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Words alone cannot properly describe the geological magnificence of the rich Abitibi Greenstone Belt and the sight of mine after mine along the Golden Highway where communities came into existence because of vast amounts of Gold and copper in the ground.  So we did a helicopter fly-over of part of the Cadillac Trend – from Val-d’Or to about 25 kilometres west of Rouyn-Noranda where Richmont Mines‘ (RIC, TSX) Francoeur Mine is set to go back into commercial production by early next year.  We have put together a few pictures in this posting that help to tell the story of this amazing area.  We’ll share more pictures later in the week.  Enjoy (no need to click on anything, pictures automatically change).

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The old Lamaque shaft at Val-d’Or where guided surface and underground tours are available during the summer at this former producing mine.

Underground production of 45,000 to 50,000 ounces is expected this year from Century Mining’s Lamaque Project where open-pit mining used to take place. Val-d’Or is in the background.

Agnico-Eagle’s Goldex 2 is one of the lowest-cost underground operations in the world. Commercial production started in August, 2008, as Goldex 2 became AEM’s second mine to open in the Abitibi region (followed by Lapa). The plastic “futuristic” dome is for ore storage.

Wesdome Mining’s Kiena Mine Complex at Lac De Montigny west of Val-d’Or.

Richmont Mines’ Camflo Mill in Malartic. It’s a Merrill-Crow conventional type mill with circuits for crushing, grinding, gold cyanidation and precipitation using zinc powder. Currently, the Camflo Mill processes ore from Richmont’s Beaufor Mine but has unused capacity.

The old East Malartic shaft was constructed out of cement during World War 2. A major underground fire in 1947 killed 12 miners. Osisko Mining’s core from Canadian Malartic is stored in the white building.

Osisko Mining’s rapid development of Canadian Malartic was incredible. Full design capacity at Canada’s newest and largest commercial gold mine is 60,000 tonnes per day. The first gold was poured from Canadian Malartic exactly five months ago on April 13.

A grass “wall” helps as a “buffer” between the huge Canadian Malartic open-pit and nearby homes.

The two-kilometre long Canadian Malartic open-pit mine will go to a depth of 380 metres at the end of its projected 16-year run.

The Canadian Malartic Project has nearly 500 workers on site.

Another view of the Canadian Malartic plant. The mine is expected to produce an average of 625,000 ounces of gold per year over the first five years of a projected 16-year mine life.

Another view of the Malartic area.

Agnico-Eagle’s Lapa Project is the company’s highest-grade mine (2.8 million tonnes averaging 7.4 g/t Au). Gold was first poured at Lapa in May, 2009.

Agnico-Eagle’s flagship LaRonde Mine has produced more than 4 million ounces of gold since 1988. The project employs over 700 people with an estimated mine life stretching to 2023. Access to the underground mining operation is through the 2.2-kilometre-deep Penna shaft, believed to be the deepest single-lift shaft in the Western Hemisphere. In 2006, Agnico-Eagle began to construct a deep extension of the mine to access higher-grade ore to a depth of about 3.1 kilometres and extend the life of the operation.

Production at IAMGOLD’s Westwood Project, 40 kilometres east of Rouyn-Noranda, is expected to commence in early 2013 at an annual rate of approximately 186,000 ounces.

A close-up view of IAMGOLD’s Westwood shaft.

Doyon was Canada’s largest open-pit mine in the early 1980’s.

The old Mic Mac Mine was built out of cement around the same time as East Malartic and started production during World War 2.

Drill pads at Aurizon’s Joanna Project, 20 kilometres east of Rouyn-Noranda.

View of Pit #1 West and site infrastructure including core shack at Gold Bullion Development’s Granada Project.

A view of Granada from part of the LONG Bars Zone Eastern Extension.

Drilling under the waste pile at Granada as GBB moves closer to a NI-43-101 initial resource estimate.

Part of the Wasamac area, immediately off the main highway approximately 15 kilometres west of Rouyn-Noranda. Richmont Mines’ growing Wasamac deposit is one of the most exciting and important exploration plays along the Cadillac Trend with Visible Gold Mines enjoying early exploration success at its nearby Wasa Creek and Wasa East properties.

Commercial production at Richmont’s Francoeur Mine, less than 10 kilometres west of Wasamac, is expected to commence during the first quarter of 2012.

Rouyn-Noranda, with a population of approximately 40,000, owes its existence to the mining industry. The Horne Smelter, site of the famous past producing Horne Mine which built Noranda Mines, is in the background.

John, BMR’s TA guru, racing down the Golden Highway (just kidding).

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From Val-d’Or, Quebec
9:30 pm Eastern

The Wasamac area west of Rouyn-Noranda has been hugely under-explored – some ground has been completely unexplored – and Richmont Mines (RIC, TSX) and Visible Gold Mines (VGD, TSX-V) are leading the charge to outline major new deposits and potentially millions of ounces of Gold in this part of northwest Quebec and the rich Abitibi Greenstone Belt. Richmont, of course, is much further along with its growing Wasamac deposit but Visible Gold Mines came out with powerful, almost eye-popping news this morning regarding its optioned Wasa Creek Property (immediately adjacent to Wasamac) that was very much overlooked due to weak overall markets today.  VGD closed unchanged at 40 cents on nearly 600,000 shares (all Canadian exchanges).  Tuesday’s trading could get really interesting as investors digest the news.

Assay results are still pending for 12 additional holes drilled in Phase 1 at Wasa Creek but what jumped out at us was the detailed and very bullish geological interpretation of what Visible Gold Mines has discovered so far.  I’m not a geologist, but I know enough about the Cadillac Trend to realize that at Wasa Creek VGD now has all the ingredients for a very significant potential discovery.  And here’s why:

1. The news stated, “It’s now believed that the Cadillac Fault runs in a northeast direction, as opposed to a straight east-west direction, under at least half of the property and then it bends to the east, creating a zone of major geological interest (bolding and underlining – our emphasis).”

This kind of action – a “bending” of the Cadillac Fault – likely created intense pressure, heat, fracturing, etc., which in turn has greatly increased the chance that a mineralized system or deposit has formed at this property.

2. The news stated, “North-south faults are now interpreted to exist at Wasa Creek in areas north of the Cadillac Fault (this is believed to be significant).”

There is obviously a lot of faulting at Wasa Creek and why VGD chose to specifically highlight these north-south structures is a question we’ll be putting to President and CEO Martin Dallaire when we interview him tomorrow (confirmed).

3. The news stated, “Mineralization has been observed over a wide area at this previously unexplored property, from LBWC-11-05 at the western edge to LBWC-11-11 in the northeast sector (a distance of 2,300 metres).”

Check the map.  This is looking very, very good. Especially for a Phase 1 program with a lot of “blind” holes.

4. The news stated, “LBWC-11-12…centered approximately in between those two holes and collared 430 metres northeast of LBWC-11-03, intersected a total of 10 zones of mineralization beginning 46 metres from surface and ending near the bottom of the hole (total vertical depth was 563 metres).  This included multiple mineralized shear zones up to 13 metres in length in addition to a well-mineralized five-metre quartz carbonate vein structure in Archean volcanic rock near the end of the hole.  These mineralized sections contain 2-5% pyrite and some chalcopyrite.”

Wow.  We’ve said this before – Visible Gold Mines has an all-star geological team (Robert Sansfacon’s incredible understanding of structure was an important factor in the discovery of the 10 million+ ounce Canadian Malartic deposit) and how they have advanced this property, and the nearby Wasa East claims, over just the past couple of months is nothing short of phenomenal.

5. The news stated, “An aggressive Phase 2” drill program is on the way.

Assay results (except one) aren’t in yet but already the company is identifying drill targets for a confirmed Phase 2 – what does that tell you?

Visible Gold Mines has a lot of work ahead of it and they aren’t wasting any time as they’re immediately proceeding with a ground-based IP survey and a down-hole geophysics probe. In many ways, finding a deposit can be like chasing a needle in a haystack but VGD is moving swiftly through a lot of hay right now.  Of course there’s risk but this kind of gritty, smart geological work is what has led to huge discoveries in northwest Quebec and built many of the communities along the amazing Golden Highway.  This is precisely what makes this industry and these aggressive junior exploration companies so exciting to follow.

Wasa East is looking very promising as well, and Visible Gold Mines has also started drilling its Joutel Project 150 kilometres north of Rouyn-Noranda.  Folks, this is an action-packed drama that’s not going to end anytime soon.  Visible Gold Mines is indeed a rising star out here.

Don’t forget, VGD (60%) has optioned Wasa Creek, Wasa East and the entire Lucky Break/Cadillac Break Project from Cadillac Mining (CQX, TSX-V) which closed at 16 cents today for a market cap of only $4 million.

Note:  The writer (Jon) holds a position in Visible Gold Mines and Cadillac Mining.

Val-d’Or, Quebec, 8:45 am Eastern

Greetings from Val-d’Or, Quebec, which is French for “Valley of Gold” and indeed many millions of ounces have been produced around here since Gold was first discovered in the area in 1923…since then, base metals have become increasingly important resources as well…we’ve started our northwest Quebec tour which began yesterday with an incredible helicopter fly-over of the Cadillac Trend under sunny skies from Val-d’Or to Richmont Mines‘ (RIC, TSX) Francoeur Mine, just west of the Wasamac area, a total distance of approximately 125 kilometres…we took some incredible pictures (one of which, Osisko’s Canadian Malartic deposit, we’ve included in this morning’s report) and we’ll be putting some of them in a picture gallery as part of a special post tomorrow…about a 15-minute drive east of Val-d’Or is Richmont’s Beaufor Mine with Adventure Gold’s (AGE, TSX-V) very promising Pascalis-Colombiere Property immediately adjacent to it…we’ll be going into much more depth on Pascalis later in the week…tomorrow we’ll be in Rouyn-Noranda…we’ll be reporting from this region of the prolific Abitibi Greenstone Belt until early next week…

Richmont's Beaufor Mine near Val-d'Or enjoyed a strong second quarter as 29,317 tonnes were processed at an average recovered grade of 9.34 g/t Au for a total of 8,802 ounces.

The view from “above” of the infamous Cadillac Trend is truly amazing…restrictions prevented the helicopter pilot from flying directly over Osisko’s (OSK, TSX) massive Canadian Malartic deposit but below is a stunning picture nonetheless of Canada’s newest and largest commercial mine which poured its first Gold bar on April 13…

The two-kilometre long Canadian Malartic open-pit will go to a depth of 380 metres by the end of its projected 16-year run…nearly 500 workers are on site and Gold production is expected to average 625,000 ounces per year over the first five years…

We’re posting early (pre-market) this morning due to a site visit…as of 8:45 am Eastern, Gold is off $16 an ounce at $1,843 (it has been as low as $1,825.50)…Silver has declined 60 cents to $40.78…Copper has lost 9 pennies to $3.91, Crude Oil has softened to $85.85 (down $1.39) while the U.S. Dollar Index is off one-third of a point to 77.15…the greenback has been flexing its muscles recently as the “best of a bad bunch” as far as currencies are concerned…this has potential implications for other markets, so we’re watching the Dollar Index closely…a key test for the Dollar Index will be if it can push through resistance at 78 as John’s chart shows below…

Stock markets are expected to open lower this morning as concerns mount regarding the euro zone’s debt woes as well as weakening economic growth in Europe and North America…volatility has become the norm recently…in 20 out of the last 24 trading sessions, dating back to the August 8 lows, the Dow has closed with triple digit losses or gains…through all of that, the Dow is actually ahead 182 points (1.7%) entering today…the CDNX, which is what we follow and track most closely at BMR, is up 103 points or 6.1% since its August 8 close of 1682…the TSX Gold Index, by comparison, has surged 18.5% during that time…markets overall have been difficult to navigate over the last while but investors with exposure to good quality Gold stocks (juniors and producers) have seen their portfolios outperform the major indexes…

One of the most important exploration developments along the Cadillac Trend is unquestionably what’s unfolding at and around Richmont’s Wasamac deposit, 15 kilometres west of Rouyn-Noranda…the street hasn’t fully picked up on this yet but BMR readers were the first to know that Wasamac is quickly emerging as a potential multi-million ounce deposit and the area surrounding it has huge possibilities as well which is also why we’re so excited about Visible Gold Mines (VGD, TSX-V)…VGD is the most active driller in the area, besides Richmont, and for Visible Gold Mines to hit Gold on its very first hole at the previously unexplored Wasa Creek Property is highly encouraging…why this rich geological environment west of Rouyn-Noranda has gone under-explored for many decades is a question we’ll be probing in the days ahead…understanding that will enable you to take advantage of what we see as some incredible market opportunities in several situations…

This is a day to take time to reflect upon the shocking and unforgettable events of September 11, 2001, exactly a decade ago, when America – North America – came under attack from hateful, evil terrorists.  We remember and honor all those, including 24 Canadians, who were killed that day in the attacks on the Twin Towers and the Pentagon, and all those who courageously gave their lives to save others including 343 firefighters and 60 police officers.  9/11 brought out the worst in human nature but also the very best.

Canadian Prime Minister Stephen Harper has formally designated September 11 as a national day of service to pay tribute to both the victims and the Canadian communities who helped stranded travelers.  And on this 10th anniversary of an event that changed the world, a memorial in the footprint of the Twin Towers was unveiled.

Visible Gold Mines (VGD, TSX-V)

Visible Gold Mines charged higher again last week, breaking through resistance in the upper 30’s to close at 40 cents Friday as volume continues to accelerate…the stock was up 3.5 pennies for the week and the 100-day moving average (SMA) is reversing to the upside, another very bullish development…daily volume over the last 8 sessions (Canadian exchanges) has averaged 604,000 shares vs. 166,000 shares over the previous 8 sessions…the average number of daily trades has also exploded from 26 to 108 during those same periods…those are very telling statistics…interest in VGD, and in the Wasamac area in general, is climbing dramatically and for good reason…Wasamac has the potential to become a major new mining camp along the Cadillac Trend west of Rouyn-Noranda and we’re looking forward to reporting from there next week…since August 8, Visible Gold Mines has jumped 43% while Richmont Mines (RIC, TSX) has climbed 61%…VGD has already gone well beyond what it said it would drill at its Lucky Break Project this year (Wasamac area) and that tells us the company is continuing to hit “the right stuff” at its Wasa Creek 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 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…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 continues to have a very bullish chart pattern with John showing a near-term 51 cent Fibonacci level…Visible Gold Mines had $6 million in working capital at the end of July 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…

Cadillac Mining (CQX, TSX-V)

Cadillac got as high as 15 cents last week, where it faces some resistance, and closed down a penny for the week at 13 cents…John’s updated CQX chart Friday shows the stock appears to be close to a breakout (it’s trading near the top of a 4-month channel) but volume must increase…Wasamac is certainly hot and Cadillac must seize the opportunity now…with a market cap of just $3.5 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…that alone should propel CQX higher…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 down half a penny last week at 10.5 cents…ABI faces stiff overhead resistance with a declining 100-day moving average (SMA) at 12 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 ($15.6 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)

All remains quiet on the Greencastle front…the stock was up half a penny last week at 16 cents on continued very light volume…the declining 100 and 200-day moving averages (SMA) at 18.5 and 22.5 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 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 $7.3 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 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 14% 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 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 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 closed unchanged last week at 2.5 cents though it hit a new 52-week low of 2 cents…the company currently has 137 million shares outstanding for a market cap of $3.4 million…

Gold Bullion Development (GBB, TSX-V)

GBB is trading at support again in the mid-30′s after falling 2 pennies last week to close at 35.5 cents…patience is the key as everyone waits for more drill results from the LONG Bars Zone and of course the much anticipated initial 43-101 resource estimate from GENIVAR…the stock is facing stiff technical headwinds at the moment…the 100-day moving average, for example, which supported GBB from late 2009 through early this year, is now resistance which the stock has not yet been able to overcome…the fundamentals look good, however, especially with Gold trading where it is…GBB has a very valuable asset – Gold in the ground and close to surface at Granada…just how much of it remains to be seen but we’re optimistic as a resource estimate draws closer…one important point is very certain in this current equity and Gold environment…many producers, big, medium and small, are sitting on large piles of cash and are looking to add ounces to their production profiles…any junior with an advanced property like GBB possesses, and a 43-101 resource to back it up, could be the target of a potential takeover…merger and takeover activity and property acquisitions in this sector are likely going to increase substantially in the months ahead…GBB has received approval from the TSX Venture Exchange to lower the exercise price of a total of nearly 8 million share purchase warrants to 58 cents (7.4 million from last October’s financing were priced at 75 cents)…these warrants expire October 27, 2011…having those warrants exercised would bring another $5 million or so into the GBB treasury, so a robust resource estimate in the very near future would be timely…a move through the mid-50′s would also constitute a major technical breakout for the stock but that’s going to require a strong 43-101…GBB’s last drill results were released July 13…there was nothing spectacular in those numbers but hole #165, collared approximately 50 metres northeast of hole #108, offered encouragement with regard to the very promising northern portion of the Eastern Extension…#165 returned 141.5 metres grading 0.31 g/t Au (from 155 to 296.50 metres) with no high-grade spikes, showing an apparent consistency of mineralization…it included a 20.5-metre section grading 1.2 g/t Au…assays have yet to be reported on 8 more important holes drilled in this general area (168, 178, 183, 241, 243, 246, 254, 257) according to GBB’s most recent drill map…along with additional results, GBB’s 43-101 resource estimate is going to be critical along with the Castle spin-off and potential discoveries in LONG Bars Zone 2…infill drilling is GBB’s focus at the moment with drill hole spacing tightening (which could help to improve grade) in preparation for a resource calculation…the company’s current market cap of $62.5 million which puts a value of just $21 an ounce on Gold in the ground at Granada if one were to assume the 43-101 will outline approximately 3 million ounces in the measured, indicated and inferred categories…that’s just a hypothetical number on our part at the moment but whatever number GENIVAR comes up with, we believe it should exceed the 2.4 to 2.6 million ounce conceptual figure that Gold Bullion gave in April of last year…based on all the drill results to date, this appears to be shaping up as a half-gram deposit with a higher grade starter pit and massive volume…it’s all about volume at Granada which is why the drills have to keep turning and why we want to see more than just two rigs in the LONG Bars Zone…this property continues to offer incredible potential…the company provided an update on its Castle Silver Mine Project August 25…a total of 12 holes were completed in Phase 1 drilling…while GBB chose not to release all the assay results, they did report that the best Silver intersection was 189 ounces per tonne (6,476 g/t Ag) over 3.09 metres which included a half-metre super high-grade section of 1,194 ounces or 40,944 g/t Ag (hole CA11-08)…the company also stated that numerous strong calcite veins and vein systems were drilled, and many of these were independent of the existing mine workings…more exploration work of course is planned and much will be required in order to advance Castle…GBB plans to spin-off this asset into a separate publicly traded entity…GBB is up 407% since we introduced it to BMR readers in late December, 2009…

Currie Rose Resources (CUI, TSX-V)

Currie Rose suffered its first weekly loss in a month, losing a penny to close Friday at 17.5 cents…still, the stock has declined on only two occasions over the last 13 trading sessions…17.5 cents is also the 100-day moving average (SMA) and CUI has found support there since climbing above that level in late August…with assay results pending from Mabale Hills, the hope is that CUI could soon stage a breakout through resistance in the low 20′s but that will require very good results which are certainly possible…Currie Rose reported August 24 that 20 RC holes have been completed at Mabale Hills (16 at Sisu River, 4 at Dhahabu) while drilling has shifted to the Sekenke Project approximately 200 kilometres to the southeast…what we found especially encouraging about the news is the fact that disseminated sulphides were intersected in all 16 holes at Sisu River, unlike Phase 1 drilling there last winter…the initial stage of drilling at Sisu River gave the company some important geological clues and it’s quite possible that assay results will turn out much better this time around…each of the 4 holes at Dhahabu also intersected disseminated sulphides…drilling has yet to commence at Mwamazengo…geochemical analysis has outlined a continuous anomaly over a few hundred metres that runs parallel to the west of a previously reported discovery at Mwamazengo where drill results included notable high-grade intercepts such as 34 metres grading 3.60 grams per tonne Gold, 12 metres grading 9.11 g/t Au, 63 metres grading 2.59 g/t Au and 31 metres grading 5.97 g/t Au…we’re most excited, however, about the Sekenke Project which has “blue sky” written all over it…Sekenke is why we decided to start following CUI when it was trading around a dime last fall…results from satellite imagery provide additional evidence that Sekenke is a highly intriguing geological target and part of the same northwest trending structure that hosts Canaco’s (CAN, TSX-V) Handeni Project…satellite imagery has also shown that the structures at Sekenke are coincident with a strong alteration envelope…what’s unique about this project is that it surrounds and runs in between two former high grade Gold mines including Tanzania’s original producer…this greatly increases the chances of a discovery as it’s unlikely the former mines were fully exploited or explored as techniques a century ago in this industry obviously weren’t what they are today…CUI has a terrific chance to hit it big at Sekenke and we also wouldn’t be surprised if the company also takes a shot at acquiring the former Sekenke Mine…that’s speculation on our part but it makes sense from a strategic point of view…CUI announced a joint-venture deal January 25 with Australian-based Liontown Resources for Currie Rose’s Jubilee Reef Gold Project in Tanzania…CUI’s focus is on the Sekenke and Mabale Hills Projects, so finding a partner for Jubilee Reef made sense…it was announced August 24 that Liontown has now started drilling at Jubilee…Trueclaim Exploration (TRM, TSX-V) has completed a Phase 2 drill program at the Scadding Propery…TRM has earned a 51% interest in Scadding and can acquire a full 100% interest by completing a feasibility study, paying $2 million to Currie Rose, and giving Currie Rose a 3% net smelter royalty…Trueclaim’s results were encouraging but considerably more work needs to be completed at Scadding to better determine its ultimate potential…while Currie Rose has had its market cap shaved by more than half, from a high of nearly $40 million late last year to the current $15.5 million, what hasn’t changed is the quality of this company’s project portfolio which remains as high as ever…Currie Rose‘s June 30th financials (six months) were released a few weeks ago and show the company has all the cash it needs (nearly $2 million as of June 30) to complete an initial major round of drilling (10,000 metres) in Tanzania this summer…

Adventure Gold (AGE, TSX-V)

AGE continues to sizzle, likely in anticipation of news from at least a couple of properties – Pascalis-Colombiere and Dubuisson…Adventure Gold is one of our favorites with several exciting projects on the go…our contention is that there’s a strong chance at least one of them will “hit”…Pascalis is our pick and we’re looking forward to visiting that property during our upcoming trip to northwest Quebec…the stock gained 11 cents last week, closing Friday at 62 cents and above an important resistance area…the 50-day moving average (SMA) is also reversing to the upside, so AGE clearly has momentum at the moment…it has also significantly outperformed the CDNX this year which is always a positive sign…President and CEO Marco Gagnon is a sharp operator who knows how to maximize every dollar the company spends…he also has the strong backing of Montreal investment firm Windermere Capital which holds just under 20% of AGE as disclosed January 21…the company has five active key projects, two of which are in the hands of joint venture partners Lake Shore Gold (LSG, TSX) and Agnico-Eagle Mines (AEM, TSX)…AGE started a 5,000 metre Phase 2 program in late May at its very promising Pascalis Property near Val d’Or…on May 31 the company reported more highly encouraging Phase 1 drill results from this former producer including 4.8 g/t Au over 33.1 metres in hole #20 (plus lower grade halos over significant widths)…the Phase 2 program was designed to further define the Gold system, leading to a resource calculation which is already being worked on…Pascalis encompasses the past producing L.C. Beliveau Mine (Richmont’s Beaufor Mine is nearby)…we found a comment from Gagnon in AGE’s June 2 news release quite interesting…“Following positive drill results and the permitting process, an open-pit or an underground operation could be producing in the near future”…we believe Richmont Mines (RIC, TSX) could be very interested in this project as they are looking for an acquisition in the general area…earlier this year we met with AGE’s Jules Riopel, VP Exploration, regarding the company’s strong portfolio of properties…he was very keen at that time on Pascalis and given the drill results, his bullishness on this property appears to have been justified…the former L.C. Beliveau Mine was a very profitable operation between 1989 and 1993, producing nearly 170,000 ounces of Gold for Cambior…we believe a lot of Gold was overlooked in that area…in addition, the geometry of the deposit is such that mining costs should be relatively low…considerable infrastructure is also in place…meanwhile, drill results are pending from Agnico-Eagle’s 4,000 metre drill program at AGE’s Dubuisson Property near Val d’or…Dubuisson is contiguous to the Goldex Mine Property and also straddles a 5-kilometre segment of the prolific Cadillac-Larder Lake Gold break…also of immediate interest is AGE’s partnership with Lake Shore Gold on the Meunier 144 Property where deep drilling is still 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 and had reached a core length of 2500 metres as of mid-June with at least another 500 metres to go…if a discovery is made, AGE will instantly explode higher…AGE has completed an 8-hole Phase 1 program at the Lapaska Property near Val D’Or…results released July 21 for the remaining 6 holes at Lapaska were very mediocre compared to the first 2 holes (MZO-TSX-V has an option to earn up to a 70% interest in the property) but Lapaska still holds good potential…AGE course also still has plans for the Granada Extension Property…AGE’s latest financials, released June 29, show the company with $3.3 million in working capital as of April 30, a $300,000 improvement in working capital over the quarter ending January 31…we first mentioned Adventure Gold to our readers in an article September 29 last year, 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 just 34 cents October 28…Adventure Gold has been around only since late 2007…AGE is clearly a keeper for the long haul and we wouldn’t be surprised to see a major breakout in this play this month as results begin to flow in from Pascalis and Dubuisson…

GoldQuest Mining (GQX, TSX-V)

GoldQuest is showing signs of life and gained another 2.5 cents last week to close at 19 cents after hitting a low of 13.5 cents at the end of August…volume on all Canadian exchanges Wednesday through Friday totaled just over 1 million shares…this is a company with strong management and a superb portfolio of properties in the Dominican Republic and Spain, so a $19.7 million market cap – down from about $50 million earlier this year- makes GQC look exceptionally attractive for long-term investors…the 200-day moving average (SMA), currently at 28 cents, is now in decline but the 300-day (SMA) at 25 cents continues to rise albeit very slightly…Chairman Bill Fisher has been buying GQC stock on the open market, his latest purchase being 20,000 shares July 12…he has bought nearly 250,000 shares over the past few months between 18 and 20.5 cents according to insider trading reports…GQC’s prospects remain solid as the company has an outstanding portfolio of projects in the Dominican Republic and Spain…On August 24 the company provided an update on its exploration activities, though no timeline was specified for the re-commencement of drilling in the DR…the substantial drop in the share price from a high of 48.5 cents in early February was due to general market weakness and selling from speculators whose expectations may have been too high regarding initial drill results from the company’s La Escandalosa Project in the Dominican Republic…in addition, the company stopped all drilling in the DR during the spring in order to complete extensive ground geophysical (IP) surveys over Escandalosa and magnetic surveys over other properties…overall assay results from Escandalosa were decent though far from spectacular…the final set of assays for 7 holes came out May 16…the best intersection from Escandalosa Sur, where an initial 43-101 inferred resource of 400,000 ounces was outlined last fall, was 20 meters grading 1.32 g/t Au…results from this area overall (21 holes) were somewhat disappointing though more drilling is required and will take place…however, the company drilled 3 holes at the Hondo Valle target 1.6 kilometres to the north (outside the resource area) and all 3 intersected significant mineralization including 29 metres grading 2.18 g/t Au in hole #65…that’s the thickest and highest grade mineralized section drilled to date at Hondo Valle…the theory is that mineralization trends north from Escandalosa Sur to Hondo Valle…GoldQuest also has other promising projects in the DR (in particular, Loma Oculta – formerly Las Animas – where an exploration program aimed at identifying new drill targets is now underway) in addition to its lead-zinc-silver deposit in Spain…GoldQuest’s potential has not diminished whatsoever yet the share price dropped by as much as 70% from its early February high…the company released a 43-101 resource estimate March 2 on its Toral zinc-lead-Silver deposit in Spain…it showed slightly lower grades but much higher overall tonnage than the previous historical non-compliant estimate…as a result, total resources came out 15% higher…resources in the indicated category are 4.04 million tonnes grading 11.8% lead and zinc (5.3% lead, 6.5% zinc) as well as 41 g/t Ag and 0.11% Cu… inferred resources are 4.67 million tonnes grading 9.8% lead and zinc (4.44% lead, 5.4% zinc), 32 g/t Ag and 0.14 Cu…Toral has significant exploration and development upside as a majority of the historical drilling (40,000+ metres) was conducted over one relatively small part of the property…the zone of sulphide mineralization is open along strike to the northwest toward a known lead deposit as well as along strike to the southeast and downdip…the project is also an ideal candidate for a fast-track to production…the deposit is close to a power line, highway and rail line…a large smelter is located just 300 kilometers away by rail…meanwhile, GQC has been granted the Lago exploration concession, as reported last July 19, which is only a 30-minute drive northeast of Toral…the Lago property is the first permit granted of three applications by GoldQuest…securing an exploration concession for Lago, where mineralization is similar to that of Toral, is another important step for GoldQuest in building its assets in that region…a comprehensive mapping, geochemical sampling and ground geophysical program will be initiated at Lago to define both infill drilling and new targets that may warrant drilling in the vicinity of the known hydrothermal lead and zinc mineralization that remains open along strike and at depth…GQC is down just half a penny since we added it to the BMR model portfolio last fall at 19.5 cents…

Seafield Resources (SFF, TSX-V)

Seafield’s new President and CEO Carlos Lopez continues to put the building blocks together with this company…we’re impressed with his actions over the last few months as he has strengthened Seafield in several ways…he has also put his money where his mouth is, buying significant amounts of stock in the open market…Seafield fell 2 pennies last week to close at 24 cents…the stock has been less volatile recently after bouncing up and down for a period of time between the low 20′s and the low-to-mid-30′s…SFF has rock-solid support at 20 cents, just half a penny above its rising 1000-day moving average (SMA)…the company’s June 30th financials were released August 26, showing SFF with $18 million in cash…Seafield announced August 31 that it has opened its new office in Medellin…this followed the news August 11 that Giovanny Ortiz, the former exploration manager of the Angostura Project, has been appointed General Manager of the company’s operations in Colombia…heavy selling came into the SFF market July 25 when the company announced drill results from Dos Quebradas which were disappointing, though we caution it’s still early in the game for that property…Seafield is currently drilling a promising area at Dos Quebradas approximately 250 metres wide (east to west) and more than 300 metres long (north to south)…the zone is open at depth and is interpreted to plunge to the north…meanwhile, Seafield has added a second drill rig at Miraflores in order to expedite a Phase 2 program there which is designed to better define the shape of the orebody, increase the resource confidence and extend mineralization…a total of 10 holes or 6,200 metres is expected to be completed by November (the rock is hard at Miraflores, so the drilling is slow which is why a second rig has been added)…the company announced July 5 that it has hired SRK Consulting for a preliminary economic assessment or scoping level study on Miraflores for completion by the first quarter of next year…SRK will evaluate the potential positive economics of developing an open-pit and underground operation at the property…it will also provide recommendations to advance the project to prefeasibility…Seafield released an updated 43-101 resource estimate for Miraflores May 26…the project has gone from an inferred resource of 776,000 ounces (at a cut-off grade of 0.5 g/t Au) to a measured and indicated resource of 1.2 million ounces and an inferred resource of 354,000 ounces (at a cut-off grade of 0.3 g/t Au)…Seafield exploded from the low 20′s to an all-time high of 77 cents in just one day last December but then proceeded to give up all of those gains…the company’s Quinchia land package in Colombia has a great deal of untapped potential and Seafield is also in a very strong cash position…patient investors have an opportunity to do extremely well with this play given the geological merits of Quinchia and the real potential for 5 million+ ounces from several potential deposits…we have confidence the new management group will unlock value by bringing fresh insight and new energy to this play along with a more aggressive exploration approach…Seafield has gained 300%% since we made it the first company in the BMR model portfolio two years ago…its current market cap is $40 million, just a little more than twice the company’s cash value…

TSX Venture Exchange and Gold

Market volatility continues.  Amazingly, there have been triple digit moves in the Dow on a closing basis in 20 out of the last 24 sessions dating back to the August 8 low.  Through all of that, the Dow is actually ahead 182 points (1.7%).  The CDNX, which is what we follow and track most closely at BMR, is up 103 points or 6.1% since its August 8 close of 1682.  The TSX Gold Index, by comparison, has surged 18.5% during that time.    Markets overall have been difficult to navigate over the last while but investors with exposure to good quality Gold stocks (juniors and producers) have seen their portfolios outperform the major indexes.

The CDNX dropped 25 points or 1.4% last week (vs. a 1.7% loss for the TSX and a 2.2% loss for the Dow) to close at 1785.  This has been a selective market and some plays are doing quite well.  With Gold above $1,800 an ounce, there are investors shopping for attractive situations and that is likely to continue.  With many companies expected to report drill results in the coming weeks, a fresh discovery somewhere could certainly light a fire under the CDNX.

Part 1 of our Week In Review And A Look Ahead is somewhat abbreviated as we’re preparing for our trip to the Rouyn-Noranda and Val-d’Or areas of northwest Quebec where we’ll be conducting interviews and investigating some of the most exciting exploration stories in that prolific region.  We expect our coverage to begin by Tuesday or Wednesday.

Gold

Gold’s volatility continues as well.  It just barely made a new all-time high last Tuesday of $1,922.20 on the Spot Market before correcting again and falling slightly below $1,800.  It regained strength on Thursday but fell sharply again early Friday before rebounding to close at $1,859.  The loss for the week was $25.   Our view, as John outlined in a chart a week ago, is that Gold remains in a consolidation phase and must further unwind its current overbought condition before making a decisive move through resistance just above $1,900.  Patience is the key.

Gold’s fundamentals remain strong and the Swiss central bank policy change to peg the franc to the value of the euro has to be considered long-term bullish for Gold as it helps to further underpin the yellow metal’s status as the ultimate currency and the ultimate financial safe haven.

Silver fell $1.87 last week to close at $41.38.  Copper was off 12 cents to $4.00 while Crude Oil gained 79 cents to finish at $87.24.  The U.S. Dollar, meanwhile, continues to show it’s the best of bad bunch as far as the currencies go.  The Dollar Index charged through resistance this past trading week around the 76 level to close at 77.20.  It’ll be interesting to see how the greenback performs through the rest of September.

Continued volatility in Gold can be expected given the very fluid situation in Europe and the upcoming FMOC meeting September 20 and 21.  There is a lot of anxiety in the markets right now with major concerns regarding sovereign debt woes in Europe as well as growth slowdowns in Europe and North America.  One encouraging sign, however, is continued strength in the emerging markets.  The situation in China remains very robust – good news for the commodity markets – and we strongly encourage readers to check out an excellent report (click on the link below) by Frank Holmes from China in his Investor Alert last night:  “China Fears Much Ado About Nothing”.

http://www.usfunds.com/investor-resources/investor-alert/?CFID=3317909&CFTOKEN=48434171

The “Big Picture” View Of Gold

As Frank Holmes so effectively illustrates at www.usfunds.com, Gold is being driven by both the Fear Trade and the Love Trade.  The transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, is having a huge impact on Gold.

The fundamental case for Gold remains incredibly strong – currency instability and an overall lack of confidence in fiat currencies, governments and world leaders in general, an environment of historically low interest rates and negative real interest rates (inflation is greater than the nominal interest rate even in parts of the world where rates are increasing), massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand, investment demand, emerging market growth, geopolitical unrest and conflicts, and inflation concerns…the list goes on.  It’s hard to imagine Gold not performing well in this environment.  The Middle East is being turned on its head and that could ultimately have major positive consequences for Gold.

What’s also driving Gold is the weakness of the United States, brought on in no small part by one of the most ineffectual Presidents the nation has ever been saddled with.  America has lost its way and the recent S&P downgrade is both a real and a symbolic reflection of that.  Since the summer of 2009, the U.S. economy has produced a net total of just two million jobs while federal spending has gone through the roof.  Throughout its incredible history, the United States has demonstrated an amazing resiliency and the ability to bounce back from major economic, social and political troubles.  It will do so again but this will take time and a real Commander-in-Chief in the White House by November, 2012.  By then Gold will have climbed another 50% or more.

As we prepare for our visit to northwest Quebec, and during that visit, we will likely be sending out some special BMR eAlerts.  We have also added a regular new eAlert feature at the beginning of each trading week.

We are also in the process of updating our list.  If you wish to be included in the BMR eAlert system, which sends out important and timely market information that’s not always posted on our site (or before it’s posted on our site), simply click on the “Contact Us” button you see in the top right hand corner of this page, type in “Alert” in the subject line, give us your first name, and hit the send button.  We send out only occasional eAlerts but when we do, they are significant.  Your email address is not given out to any other party.

Again, use the “Contact Us” button you see in the top right hand corner of this page or send us an email at:  [email protected]

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