Visible Gold Mines (VGD, TSX-V)
Visible Gold Mines managed to hold most of its gains from a 40% jump the previous week and closed Friday at 29 cents, a loss of two-and-a-half pennies over the five sessions…stronger bids are showing up in VGD…technically, the stock is looking healthier than it has for quite some time…the 10 and 20-day moving averages are advancing sharply together for the first time this year while the 50-day SMA has flattened out and is showing signs of a potential imminent reversal…sentiment toward VGD has clearly changed and momentum now appears to be in its favor…so why the sudden turnaround for a stock that had become so unloved and oversold through May and June?…the market seems to be waking up to the fact that VGD has strong discovery potential with its 20,000+ hectare land package in northwest Quebec…this perception has been aided by the fact the company has put its Joutel Project front and centre and will be drilling it this summer…Joutel, 150 kilometres north of Rouyn-Noranda, covers a wide area stretching 25 kilometres west to east and includes three former deposits…in addition, Visible Gold Mines is aggressively drilling the wild frontier along the Cadillac Trend west of Rouyn – the Cadillac/Lucky Break Projects are vast and include claims in the immediate vicinity of Richmont Mines’ (RIC, TSX) growing Wasamac deposit…we added VGD to the BMR model portfolio a few months ago when it was trading around 40 cents in part because of the quality of this company’s projects, its aggressive approach to exploration, and the team of people it has on the ground and in the front office…VGD is in the process of drilling 40,000 meters in one of the best places in the world for mining and exploration – northwest Quebec – and the company’s senior geologist is Robert Sansfacon who’s a genius at understanding structure…he honed his skills for many years in the exploration division of Lac Minerals and was involved in the discovery of Osisko’s (OSK, TSX) Canadian Malartic deposit, now the largest Gold mine in the country…Sansfacon is determined to make a discovery for VGD and if anyone can, it’s him…he sees great potential with the company’s projects along a 2o+ kilometre stretch of the Cadillac Break west of Rouyn-Noranda, where drilling continues, but he’s particularly anxious to start drilling the Joutel Project, a joint venture between VGD and Agnico-Eagle Mines (AEM, TSX) with VGD acting as the operator…several high priority drill targets are being finalized, work begins on the ground shortly and the property will be drilled aggressively through the balance of the year…a geologist from another company we spoke to recently called this a “fabulous” project…Joutel is a significant former producer that Agnico-Eagle mined from three zones between 1974 and 1993…the operation was closed prematurely as AEM turned its attention to its huge LaRonde Mine…the theory is that there are additional potential undiscovered deposits on this 500+ claim land package, and the area we believe VGD will be targeting initially is the eastern portion of Joutel which has not been fully explored and has “similar geological signatures” to the previously mined deposits to the west, according to the company’s latest Fact Sheet on its web site…Joutel is a geologist’s dream with a great story…”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,” VGD President and CEO Martin Dallaire told us in a recent interview…”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”…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…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…armed with $6.5 million in the bank, Visible Gold Mines is well positioned to make things happen in northwest Quebec…
Cadillac Mining (CQX, TSX-V)
Cadillac got as high as 15.5 cents last week but never closed above resistance at 15 cents…volume came back down Friday and the stock finished the week off a penny at 13.5 cents…Wednesday’s volume of 245,700 shares (190,700 on the CDNX) was the highest since March…this continues to be a company with tremendous potential given its property packages but we don’t see a game plan yet for moving Cadillac forward in an effective and sustainable manner – when we do, we’ll let our readers know it’s time to pile back in…we are frustrated but remain patient for now because the possibilities with CQX are still incredible, especially considering the current market cap which is just $3.6 million…not often does a company get the kind of opportunity that Cadillac was handed (and still has)…CQX holds a 100% interest in a very strategic piece of property that adjoins Richmont Mines‘ (RIC, TSX) Wasamac deposit, 15 kilometres west of Rouyn-Noranda…the principal Gold structure hosting mineralization at Wasamac dips northerly onto the seven claims held by Cadillac…Richmont started drilling Wasamac a year ago and steadily ramped up its drilling due to excellent results…in February of this year, Richmont reported a nearly five-fold increase in all-category 43-101 resources (from 285,000 to 1.4 million ounces) at Wasamac…as a result RIC has been one of the best performing Gold stocks on the TSX this year…BMR brought the Wasamac situation to the attention of its readers in December…investors got excited about the story and the potential of Cadillac’s “Wasa” claims…the stock ran to 50 cents by early January and the market was clearly eager to see Cadillac pursue this project as quickly as possible…management’s delay in doing so has been frustrating and has led to a substantial drop in CQX’s share value…the company is also cash poor and needs to raise some money…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 tackle Goldstrike in the right way…the best solution in our view is for Cadillac to cut a deal with another company for exploration at Wasamac and the natural partner for that appears to be Visible Gold Mines (VGD, TSX-V) which last December entered into a JV with CQX on its other Rouyn-Noranda area properties…VGD has all the money and expertise necessary to unlock the value of Cadillac’s Wasa claims…Cadillac could let others do the heavy lifting at Wasa and then focus its energies on developing the Goldstrike Project…talk is cheap – the onus right now is on Cadillac to show investors that it can “walk the walk” and make things happen, however they decide to proceed…
Abcourt Mines (ABI, TSX-V)
Abcourt is showing some renewed signs of life though it remained unchanged last week at 13 cents…ABI enjoyed its highest volume day in two months Wednesday when 1.6 million shares traded on the CDNX and other markets…the stock got as high as 14 cents…ABI is looking healthier technically but still faces stiff overhead resistance with the 100-day moving average (SMA) at 15 cents and the 200-day SMA at 15.5…both SMA’s are declining…if you’re bullish on Silver and Zinc prices, however, which we are, you have to love this play as the current market cap ($19.5 million) really doesn’t take into account the value of the company’s Abcourt-Barvue Silver-Zinc deposit…ABI is ripe for a takeover given the value of its assets and management’s apparent inability to unlock that value which is why we still view this company with considerable interest…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 June 13 including 20 metres grading 108.33 g/t Ag and 1.49% Zn in hole #31…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 later this year…the rig was just recently moved to the Vendome Property (Gold, Silver, Copper, Zinc) approximately 13 kilometres south of Abcourt-Barvue…more results came out last week 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 continues to edge up slowly and closed Friday at 20 cents for a gain of another penny-and-a-half for the week, albeit on continued low volume…as far as the fundamentals go, our gut feeling is that something is cooking here – President and CEO Tony Roodenburg has been quiet for too long…with the correction over in the CDNX and a new uptrend just getting underway, Roodenburg likely won’t waste too much time getting Greencastle back on track…technically, the Slow Stochastics and RSI(14) show the stock is in overbought territory at the moment and this condition needs to unwind which could take a couple of weeks…the company released its Q1 financials June 9 which show working capital of 16.4 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 which underscores the need for VGN to make some major changes as Primate just isn’t the cash cow it used to be…the fact 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 a couple of 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, but we’re confident Roodenburg will do it – sooner or later…Greencastle’s market cap of $9.3 million means the stock is now trading just 3.5 cents above its cash value…history shows that whenever VGN is near cash value, a terrific 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 $7.5 million in working capital, three Gold properties (including land near the Blackwater Project) and monthly (albeit declining) 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 rising 200 and 300-day SMA’s that are in no danger of reversing at the moment (the 200-day could start declining however if something doesn’t develop by the end of August)…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 during the last half of this year…Pinetree Capital also accumulated more shares in Greencastle late last year, so there’s every reason to be very optimistic regarding this company’s prospects…Greencastle is up 43% 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…things are still very quiet on the Sidon front with the stock down half a penny last week at 3.5 cents…the company 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 Tanzani…there has been no news from the company since March 14 – they effectively “sat out” the correction in the CDNX – 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 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 has drilled 4 deeper holes with results for those still pending…what the initial 6 holes have given Sidon, however, is a better understanding of the Morogoro geological structure which would 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 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…Sidon ran as high as 26.5 cents last winter but is now off a penny-and-a-half 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…
