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The Resource Sector & Equity Markets
 

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April 21, 2015

BMR Morning Market Musings…

Gold has traded between $1,192 and $1,203 so far today…as of 9:00 am Pacific, bullion is up $2 an ounce at $1,197…Silver is flat at $15.91…Copper has fallen 4 pennies to $2.69…Crude Oil is relatively unchanged at $56.27 while the U.S. Dollar Index is now off slightly at 97.80 after jumping half a point earlier today…

After a 2-month hiatus, Russia’s central bank jumped back into the Gold market last month…according to media reports, the Russia bought 28 tonnes of Gold in March, its biggest 1-month purchase since September…in January the central bank sold 0.5 tonnes of Gold and didn’t purchase anything in February…

A bullish report regarding the Gold sector in India was released yesterday with credit rating agency ICRA forecasting robust growth in the country’s Gold jewelry industry of 8% to 10% over the medium to long-term…

“Over the near-term, ICRA expects improvement in Gold availability coupled with the re-introduction of low cost Gold metal loans, rising consumer sentiments and aggressive store expansion by organized retailers to drive volume growth,” the report said.  On a longer term basis, Gold jewelry demand in India will be supported by cultural underpinnings in the country and growing disposable income, “especially in tier 2/tier 3 rural markets which account for a major chunk of the demand.”

Oil Update

Middle East tensions, a leveling off of U.S. production, and concerns regarding OPEC spare capacity are factors contributing to Crude Oil’s strength in recent weeks…

Some analysts are warning that OPEC’s ability to cope with an unexpected surge in demand is diminishing fast due to limited spare capacity…

“If the demand and non-OPEC supply responses to lower prices are similar to what was experienced in the 1980’s, the very low level of spare capacity carries a risk of a price spike in the not too distant future,” according to analysts at PIRA Energy (source: CNBC)…OPEC’s spare capacity could halve to as low as 1.7 million bpd this year, far below the level of more than 10 million bpd in the 1980’s when Saudi Arabia last opted for market share over price..

WTIC Long-Term Chart

As we pointed out yesterday, inflows into U.S. and European-listed Crude Oil exchange traded products (ETPs) have surged this year given the perception that Crude prices bottomed during Q1 after a rapid 61% plunge, just as they did during Q1 2009 following a quick 77% decline brought on by the financial crisis…

One cannot rule out the possibility that what we’re witnessing now, based on this long-term monthly chart, is another major trend reversal…this increases the likelihood of a trading range over the short to medium term of $50 to approximately $70 a barrel, as opposed to a $30 to $50 range…this would bode well for the Venture which has actually shown a higher correlation with Oil than Gold for an extended period…

WTIC4(4)

Today’s Markets

Asia

Asian markets were strong overnight, led by a 2% advance in Shanghai’s Shanghai Composite…over the weekend, the People’s Bank of China (PBoC) made the deepest single reduction since 2008 in the reserve requirement ratio (RRR) for all banks – the second industry-wide cut in 2 months…

Europe

European markets were higher today, with the notable exception of Greece, as investors reacted positively to a slew of corporate earnings reports…yesterday, Greece ordered state bodies to send cash balances to the country’s central bank as it scrambles to pay its bills…

North America

The Dow is down 71 points as of 9:00 am Pacific…the Nasdaq, meanwhile, is back above the 5000 level (5019) with a 20-point advance through the first 2-and-a-half hours of trading…

In Toronto, the TSX is off 92 points as of 9:00 am Pacific with the federal budget to be delivered following the market close…the Venture reacted again at resistance (707) and is now down 2 points at 702

North Arrow Minerals Inc. (NAR, TSX-V) Update

Very encouraging news from North Arrow Minerals (NAR, TSX-V) this morning, and the stock has responded well as a result…yellow diamonds from the company’s Q14 kimberlite in Nanavut contain “unaggregated nitrogen”, a defining characteristic of rare, natural Type 1b diamonds with fancy canary yellow colors…Type Ib diamonds are exceptionally rare, estimated to make up less than 0.1% of natural diamonds globally…

A total of 41 representative yellow diamonds from the Q14 kimberlite, ranging in color from very pale yellow to intense yellow, were analyzed by Apex Geoscience Ltd. at the University of Alberta’s diamond research laboratory…all but 1 of the diamonds were determined to contain unaggregated nitrogen…

To put the importance of this into proper context, NAR President and CEO Ken Armstrong stated, “Less than 1% of over 24,000 fancy yellow diamonds investigated by the Gemological Institute of America as part of a 2005 study were classified as Type 1b diamonds, indicating that Type 1b diamonds are rare, even among natural fancy yellow diamonds. This rarity highlights the significance of today’s result: all but one of the analyzed Q1-4 yellow diamonds contain unaggregated nitrogen and yellow diamonds make up over 21%, by carat weight, of the diamonds recovered so far from the Q14 bulk sample.”

NAR is up 18 cents at $1.10 as of 9:00 am Pacific

Doubleview Capital Corp. (DBV, TSX-V) Update

It’s reasonable to assume, based on results to date and visual analysis reported by Doubleview Capital (DBV, TSX-V), that DBV’s hole 23 at the Hat Project will likely produce the longest, highest-grade intercept ever drilled in the Sheslay district…given a much better understanding of the overall geological framework and orientation of the Hat system that has developed in recent months, the odds of even better results (and new discoveries) in the next round of drilling – slated to begin soon – have increased substantially…just 2 years ago, the Hat was just a grassroots project that had never been drilled, so the progress that has been made after just 23 holes is truly impressive and underscores the extent of both the near-term and long-term potential…

On the ground and in the market, we see big possibilities with DBV (and the entire Sheslay district) over the next few months as exploration ramps up and more results pour in…

What excites us about this latest DBV chart is how the stock is well-positioned for a breakout above a bullish downsloping flag that started to form after last year’s 40-cent high…keep in mind, that was a 10-fold price increase over just 6 months, so a healthy consolidation out of very overbought conditions was a very normal development – aided, of course, by a dramatic plunge in the Venture from September into mid-December…

Each round of drilling at the Hat since 2013 has produced better results…that’s a key sign one looks for to know that a project is on the right track…

DBV1(3)

To view Part 2 of our video feature (just over 1 minute) with Dr. Razique on hole 23, click on the arrow below.

Kootenay Silver Inc. (KTN, TSX-V) Update

Kootenay Silver (KTN, TSX-V) is another company enjoying exploration success, and this is also reflected in a strong chart (see updated version below)…drilling continues at KTN’s La Negra Silver discovery in Sonora State…a 30-hole follow-up drill program commenced in late February with more encouraging results released 3 weeks ago…La Negra is approximately 6.5 km north of KTN’s flagship Promontorio Silver resource…

As expected, KTN has been gradually gaining traction following a confirmed breakout above resistance at 44 cents and an ascending triangle…this bodes well for the balance of Q2 – significant gains could be in the works given how the fundamentals and technicals are matching up here, and RSI(14) on this 3-year weekly chart still has plenty of room to move higher…

KTN is up 2 pennies at 50 cents as of 9:00 am Pacific

KTN7

Calibre Mining Corp. (CXB, TSX-V) Update 

Over the past year, Calibre Mining (CXB, TSX-V) has been a standout performer in the challenging junior resource market…the company is working strategically with strong partners in the prolific northeastern part of Nicaragua, and also has some 100%-owned ground which it is now drilling as announced yesterday…

Calibre’s Phase 1 program at its Montes De Oro Gold Project will consist of 2,000 m in 8 to 10 drill holes, designed to test 2 subparallel Gold-mineralized structures defined by surface exploration including trenching results of 52.3 m grading 7.1 g/t Au, 27.5 m grading 4.92 g/t Au, and 33.5 m grading 2.10 g/t Au…

Overbought technical conditions in CXB last September/early October unwound during November and December…Fib. support held between 9 and 12 cents held as expected…

The rising 200-day SMA (not shown on this 2.5-year weekly chart) is now providing excellent support at 13 cents…based on its current technical posture, and continued positive exploration developments, CXB is poised to continue to be an “out-performer” as this year progresses…

CXB is off a penny at 13.5 cents as of 9:00 am Pacific

CXB1(5)

The Not So Fortunate – A Sign Of The Times

The languishing shares of Global Minerals Ltd. (CTG, TSX-V) rose in price yesterday after the company struck a deal to get a liability off its books…CTG has agreed to transfer and write down 100% of its interest in the Strieborna Silver-Copper Project in Slovakia to a private local investor group in exchange for the group assuming all of the associated liabilities that include, among other things, mine dewatering, mine site security and local regulatory costs…the estimated costs to maintain the mine are approximately $1.2-million per year…Global currently has approximately $120,000 in cash and does not have sufficient funds to maintain Strieborna…upon the project transfer completion, subject to all approvals, the company will have no material assets…the stock is trading at a penny this morning…

Note:  John and Jon both hold share positions in DBV.

18 Comments

  1. I am surprised BLO did not break out. I am glad I bought NAR back, I think she sees $2 soon.

    Watching BLO, NPH, and VID closely.

    MZI could break out any day here.

    Looking forward to see what the Shelsay brings.

    Comment by dave — April 21, 2015 @ 9:39 am

  2. Dave,regarding BLO…the stock will move when 1)they have the patent in hand 2) when they release the results of the Alpha/Beta tests. I would be a little bit hesitant to grab a position at this stage. Too many unknowns at this time. I hold a position in the company but like the BMR guys I bought it when it was under a dime…I have a lot of wiggle room just in case things don’t pan out. It’s still a risky stock, no doubt about it, but I like the chances of it succeeding.

    Comment by chris — April 21, 2015 @ 10:09 am

  3. I must say that I have never seen a NR worded the way IMT’s was this morning. Correct me if I am wrong Jon, but aren’t those 2 minerals indicative of gold.

    Wolverton and Jordon buying a lot of MZI, these are the 2 important boys.

    I will try and stay in touch, my daughters health is not so good right now. Take care gang.

    Comment by dave — April 21, 2015 @ 10:17 am

  4. DBV starting to heat up! Well into the green today with the last trade at .19…

    Comment by Steve A — April 21, 2015 @ 10:28 am

  5. Hi, have you any comments on CMC Metals, very soon a gold producer? and only at 5 cent.

    Comment by Bosse — April 21, 2015 @ 11:09 am

  6. Hi again,
    It would also be nice if you could have a link to your top ten companys in falling order?
    Best regards to you!

    Comment by Bosse — April 21, 2015 @ 11:12 am

  7. Nice little speculation going on with DBV. I don’t currently own it, but I hope it has a nice pop on good results for all you guys. I’ve sworn off gold stocks for the time being…but if H23 comes back with good results I will take a position in DBV. The gold market needs a good story and DBV might be the company that provides it. Good luck!

    Comment by chris — April 21, 2015 @ 1:26 pm

  8. Dave, Montoro is definitely into a Ni-Cu environment with pyrrhotite and chalcopyrite—–commonly associated with Ni deposits. In the case of Voisey’s Bay, mineralization consisted of massive, semi-massive, and disseminated pyrrhotite, pentlandite, and chalcopyrite…IMT has drilled into disseminated sulphides – they’re in the right neighborhood, probably on the edge of a system with that first hole. Speculative but very interesting. The first time a company has drilled into gabbro with visible sulphides in the Elliot Lake region, so the possibility of finding something big here is very much on the table. The key is that the 2nd hole needs to show even more encouragement.

    Comment by Jon - BMR — April 21, 2015 @ 1:30 pm

  9. Thanks Jon.

    Chris, I was thinking the same thing. The ONLY reason I never bought BLO is I am concerned about the prototype not working right. But if it is a success, than BLO should GO. I will try to check in often.

    Comment by dave — April 21, 2015 @ 2:14 pm

  10. hello bmr boys I bring you the latest press release from heron resources(her txch) dated 21 april 2015 “PRELIMINARY ECONOMIC ASSESSMENT DELIVERS STRONGBUSINESS CASE FOR THE WOODLAWN ZINC-COPPER PROJECT” REGARDS WALTER EMOND

    Comment by walter emond — April 22, 2015 @ 12:35 am

  11. DBV news at close yesterday…..

    Doubleview Receives Expanded Exploration and Drill Permit for Hat Project, Prepares for Next Round of Drilling

    Comment by D4 — April 22, 2015 @ 2:29 am

  12. Dave .. the technology has already been proven by the researcher in Sweden… so the heavy lifting has already been done.. BLO is now simply (or not) putting the research into action.
    If they are readying a beta then it tells me that the alpha has been successful. just sayin

    Comment by Jeremy — April 22, 2015 @ 2:57 am

  13. D4, another smart strategic move by Farshad…looks like they’re going to be able to cut back significantly on helicopter usage, which has been a big part of the cost of drilling at the Hat…this could mean nearly twice as many holes for the same cost…get ready for what I sense is going to be a dramatic turn of events.

    Comment by Jon - BMR — April 22, 2015 @ 4:41 am

  14. BMR – great video about DBV with Dr. Razique.
    Thanks

    Comment by Les — April 22, 2015 @ 6:17 am

  15. What is wrong with GGI?

    Comment by Dan — April 22, 2015 @ 7:19 am

  16. GGI is currently up half a penny at .13, Dan…the chart says it’s forming an important bottom…Gold is off today, not much more to say…patience as always is key…

    Comment by Jon - BMR — April 22, 2015 @ 7:50 am

  17. Jon,IMT was drilling right into the heart of their anomoly.Imo,they won’t be hitting much if they didn’t hit pendlandite.Chalcopyrite was the second mineral mentioned,not the first.Since pyrrotite is the principle mineral found so far,it would make the mining of whatever ore is found uneconomical.
    I saw too many words like ‘highly encouraged…there is evidence…could occur elsewhere…disseminated’…and the big one,’pyrrotite’.Not ‘pendlandite’.Jmo.
    Sounds like a sales job.Research the extracting of nickle from pyrrotite.Not good.

    Comment by Jim Niles — April 24, 2015 @ 7:28 am

  18. Jim, this is a very large anomaly (where exactly is the heart of it?) and they are 1 hole into the process…the downhole probe will be revealing and so too will the second hole…keep in mind, this is a district that up until now has not seen what they’ve hit so far, which is what makes this particularly interesting…be careful in your judgement which is very premature…you’re right in the sense that what they’ve hit so far is likely uneconomic – but what’s also correct is that some important theories on host rock (for a potential economic deposit) are being proven up, and this qualifies right now as a technical discovery…the key is to locate what could be massive sulphides somewhere at the base of the gabbro…the geochemical and the geophysical evidence are lining up…the right environment exists here…that’s certainly no guarantee they’ll hit big on the next hole or series of holes, or that a major deposit will ever be found, but this is the equivalent of the first inning of a ball game…I remember in 2013, when Doubleview reported results from hole 6, most people including some readers here wrote that off and the stock went down…that hole proved to be hugely important, it was a technical discovery and led to a major discovery a couple of holes later…it’s obviously extremely rare that a major ore body is discovered in the first hole…what you look for initially are encouraging clues, and IMT has those…

    Comment by Jon - BMR — April 24, 2015 @ 8:44 am

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