait for the drill results, before
pouring any more cash into VGD., while it’s speculative.. Being more
certain are dominant words & i remain well focused on this play. Until
the market becomes more fulfilling, my stock purchase limit is 20K shares.
I do thank you for the comments though, it’s very much appreciated. R !
It’s intuition and instinct, Bert…..I just have such a good feeling about the whole Wasamac area, and so far my instincts have proven correct….geological common sense also tells me that if a company goes onto a property that has never been previously explored and hits gold on the first “blind” hole, then chances are pretty darn good they’re going to find an even better hole…..and maybe an even better one after that…….you drill a few holes, you start to get a better understanding of structure, and success will increase if the gold is there….it’s like a puzzle…….you start to connect a few pieces and then it slowly begins to come together……..as far as Joutel goes, how can there not be another deposit (or more) there?????? Glad to hear you’re thinking big all the time, Bert!
BMR
Every time you write about VGD you always say “Visible Gold Mines has $6 million in working capital” with all of the drilling they are doing, how much cash are they burning a month?, they can’t possibly still have 6 million dollars, at what point are they going to need to raise more money to complete all of the plans they have?
thanks
Hi Greg, we obviously can’t “invent” numbers – we go only with what the company reports, and last month VGD reported it has $6 million in working capital. Back in April, when we first introduced VGD, their working capital I think was around $9 million and that’s of course what we stated. Their burn rate has been around $500 K per month. I suspect their working cap is now at about $5.5 million but we’ll wait until they let investors know. Like any junior exploration company, they will obviously have to raise additional money from investors. Keep in mind, they will receive a generous tax credit from the Quebec government next year – about 40% of their total exploration expenditures, so likely in excess of $2 million. So that will be added to the coffers. Personally, I believe this stock is going to do extremely well and they’ll be able to get those warrants exercised at 45 cents which will bring in another $7 million. Money is not an issue with VGD. They’ve raised about $10 million over the last 9 months, they have strong connections in the financial industry and this is the type of company that could raise $50 million if it wanted to – if something big develops at Joutel or Wasamac. I also wouldn’t be surprised if Agnico-Eagle steps in at some point down the road and grabs a piece of VGD.
VGN is some weird stock – I have owned this for over a year and the company has not released one PR – this seems like a shell company with no substance and everything Roodenburg said during your interviews sounds like hotair. I really hope I am wrong but whats someone to think, I dont know many any other companies that go a whole year without one PR during a massive bull run? They have nothing to report because they are doing nothing.
I’m disappointed too with VGN especially after Roodenburg made it clear to everyone late last year that he was ready to do something substantial with this company. On the other hand, it’s a “safe” play given its financial strength including monthly revenues. The way to make money with VGN is simple – buy when it’s around cash value, like now, and sell when Roodenburg starts putting out news and gets everyone excited.
I was wondering if BMR had any view on the situation that exists at Excel Gold Mining EGM which used to be part of its portfolio. This is by no means a whine at BMR in relation to EGM as I take full responsibility for all my financial decisions and I decided to hold on to some shares in EGM when BMR dropped it from its portfolio. I did this because I thought their Montauban property has great potential and I still hold that view. All I want is an overview of the unfortunate situation at this company and what are the likely outcomes from the current proceedings? Thanks in advance for any insights.
I too like the Montauban Property and did a site visit there near the end of August last year. The situation that was developing last year with EGM looked very exciting. Yes, the company had some baggage and some history and GBB’s Basa was stepping in to clean things up and make something happen for the shareholders. The stock went up in anticipation of that. Basa came on board as President and then after a month or so abruptly resigned. I’m not sure why – perhaps he wasn’t getting the control he wanted, I have no idea. Not long after Basa left, we decided to drop coverage of EGM and remove it from our model portfolio. We didn’t see the management strength necessary, without Basa, to move the company forward. As far as the current situation is concerned, I hope they’re able to fix it and get the stock trading again and the company on the right track. I do know Jacques Monette – he’s a solid and honorable guy, involved with Landdrill and also GBB. So hopefully he can take the bull by the horns, so to speak, and clean things up. With Jacques there, my confidence is high that the situation will get sorted out and EGM will be back trading again. It’s unfortunate what happened but it shows how important it is to have a solid President and CEO. It also demonstrates the importance of having a diversified portfolio – not every play is going to work out, these are highly speculative situations. Also, try to be careful to limit your losses in one particular play. A rule that some traders/investors follow is that they automatically sell a stock when it’s down 20% – much better to lose 20% than 75% or 100%. Limit your losses, cut them short, and let your winners run (but don’t get greedy and forget to take profits along the way). That’s one of the keys to being a successful trader/investor in these speculative stocks.
It’s intuition and instinct says Jon,
It’s my gut says Bert
For goodness sake, it’s all about body parts, mind over matter. The few dollars i have left,
i can kiss good bye, unless we have a fortune teller out there…
Only joking Jon, i believe you & we will do well ! R !
Hey JOn.. with respect to the #9 point .. if your ACB on ABI was 16-22 would you still hold true to the 20% sell profile?? it dropped from 17 to 12 in one week, and sorta caught me off guard… now at the oh well point… and waiting is the best plan yes??
The 20% rule may not apply to any company with the goods in the ground… and just more patience required.
Just a silly point… but a point just the same.. its just dead money for now…
There are different strategies but not one-size-fits-all – everyone has to find a strategy that they’re comfortable with and works for them. But overall, I believe one of the keys to making good money on a very speculative market like the CDNX is to limit losses and let your winners run (keep in mind I’m not a financial adviser, these are just my personal approaches). No matter how smart of an investor you are, and no matter how much due diligence you do, sometimes a situation doesn’t work out, or at least immediately work out. That’s going to happen – it’s almost like the law. Each one of us has lost money on a stock and will lose money again on another stock – guaranteed. There are so many variables out there. What’s important is to limit your risk as best as possible, understand volatility, keep losses to a minimum, and very occasionally hit it big with a play. Patience is crucial and avoid falling victim to fear or greed. Fear and greed rule the markets – understand that and take advantage of it. In mid-August there was a crazy amount of fear in the market and blood in the streets – superb time to buy some good plays, but a lot of investors got scared and were throwing great stocks overboard. In the case of ABI, they have valuable assets (gold, silver and zinc resources) which is a real advantage for them. I envision a scenario where ABI will be taken out by another company.
Hi Jeremy
Trading , like Technical Analysis, is as much an Art as it is a Science simply because the behaviour of each stock price is different. For that reason I do not use a % to determine a stop level.When I buy a stock I like to see, as a minimum a 3:1 reward/risk ratio which means I expect to make a profit of 3x the amount of my losses if I got stopped out. I prefer to buy at or near support so my stop would be just below the support looking carefully at volatility and intra-day lows.
If you are interested in a TA approach some investors use the Parabolic Sar indicator which automatically (mathematically) determines the stop value. You can find a description of this on Stockcharts.
Hope this helps
Thx Jon… and I agree that some are worth the patience and some aren’t..:) and some get away on ya.. and I can tell everyone that the strategy is not necessarily a decision but more of a process… its hard to sell until you have done it a few times and experience the emotional detachment.. selling for a loss is not easy.. and selling into strength isn’t easy either… tis a process… one of which I am in the middle of..:) thx again Jon.. your words are a guiding light!!
Bert
I believe your drive the other day was on the highway with Bonne Bay on one side and Gros Morne on the other. Yes?
My wife is from Corner Brook!!!!
John
Beautiful down that way also, but i travelled the north side of the Bay of Islands. I am
from just outside Corner Brook. I feel better now knowing i have someone who will side
with me on the BMR board & that’s John’s wife. We Newfoundlanders stick together &
thank God we are surrounded by water. R !
some good talks today
Bad start to the week,,Discouraging indeed !!!
South Korea, Monday, Sept. 5, 2011. – A currency trader covers his face with his hands in front of screens showing the Korea Composite Stock Price Index, top left, and the exchange rate between the U.S. dollar and the South Korean won at the Korea Exchange Bank headquarters in Seoul, South Korea, Monday, Sept. 5, 2011. | AP
World stocks, euro hit by euro zone worries
Natsuko Waki and Jeremy Gaunt
London— Reuters
Published Monday, Sep. 05, 2011 6:39AM EDT
Last updated Monday, Sep. 05, 2011 10:32AM EDT
European stocks shed 3 per cent on Monday and the euro sank against the dollar as markets weighed a risk-heavy outlook for the euro zone, dominated by peripheral debt concerns and political uncertainty in Germany.
Worries about public deficits in Greece and Italy and a regional election rout for Germany’s ruling party cast fresh doubt on the euro zone’s ability to tackle its debt crisis, extending Friday’s selloff.
More related to this story
Service sector recovery slows sharply
Economy tops agenda for policy makers
Fed has to move
Wall Street was closed for a holiday but is was unlikely that U.S. investors would have been in a more positive mood given data ahead of the long weekend that showed U.S. employment growth halted in August.
That fuelled concerns that the world’s biggest economy is slipping back into a recession. .
The euro zone, meanwhile, faces a week packed with political and legal risks, beginning with a German constitutional court ruling on Wednesday on claims that Berlin is breaking German law and European treaties by contributing to bailouts for Greece, Ireland and Portugal .
The court is not expected to rule against the contributions, but may add stipulations for dealing with future requests that will complicate the region’s bailout plans.
The yield premiums investors demand to hold Italian and Spanish 10-year government bonds rather than benchmark German Bunds hit their highest levels in a month.
“Not a great start to the week. There is a lot going on for banks, especially in the light of a low-growth environment and the backdrop in the euro zone not improving,” said Mike Lenhoff, chief strategist at Brewin Dolphin.
The MSCI all country world equity index was down 1.8 percent on the day.
European stocks fell 3.3 per cent, with the banking sector hitting a 29-month low.
“There is massive tailrisk in the system right now,” said Andrew Lim, banks equity analyst at Espirito Santo.
The U.S. dollar rose half a per cent to a one-month high against a basket of major currencies.
The euro fell across the board, hitting a three-week low of $1.4111 and dipping 1 per cent against the safe-haven Swiss franc.
As many European financial institutions are saddled with losses on bond holdings, traders are also worried that their funding could face more strains, putting pressure on the single currency.
As pressure mounted on Italy – the euro zone’s third-largest economy – to get its fiscal house in order, Italian 10-year yields rose to 5.487 per cent, their highest since Aug. 9.
Recent buying by the European Central Bank had pushed them down to the 5 per cent level.
Besides the German court ruling, a meeting of finance ministers of Germany, the Netherlands and Finland will be closely eyed as they discuss the nagging issue of collateral for loans to Greece.
Debate over the effectiveness of ECB bond-buying is likely intensify at the bank’s monthly policy meeting on Thursday.
“We will probably get the … assertion that ‘all euro zone countries must stick to their fiscal plans as agreed with the euro zone authorities’,” Richard McGuire, rate strategist at Rabobank, said.
“Singling out Italy — there is a risk that that would be counterproductive because it would put Italian yields under significant pressure and therefore undo much of the work that the ECB has done.”
jOHN – THANK YOU … man there is so much to take into consideration… I am a subscriber to StockCharts.. and am trying to learn ‘stuff’… gotta quit my day job:) thx again for the tip… will investigate and implement!!:)
Jon Bmr
Thanks for answering on the cash situation at VGD I agree I think this company is going to be a big winner and I just hope CQX does something with them on their wasa holdings as well, maybe I can get back to even on CQX or even make a little, who knows, but thanks for all of the work you guys do and answering all of our questions too!
greg
Thanks, Greg. Hang in there with CQX (as I am) because while their cash position may be low, they have stellar properties and a very small market cap. They have an opportunity to very effectively leverage their 100% owned Wasa claims that clearly hold significant strategic value. Plus they maintain an interest in what VGD is doing at Lucky Break. I also like the land package CQX has assembled in Utah at Goldstrike. They’ve tied up almost an entire former mining camp. Huge potential still with CQX.