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GoldQuest Mining (GQC, TSX-V) and Rainbow Resources (RBW, TSX-V) Updates

Another fabulous day for GoldQuest Mining (GQC, TSX-V) – up 15 cents to a new all-time high of $1.95.  It seems there’s a huge elephant roaming around the Dominican Republic, and his name is Romero.  Meanwhile, in the West Kootenay region of British Columbia, we’ve spotted what appears to be a very fat cow.  Or maybe it’s an elephant, too.  More on that later as a confirmed breakout occurred with RBW today.  First, let’s recap the GQC situation and then examine the latest chart from John.

On July 31, with GoldQuest Mining (GQC, TSX-V) trading in the $1.30’s, we wrote:

“While it’s still very early in the drilling game at Romero, GoldQuest Mining’s (GQC, TSX-V) world class hole reported yesterday (a 25-metre step-out to the east of its discovery hole) should convince investors that GQC has a potential monster-sized deposit on its hands and now’s not the time to be giving up your shares, especially if Gold and Silver strengthen considerably in the weeks ahead as we believe they will…below is an updated GQC chart from John with a new Fibonacci level after the stock blasted higher yesterday on volume of 5.3 million in just one hour and 15 minutes of trading after the halt was lifted…GoldQuest has also just announced this morning a $10 million private placement at $1.25 per share (no warrants) in an agreement with Dundee Securities on behalf of a syndicate of underwriters…the big money has wasted no time in jumping in after yesterday’s spectacular results”…

GoldQuest Chairman Bill Fisher granted his first interview on the Romero discovery to BMR back in early June when we quickly realized this was about to become one of the most significant exploration stories in years with a game-changing impact on GQC despite the ongoing overall bear market.  Amazingly, at the time of our interview the stock could have been picked up for a mere 70 cents.  GoldQuest is about to close its second major financing (with no warrants) since the Romero discovery, and more assay results are pending (bring them on).  So this has truly become a remarkable story and we’ve been fortunate to follow it since Day 1 with some of our readers cashing in (or sitting on) huge profits.  The insight from the Fisher interview, our general familiarity with the mineral-rich Dominican Republic, and John’s very accurate charts have all helped in demonstrating the potential of this situation for our readers.  It doesn’t always go this way – some luck has been on our side – so we’re very grateful for how the GoldQuest story has unfolded so far.

Below is another picture from John that tells a thousand words – an updated 2-month daily GQC chart after today’s $1.95 close.

So where’s the next discovery opportunity?  We believe investors should be looking at a prolific area in southeastern British Columbia, the mineral-rich West Kootenays, where upstart Rainbow Resources (RBW, TSX-V) is now drilling its International Silver Property 40 miles north of the historic Silver mining community of Kaslo.   Rainbow holds 13,000 hectares in the West Kootenays – the Big Strike Project – which covers land packages very prospective for high-grade Silver and Gold discoveries.  A unique flake graphite opportunity exists immediately west and south of Big Strike, while the company will also soon be drilling the Jewel Ridge Gold-Silver Property along the prolific Battle Mountain Trend adjacent to Eureka.

Rainbow has one of the best-looking charts on the Venture and is up nearly 50% for 2012, a testament to the aggressiveness of this company in building a rich portfolio of properties in less than a year.  Three Rainbow directors are highly respected Calgary businessmen, one of them (Bob Libin) a part-owner of the NHL’s Calgary Flames.  This group is playing to win.

We’ve written at length about the International Property over the last number of months and it’s important to point out that this is exactly the type of situation that often results in a discovery:  Historical producer, no previous drilling, and extensive exploration work featuring everything from soil and rock sampling to geophysics.  Several geologists have studied this 4,000-hectare property, including geologists from the British Columbia government in the early 1900’s when an important Silver discovery was first made.  A vein system that was surveyed in the 1930’s over a true strike length of 1.2 kilometres is now believed to extend over a much greater distance.  Something special appears to have been cooked up here.  But only the “truth machine” can confirm that.

At the moment, Rainbow is drilling into a wall of exposed mineralization – a quartz-dominated structure that features disseminated to massive galena, pyrite and rare sphalerite.  Because of the high-grade nature of the mineralization at the International, Rainbow doesn’t need an elephant here – just a big fat cow.  A near-surface, high-grade deposit – if it is defined – could be an extremely profitable scenario especially in a rising Silver price environment.  In another part of B.C., Huldra Silver (HDA, TSX-V) has a low-tonnage, high-grade deposit it’s about to mine and the stock’s market cap is $60 million.  Rainbow appears to have even more potential yet has a modest market cap of only $8.7 million.

Today, Rainbow closed unchanged at 24.5 cents on impressive volume but a confirmed breakout occurred today with that close as John outlines in the chart below.

Note: John and Jon both hold share positions in Rainbow Resources (Jon also holds a share position in GoldQuest Mining).