BullMarketRun   BullMarketRun.ca

A Daily, Vibrant Voice Focused on Speculative Opportunities,
Commodities, and Economic & Political Trends Impacting
The Resource Sector & Equity Markets
 

"Market-Trouncing Returns Through Unbeatable
Technical & Fundamental Analysis of Niche Sectors"

March 11, 2011

The Week In Review And A Look Ahead: Part 1 Of 3

Gold Bullion Development (GBB, TSX-V)

It was another rough five days for Gold Bullion which fell below important support and closed Friday at 41 cents, a drop of 12 cents for the week…the stock got as low as 37 cents Friday, a level not seen since May of last year…there is a mixture of good and bad news in this story at the moment…on the positive side, a move higher next week seems probable given that technical indicators such as RSI and Stochastics show that GBB is now heavily oversold…from a fundamental standpoint, as our article earlier this week detailed, results from over 80 drill holes clearly demonstrate that the LONG Bars Zone continues to have multi-million ounce potential…mineralization remains open in every direction with six kilometres of untested strike length going east…continuity between the Preliminary Block Model and the Eastern Extension has been established in our view, though much more drilling in the Eastern Extension is still required…at 41 cents, Gold Bullion’s market cap is now only $64 million…this seems incredibly cheap given the 2.4 to 2.6 million ounce potential of just the Preliminary Block Model area as outlined by GBB nearly a year ago…on the negative side, the market is concerned with Gold Bullion’s dwindling cash position ($8 million at the end of December with a burn rate between $1 million and $1.5 million per month) and the fact that in March, 2011, more than nine months after a second drill rig arrived at Granada, there are still just two drill rigs on this property…the LONG Bars Zone is all about massive tonnage and the only way to prove up massive tonnage is through a massive amount of drilling…given the apparent manpower shortage at Granada, the optics of a drill campaign (one rig) at Gold Bullion’s Castle Silver Mine are not good…from a technical perspective, GBB’s chart has gone from a picture of beauty for many months to an ugly duckling over just the last 18 trading sessions since February 15 when the company communicated its message poorly in a news release on fresh drill results…our faith, however, in the Granada Gold Property remains as firm as ever and since we’re in the bull market of a lifetime in Gold, any company that appears to be sitting on A LOT of Gold, especially near-surface and in such an attractive jurisdiction as Quebec, is potentially worth much, much more than $64 million…

Cadillac Mining (CQX, TSX-V)

Cadillac slid in sympathy with the overall market this week, falling 7.5 cents to 25 cents but on low volume of just 528,000 shares on the CDNXCadillac remains one of our favorite opportunities for 2011 given the company’s properties in Quebec and Utah, its highly attractive share structure and the abilities and determination of management…at 25 cents, Cadillac’s current market cap is only $5 million which allows for plenty of upside potential…the risk-reward ratio with this one is extremely attractive… Richmont’s (RIC, TSX) success at its Wasamac Property west of Rouyn-Noranda is very bullish for Cadillac which is now preparing an exploration program including diamond drilling for its adjacent 100%-owned “Wasa” claims…Richmont has started a new 35,000 metre drill program of its own to upgrade and further expand resources at the growing Wasamac deposit where the principal structure hosting Gold mineralization plunges north at a dip between 50 and 55 degrees toward Cadillac’s claims…while there’s no guarantee, of course, there’s certainly the possibility that Cadillac’s Wasa claims could host a significant high-grade extension of Richmont’s deposit…this is what Cadillac will be exploring for…in addition they’ll be going after some highly prospective VMS targets on the property…the infamous Horne Creek fault runs right through the Wasa claims and Cadillac discovered a zone last year (by deepening the only hole they’ve ever drilled on the property) that’s interpreted to be a feeder system typical of those seen under VMS systems in the Noranda camp…Cadillac’s Wasa clams have excellent potential and we’re pleased to see they’re going to “seize the moment” and drill for a possible discovery…other CQX ground along the Cadillac Trend is also about to be drilled…Visible Gold is starting a 9,000 metre drill program this month as part of the agreement they worked out with Cadillac in December on over 7,000 hectares of land in the Rouyn-Noranda region…the first four holes of that program will be drilled on ground adjacent to Vantex’s (VAX, TSX-V) Moriss Zone discovery at the Galloway Project west of Wasamac…besides northwestern Quebec, Cadillac has secured an entire former mining camp in Utah near the Nevada border (the “Goldstrike District”) which has Carlin-type potential…Goldstrike produced over 200,000 ounces of Gold and 200,000 ounces of Silver from numerous open pits in the late 1980′s and early 1990′s…the area has never been properly explored and Cadillac is planning a major exploration program for later this year in order to unlock the potential value of Goldstrike…we encourage readers to listen to our informative interview with Cadillac President and CEO Vic Erickson posted March 4…Part 2 of that interview is coming soon…

Abcourt Mines (ABI, TSX-V)

Abcourt held up well this week and finished on a strong note, climbing 1.5 cents Friday on over 1 million shares to close at 18.5 cents…that was a drop of just half a penny for the week…the stock has held above its 100-day moving average (SMA) since the first trading of the year and technical indicators (Stochastics, RSI, volume) turned bullish Friday, suggesting Monday could be strong as well to start the new week…the Gold, silver and zinc assets this company has are much more significant than its current $20 million market cap would lead someone to believe…Abcourt released more positive assay results recently from its ongoing 10,000 metre drill program at its Elder-Tagami Gold Project near Rouyn-Noranda…mineralization continues to expand to the west of the former underground Elder Mine…the Tagami area to the north, meanwhile, has major potential so by later this year we’re expecting a substantial increase in resources at this project…the last 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…the company’s goal is to put Elder back into production by the end of next year…considerable mining infrastructure is already on site…Abcourt released assay results February 15 from six more holes at its Abcourt-Barvue Silver-Zinc Property near Val d’Or, and results continue to be very encouraging…the holes were all drilled 150 to 200 metres from surface and five of them intersected two zones of high-grade silver and zinc…Hole #16 cut 152.26 g/t Ag over 12.7 metres…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…we’ve seen these type of volume surges before and they are always a very positive sign…Abcourt is being accumulated, and our best guess is that some savvy players like the assets in the ground…the 10,000 metre drill program at Abcourt-Barvue continues with the goal of upgrading and augmenting existing 43-101 reserves and resources…the company is also trying to justify an expansion of the proposed mill from 650,000 tonnes to one million tonnes…Abcourt-Barvue is a former producer and one of the best silver assets in the country with nearly 20 million ounces in all-category reserves and resources (plus nearly 300,000 tonnes of zinc)…Abcourt completed a $4 million financing at the end of December…with 110 million shares outstanding, its market cap currently sits at just $20 million…continued drilling success and even 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…

Currie Rose Resources (CUI, TSX-V)

Currie Rose was off a penny for the week, closing Friday at 16.5 cents and just slightly above its still-rising 200-day moving average…volume Friday of just over 1 million shares was the highest since February 23…Currie Rose continues to build an impressive base after its January drop to a low of 15 cents…the key technical event we’ll be looking for over the next two to four weeks with CUI is a reversal in the stock’s 50-day moving average (SMA) which has been in sharp decline since January and currently sits at 19.5 cents…the 40-day SMA has now flattened out…significant accumulation has been taking place in Currie Rose given the CMF indicator which has shown increased buying pressure since early February…while its Tanzanian properties are the market’s major focus, Currie Rose could benefit over the coming weeks and months from good exploration news from Trueclaim Exploration (TRM, TSX-V) which is currently conducting an 8,000 metre drill program at the Scadding Gold Property near Sudbury…Trueclaim, which released assay results March 4 including 15.78 metres grading 5.36 g/t Au near-surface, is in the process of earning a 51% interest in Scadding by carrying out a $2 million work commitment…Trueclaim can acquire a full 100% interest by completing a mine production plan, paying $2 million to Currie Rose, and giving Currie Rose a 3% net smelter royalty…CUI announced a joint-venture deal January 25 with Australian-based Liontown Resources for Currie’s Jubilee Reef Gold Project in Tanzania…CUI’s focus is on the Sekenke and Mabale Hills Projects, so finding a partner for Jubilee Reef made sense…the deal commits Liontown to at least 5,000 metres of drilling at the property this year which will give Currie Rose a minimum of 23,000 metres of drilling at all of its properties in 2011…while Currie Rose has had its market cap shaved considerably, from a high of nearly $40 million to the current $14.4 million, what hasn’t changed is the quality of this company’s project portfolio which remains as high as it ever was in our view…Currie Rose has nearly $2 million in cash and is starting to gear up for a major drill program beginning later this spring in Tanzania…

Richfield Ventures (RVC, TSX-V)

During a week in which the CDNX dropped 7%, Richfield was actually up a nickel for the week after a 60-cent gain Friday pushed the stock to a closing price of $6.00…that’s just 15 cents below the all-time high RVC reached March 2 when the company released a 43-101 resource estimate for its Blackwater Project in central British Columbia…using a 0.4 g/t Au cut-off grade, the estimated global indicated resource for Blackwater is 1.83 million ounces of Gold (53.46 million tonnes grading 1.06 g/t Au) with an additional 2.34 million ounces in the inferred category (75.45 million tonnes grading 0.96 g/t Au) for a total of 4.17 million ounces…some 20 million ounces of silver are also in the indicated and inferred categories…initial metallurgical testwork has indicated an average of 92-per-cent Gold recovery using conventional whole ore direct cyanidation…the company has also contracted a series of consultants to prepare a Preliminary Economic Assessment (PEA), planned for completion in the fourth quarter of 2011…the study will consider the potential for a large-scale, open-pit mine and ore processing facility…with cash on hand of $17 million, the company has ample reserves to complete a 30,000 metre drill program this year as well as the PEA…given the state of the Gold market and the likelihood of continued exploration success at Blackwater, Richfield’s current market cap of $260 million still gives it considerable upside potential for the balance of 2011… we were very pleased to see that Richfield got a well-deserved buy recommendation recently from GMP Securities which has initiated coverage on RVC with a 12-month target price of $11.10 per share…BMR introduced Richfield to its readers in December, 2009, when the stock was trading at only $1.20…GMP sees the potential for at least five million ounces of Gold at Blackwater which is located in central British Columbia…the primary trend remains up with Richfield and there’s every reason to expect more excellent drill results throughout 2011…we believe the company’s ultimate objective is to find a buyer who can put this deposit into production…if good drill results continue as we expect they will, we’re confident that objective will be met and the takeover price could be significantly higher than the current $6.00 per share…

8 Comments

  1. Hi Jon, I know you guys at BMR are still very high on GBB and it’s massive potential as it does appear that they are sitting on a massive amount of gold practically starting at surface, but with some concerns with regards to the number of drills still on this property and the amount of cash the company has left in it’s treasury. I agree that they need to get more agressive to try and accelerate the NI 43-101 to prevent future dilution. However, maybe the company will transport the drill from Castle back to Granada as soon as the 6000 meters is completed there….which shouldn’t take to long….should it? I am concerned as well regarding the burn rate; however shouldn’t they receive some money from the Quebec government this year which is a nice chunk of change…somewhere in the 4 million dollar range I believe….correct me if I am wrong. I am particularily interested in another interview between BMR and Frank Basa as I believe you guys at BMR deserve it. In my opinion, it was BMR who helped expose this little gem with your articles and site visits. So, Basa if you read this site, as shareholders of your company we are requesting another interview with BMR to explain the companies plan going forward as there seems to be a little confusion amongst shareholders as to the Granada property and the timelines for the 43-101.

    Regards, Dan

    Comment by Dan — March 12, 2011 @ 6:06 am

  2. Hi Jon
    Have to agree with Dan. Trelawney, TRR, this week put out an (inferred only) resource of 4.2Moz
    based on 47 drill cores and totalling 23,500m. This was drilled off between Dec.’09 and Dec’10!!
    The grade is 1gm/T with a cutoff of .3gm/T. They are currently drilling the Cote lake deposit with
    5 drills with a 6th exploring other targets. There was only one historic drill hole at Cote lake when
    they decided to drill it. I continue to be a large share holder in GBB and recognize that each exploration
    project has unique parameters. However, this example highlights good communication and execution.

    Comment by Bob — March 12, 2011 @ 7:04 am

  3. Agreed: I absolutely cannot fathom why the initial NI 43-101 is being delayed until mid-summer (such a vague time-line suggests it’ll actually appear even later than that, given the delays inherent to this business.) During most of last year the announced goal was a 43-101 report in Q1, then Q2, now, who knows? This is disturbing, and, as the TRR example cited above strongly suggests, entirely unnecessary. I understand that management faces a Catch-22 situation here: it is in one sense desirable to delay the first confirmed resource estimate so as to shore up as large a resource as possible. The downside, however, is that the share price drifts downward in the meantime and, more important, the delays at least invite the possibility that the company will be broke before the 43-101 appears, neccesitating massive dilution and threatening the viability of the project. In this Catch-22, why not err on the side of caution? I own 1M shares and this is my chief concern.

    Comment by Roger — March 12, 2011 @ 8:00 am

  4. If GBB was to accelerate drilling at Granada it’s going to significantly increase operating costs which are probably already ahead of budget with oil/fuel costs on the rise etc. So they would run out of cash sooner rather than later. The resource isn’t going anywhere but the slower pace perhaps buys time for a financing resolution?

    Comment by Andrew — March 12, 2011 @ 9:11 am

  5. In order to do NI 43-101, GBB needs to drill up and get results. GBB is drilling about a hole per day. I don’t have big issue with that. For GBB, the problem for the initial NI 43-101 timing is getting the drill results in time. Even if they had 10 rigs going, I don’t think that would make a big difference based on the turn around time from the labs. So until NI 43-101, GBB is a sitting duck.

    Since GBB has lots of shares outstanding, financing 6-months worth of expense should not be diluting shares too much (around 10% may be). My concern is what the market is going to look like when they do financing. I just don’t like the possibility that GBB can be financing at a low price.

    I have expectation of what the resource may be on the NI 43-101 based on the past drilling. To me, unlsess GBB finds huge gold veins, the remaining drill results would not make huge difference to the resouce estimate. The catalyst that I can see the share price moving is success at Aureko (whatever that is called) and at Castle Silver.

    Comment by Bruce — March 12, 2011 @ 4:32 pm

  6. Hi Jon and others here:
    The point I was trying to make is, there was 26,000m of historical drilling on the Prel. Block, a bulk sample was run, and a small drill program gave Genivar
    confidence to estimate 2.4 Moz. They have since done a further Ph2-25,000 M drilling and approx. a further 15,000 M of PH3 drilling. Having doubled the depth
    let alone the length and width– they should be able to double that estimate. The Prel. Block is where they need to focus and give us a 43-101 (inferred); everything else is a bonus and can be added as we go forward.

    Comment by Bob — March 13, 2011 @ 5:08 am

  7. The private placement shares at 54 cents already dumped into the market… the current 40 cents mark is in danger and it may go back to low 30s. If the money in their bank has dried up, it could go back to twenty cents or even lower. It appears that the small investors are now in the play and there are a lot of uumping when the price has filled up.

    Comment by Theodore — March 13, 2011 @ 5:52 am

  8. Hi Jon,
    the infamous Horne Creek fault runs right through the Wasa claims and Cadillac discovered a zone last year (by deepening the only hole they’ve ever drilled on the property) that’s interpreted to be a feeder system typical of those seen under VMS systems in the Noranda camp………
    My question is…do you know how far from the border of RIC’s and CQX’s claims was this hole drilled?
    Thanks,

    Comment by Dan — March 13, 2011 @ 10:59 am

Sorry, the comment form is closed at this time.

  • All Posts: