On July 7, with the stock trading at 24 cents, we wrote that a turnaround was in the works with Visible Gold Mines (VGD, TSX-V). This interpretation was based on John’s very revealing 1-year VGD chart, which was (and still is) giving very bullish technical signs, as well as our assessment of fundamental factors driving this company – namely, an outstanding geological team headed by the highly respected Robert Sansfacon, strong overall management, a healthy financial position, and an impressive property package in northwest Quebec that offers a real chance for discovery.
In this business, there’s nothing more exciting (and potentially profitable) than a Gold discovery and Sansfacon knows all about that – he’s a genius at understanding structure, and it was his expertise that helped Osisko (OSK, TSX) make the largest Gold find in the country at Malartic.
We first brought VGD to our readers’ attention more than six months ago and in April we added the company to the BMR model portfolio at 40 cents. This is exactly the kind of situation we search for – “undiscovered home run opportunities in the junior resource sector”. And we’re more confident than ever that Visible Gold Mines is on track for something big.
Which brings us to the company’s news release yesterday. We see two important triggers that have the potential of sending VGD much, much higher: Joutel and Lucky Break.
Visible Gold Mines came out with a no-nonsense, very matter-of-the-fact news release yesterday that contained some nuggets of information that have raised our curiosity level even higher with VGD. Why has this company put three drill rigs on some land in its “Lucky Break” package that now suddenly also has a property name, Wasa Creek? Part of the property is quite close (within 1200 metres) of Richmont’s (RIC, TSX) growing Wasamac deposit and includes claims immediately to the south of west of Wasamac. Yes, this is ground south of the north-dipping Wasa Shear but the prolific Cadillac Fault runs right through the area as well. Geologically, VGD has some prime real estate in this option deal with Cadillac Mining (CQX, TSX-V).
And at Joutel, a project that Sansfacon is very eager to tackle, Visible Gold Mines has identified “several promising targets” over an “Eastern Extension” that features a six kilometre strike length and “exhibits similar lithologies” to the previously mined Joutel deposits – Telbel, Eagle and Eagle West. Sansfacon believes a deposit, or even a series of deposits, may have been overlooked at Joutel two decades ago. Just like he thought a major deposit was overlooked at Malartic. And he was proven correct on that.
Technically, what also has us really excited about Visible Gold Mines at the moment is that the stock’s 50-day moving average (SMA) is just now beginning to reverse to the upside. This ends a long decline that started in January. A chart can speak volumes and right now the VGD chart is telling us loud and clear that an exciting summer could be at hand for this company.
Note: Jon and John both hold positions in Visible Gold Mines (Terry does not).
BMR – So what’s the better option to hold CQX or VGD if your considering the Lucky Break package (now named Wasa Creek)? Was this something that CQX knew from the beginning and is why they chose not to finance and instead sit on the sidelines while VGD promote their package?
Comment by Andrew M — July 22, 2011 @ 5:45 am
What kind of a berry is that ?
It’s a blueberry’
How can you call it a blueberry when it’s white ?
That’s because it is still green.
Comment by Bert — July 22, 2011 @ 6:07 am
CQX is way better for the Lucky Break project (if they hit). Even though they hold less interest (40%), it is more leveraged due to lower market cap.
So it’s going to be a bigger gain or bigger loss depending on the outcome.
Comment by Bruce — July 22, 2011 @ 7:05 am
How about the MZO:AGE comparison from yesterday. MZO have a potential 70% share in Lapaska, the results from phase 1 were disappointing and MZO got whacked while Age was unscathed? Is that because MZO has the lower market cap? Thanks
Comment by Andrew — July 22, 2011 @ 7:25 am
I think for AGE and MZO, it is bit different. For VGD and CQX, VGD market cap is greater than CQX by 4x +. So mathmatically, the Lucky Break would have much greater impact to CQX.
For AGE and MZO, AGE market cap is greater by 2.5x. With 30/70 split, the impact is similar from mathmatical view. However, AGE has other projects going that provides share price support, while MZO’s recent stock price increase was mainly due to Lapaska. So I think MZO got hit harder because of that.
Comment by Bruce — July 22, 2011 @ 9:11 am
Thanks Bruce
Comment by Andrew — July 22, 2011 @ 9:28 am
Correction. Sorry what was I thinking.
For MZO, their 70% interest has way bigger impact than AGE’s 30% because of the market cap difference. (the impact is NOT similar from mathmatical view).
Another thing. The same kind of risk exist for CQX. VGD has several projects (Joutel, Lucky Break, etc) going as well, while CQX is relying on VGD for Lucky Break (and no news on Utah property).
Comment by Bruce — July 22, 2011 @ 10:02 am
how about BER,,,,up 800% today,,,,,what if what if what if,, congrats to any of the lucky ones that got in on that.
Comment by heath — July 22, 2011 @ 2:16 pm
VGD and CQX leaving the train station all aboard next week or miss the ride…………!!!!!! We know assays are pending, must have hit something big perhaps….. now wouldn’t it be great if we have another ten million plus ounce gold deposit on the cadillac trend.
Comment by Ed — July 22, 2011 @ 7:25 pm