Visible Gold Mines (VGD, TSX-V)
Visible Gold Mines unfortunately took an abrupt and unexpected u-turn last week, falling 11.5 cents or 30% to 26.5 cents…the good news is, the stock is now technically quite oversold based on RSI(14) and Stochastics and there are positive things happening with this company on the ground in northwest Quebec…investors in our view likely read too much into selling of more than 300,000 shares by Pinetree Capital’s (PNP, TSX) Sheldon Inwentash, but that’s what started the nosedive which stopped the stock’s momentum and rattled some nerves…the overall market’s plunge then accelerated the selling along with a weakening of VGD’s technicals…as everyone knows, and was reminded last week, junior exploration stocks can be extremely volatile and aren’t for the faint of heart…but the rewards can be big…VGD is well positioned for success at two major projects…its Wasamac-area land package is in the heart of a promising new mining camp that is beginning to emerge west of Rouyn-Noranda…what’s highly significant for Visible Gold Mines is that much of the area around Wasamac has been under-explored and has obvious potential for additional deposits…VGD controls a large 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 Gold mineralization on its very first hole at Wasa Creek (LBWC-11-3) as announced August 11…12 other holes (some with quite encouraging visuals) were completed in Phase 1 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 the right geological structures appear to exist and the company has made rapid progress with this project in just three months…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 has started…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…Visible Gold Mines has over $4 million in working capital and is being driven by some exploration stories that appear to have serious “legs”…given this company’s aggressiveness and the quality of its geological team, we love the risk-reward ratio with this one and the odds of a potential major discovery…all the ingredients are there to make VGD the next potential big play in northwest Quebec…with a current market cap of $12.6 million, the risk-reward ratio is certainly attractive for long-term investors…
Cadillac Mining (CQX, TSX-V)
Cadillac fell in sympathy with VGD and the overall market last week, losing 4.5 pennies to close at a dime…with a market cap of just $2.7 million, CQX certainly offers strong 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 allow CQX to gain traction, 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 Andre 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…CQX came out with news September 12 that it intends to conduct a Phase 1 drill program at Goldstrike (contingent on financing) starting in November…
Abcourt Mines (ABI, TSX-V)
Patience continues to be the name of the game here and will be for a while yet…Abcourt was down a penny-and-a-half last week to 9 cents and touched a new 52-week low of 8.5 cents…ABI faces very stiff overhead resistance with a declining 100-day moving average (SMA) at 11.5 cents and a declining 200-day SMA at 14.5 cents…if you’re bullish on long-term Silver and zinc prices, however, which we are, you have to love this play as the current market cap ($14 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 is expected to take place at the property during the fourth quarter…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 in a better market…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 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)
All remains quiet on the Greencastle front…the stock was unchanged for the week at 14.5 cents (it fell as low as 13.5 cents) with a moderate jump in volume…the declining 100 and 200-day moving averages (SMA) at 18 and 21.5 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 August 25 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 will likely wait until the markets reverse 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 several 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 $6.6 million means the stock is now trading essentially at cash value…history shows that whenever VGN is trading at cash value, 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, like now, and then sell into strength when something develops (sometimes a year or more later)…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 for long-term investors at current levels…the stock is flat 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…there was finally some news from Sidon recently but not the news investors were hoping for as the company announced it will be late in filing its year-end (April 30th) 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 or bear market 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 will almost certainly 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 3 pennies since we introduced it to BMR readers in the spring of last year at a nickel…it closed off half a penny last week at 2 cents and hit a new low of just 1.5 cents…the company currently has 137 million shares outstanding for a market cap of $2.7 million…
