Visible Gold Mines (VGD, TSX-V)
Visible Gold Mines (VGD, TSX-V) was down 3 pennies last week, finishing at 23 cents, and hasn’t enjoyed an “up” week since the final week of March…selling has been technically driven and unrelated to the fundamentals and what’s happening (and about to happen) on the ground – hence we see a major opportunity at the moment with this company trading just a few million dollars above its cash value of approximately $7 million…a week ago we spent time with President and CEO Martin Dallaire at the World Resource Investment Conference in Vancouver (we have an interview we will be posting this coming week)…Visible Gold Mines is in the midst of a 40,000 metre 2011 drill program managed by Robert Sansfacon, one of Quebec’s finest geologists who played a key role in the discovery of Osisko’s (OSK, TSX) Canadian Malartic deposit…VGD is focused exclusively on northwestern Quebec and will soon be tackling a highly prospective project (Joutel) that we believe will generate a great deal of attention and excitement, similar perhaps to what developed last year at Granada…the Joutel Property, a significant former producer of Gold and Silver, is located approximately 150 kilometres north of Rouyn-Noranda…drilling will start this summer and is expected to continue through the remainder of the year at this nearly 500-square mile property where over a million ounces of Gold and Silver were extracted from three zones by Agnico-Eagle (AEM, TSX) between 1974 and 1993…the theory is that there are extensions to those deposits as well as potential undiscovered deposits elsewhere on the large Joutel land package…it’s a geologist’s dream with a great story and it was Agnico-Eagle that actually approached VGD to take on this project through a joint venture – that’s the confidence they have in Visible Gold’s geological team…”When we picked up all the Joutel boxes and maps from the Agnico-Eagle exploration offices, it took us two pick-up trucks for all the data,” Dallaire told us…”We were flooded with data but we love it because we have the capacity to analyze all of it and bring some fresh ideas to the project…the trend is very large and there’s a lot of potential for many new mines in the area”…VGD also has three other projects – Silidor, Cadillac Break and Stadacona – which are equally capable of producing some eye-popping assay results but the company’s flagship project is clearly Joutel and the market hasn’t yet caught on to that story…when it does, VGD won’t be sitting in the 20′s anymore…Dallaire, an engineer and entrepreneur from Rouyn-Noranda, understands the mining industry and what an exploration company needs to do to succeed and build shareholder value…he’s fluently bilingual, presents himself extremely well and knows how to run a business and make money…he thinks big but is focused…he has also recruited some key people including Sansfacon who honed his skills for many years with Lac Minerals…in short, Dallaire has put something together you don’t often see in the junior speculative market – a powerful dynamic of business, geological and marketing expertise with a strategic plan to rapidly build value…the company’s niche and sole geological focus is northwestern Quebec where it has acquired several promising land packages, mostly west and north of Rouyn-Noranda…Dallaire is taking an aggressive approach to exploration and he’s targeting under-explored areas and past producing mines where major new extensions are possible…
Adventure Gold (AGE, TSX-V)
Trading activity in Adventure Gold was particularly interesting last week…despite a poor overall market, AGE climbed 7 cents or 14% for the week to 57 cents…on Wednesday, the stock briefly dropped below its supporting 200-day moving average (SMA) when it slipped to 45 cents before closing the day at 48.5 cents, half a penny above the 200-day SMA…the next day, volume picked up considerably (the highest in 17 sessions) and the stock closed up 6.5 cents…more buying came into the market Friday with AGE up another 2 pennies to close the week at 57 cents…the 10-day SMA has reversed to the upside and the 20-day is ready to do the same…something is stirring here – what could it be?…the company recently reported some significant news regarding its Pascalis-Colombiere Gold Property near Val d’Or…AGE has started a 5,000 metre Phase 2 drill program at the property after releasing more highly encouraging drill results including 4.8 g/t Au over 33.1 metres in hole #20 (plus lower grade halos over significant widths)…the intent of this program is to further define the Gold system, leading to a resource calculation which is already being worked on…Pascalis-Colombiere encompasses the past producing L.C. Beliveau mine (Richmont’s Beaufor Mine is just a few kilomeres away)…we found a comment from AGE President and CEO Marco Gagnon in the 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“…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-Colombiere 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…meanwhile, Agnico-Eagle Mines (AEM, TSX) has started a 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…AGE’s latest financials, released April 1, show the company with $3 million in working capital at the end of January…AGE runs an efficient operation and knows where to direct its energies…we first mentioned Adventure Gold to our readers in an article September 29, 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 and we are impressed by the company’s solid portfolio of properties (19 in six strategic areas in Quebec and Ontario)…also of immediate interest is AGE’s partnership with Lake Shore Gold (LSG, TSX) 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 is on track to reach the 2,400 metre target level in the near future…if a discovery is made, AGE will instantly explode higher…
Seafield Resources (SFF, TSX-V)
Seafield rocked on Thursday and Friday without news on strong volume to close the week at 27 cents, a gain of 2 pennies from the previous Friday…it traded as low as 21 cents Wednesday and early Thursday before staging a reversal…the company announced the closing of a $3 million private placement at 30 cents May 24 with a “strategic” long-term investor and also released an updated 43-101 resource estimate for its Miraflores Property…that 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)…another round of drilling will begin shortly at Miraflores…there was big news out of Seafield May 9 with a change in management which has to be considered a bullish development…Cesar Lopez, who has a strong background in South American exploration management and development, is the company’s new Chief Executive Officer…he replaces Tony Roodenburg who will remain as a director…Tom Henricksen, meanwhile, takes over as Vice-President, Exploration, from James Pirie who also remains as a director…Henricksen has over 35 years of mineral exploration experience and has spent the last 15 years on projects in South America…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 sitting on approximately $18 million in cash…the company announced April 5 that drilling has commenced at Santa Sofia, about 1 kilometre north of Dos Quebradas where drilling continues…Seafield geologists have identified a promising porphyry target measuring 1,050 metres in length and 850 metres in width at Santa Sofia with soil values up to 2.3 g/t Au…on March 7, assays were reported from the first three holes completed at Dos Quebradas with hole #2 intersecting a whopping 511 metres grading 0.58 g/t Au…the hole ended in mineralization…hole #1 delivered 269 metres grading 0.37 g/t Au while hole #3 was drilled to define the eastern limit of mineralization and returned no significant results…a total of 10 holes were completed at Dos Quebradas as of early this month…significant intercepts well outside areas of historical drilling would start to get the market excited…the geological case for Seafield’s Quinchia land package is compelling and we’re looking forward to more results from Dos Quebradas as well as initial assays from Santa Sofia…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 350% since we made it the first company in the BMR model portfolio in the summer of 2009…its current market cap of approximately $44 million is modest given its cash position and resource potential…
Greencastle Resources (VGN, TSX-V)
Greencastle was off a penny for the week at 18 cents on low volume…on Thursday the company released its Q1 financials which show working capital of 16 cents per share ($7.5 million)…oil royalties have declined significantly – just $212,000 for the first three months of 2011 vs. $355,000 over the same period a year ago…the fact Tony Roodenburg is no longer at the helm of Seafield Resources (SFF, TSX-V) is a positive development in our view for Greencastle…Roodenburg had been trying to ease his way out of Seafield since 2009 without much success until last month…he’ll now be 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 boost shareholder value…Greencastle’s market cap of $8.2 million means the stock is trading just 10% above its cash value…history shows that whenever this occurs in VGN, a terrific buying opportunity has opened up though investors must be patient…it’s interesting to note that the stock’s rising 500-day moving average (SMA) and its 1000-day SMA, which has flattened out, have converged at 17 cents where there is exceptional support…Greencastle tripled in value 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 $7.5 million in working capital, three Gold properties (including land near the Blackwater Project) and monthly cash flow from an oil royalty, it doesn’t take a rocket scientist to figure out that Greencastle offers excellent value at current levels…the long-term chart remains very encouraging with rising 200 and 300-day SMA’s that are in no danger of reversing at the moment…it’s also important to note that Roodenburg, a large shareholder in VGN, refrained from selling any of his holdings during the late 2010 run-up in the share price…this is different from past bullish in the stock and adds further credence to our view that we haven’t seen the highs in this cycle yet from Greencastle – it’s poised for what we believe could be a massive breakout sometime this year…Pinetree Capital has also accumulated more shares in Greencastle, so there’s every reason to be very optimistic regarding this company’s prospects…Greencastle is up nearly 30% since we added it back in to the BMR model portfolio last October…
Sidon International (SD, TSX-V)
Sidon simply 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 stock closed Friday at a 52-week low of 3.5 cents, a loss of a penny for the week…there has been no news from the company since March 14 when it announced a proposed private placement at 8 cents and an option to acquire an 80% interest in a 50-square kilometre property adjacent to Canaco’s (CAN, TSX-V) Handeni discovery in Tanzania…the six shallow holes drilled in December at Morogoro East failed to produce significant results, the best hole showing 3 metres grading 1.7 g/t Au…the company has drilled four deeper holes with results for those still pending…what the initial six holes have given Sidon, however, is a better understanding of the Morogoro geological structure which will aid in any future drilling…exploration, especially at such an early stage, is never easy and disappointing early results don’t necessarily mean a property doesn’t hold excellent potential…the company is also trying to develop a placer operation at Morogoro…there is certainly the possibility of better days ahead for Sidon but the lack of news and the continuing weakness in the share price is not encouraging…from a technical standpoint, previous support between 9 and 10 cents will now provide resistance…Sidon is off 2 pennies since we introduced it to BMR readers just over a year ago at a nickel…the company currently has approximately 140 million shares outstanding for a market cap of $4.9 million…
