GoldQuest Mining (GQC, TSX-V)
GoldQuest declined 4.5 cents for the week, closing Friday at 35 cents after dropping as low as 29.5 cents during Thursday’s market sell-off…Friday’s trading was encouraging in the sense that we saw a sharp intra-day reversal…the stock gapped down to 31 cents and then strengthened to close at its high of the day, the 100-day moving average (SMA)…we’ll see what sort of follow-through there could be early next week…while the drop below support in the upper 30’s is a concern, the prospects for GQC this year are very bright given the company’s pipeline of quality Gold projects in the Dominican Republic where a mining boom is clearly in full swing…GoldQuest has been conducting a Phase 2 drill program at its promising La Escandalosa Property in the DR since mid-December and initial results are expected soon…based on the success of the last drill program, GoldQuest is getting closer to the centre of the mineralizing system at Escandalosa and we’re expecting results that could ultimately elevate this project to the 1 million+ ounce category…400,000 inferred ounces have already been outlined (43-101) based on just 25 drill holes…approximately 40 holes are being drilled in the current program…Escandalosa is a flat-lying, near-surface deposit where the Gold should be easy to extract…as Chairman Bill Fisher told us in a recent interview, “the economics could be really quite compelling”…proving up a 1 million ounce deposit at Escandalosa could give GoldQuest production of at least 100,000 ounces a year…GQC’s other promising priority projects in the DR are Las Animas and Jengibre which are next in line for drilling after Escandalosa…GoldQuest released a 43-101 resource estimate March 2 on its Toral zinc-lead-silver deposit in Spain…it showed slightly lower grades but much higher overall tonnage than the previous historical non-compliant estimate…as a result, total resources came out 15% higher…resources in the indicated category are 4.04 million tonnes grading 11.8% lead and zinc (5.3% lead, 6.5% zinc) as well as 41 g/t Ag and 0.11% Cu… inferred resources are 4.67 million tonnes grading 9.8% lead and zinc (4.44% lead, 5.4% zinc), 32 g/t Ag and 0.14 Cu…Toral has significant exploration and development upside as a majority of the historical drilling (40,000+ metres) was conducted over one relatively small part of the property…the zone of sulphide mineralization is open along strike to the northwest toward a known lead deposit as well as along strike to the southeast and downdip…the project is also an ideal candidate for a fast-track to production…the deposit is close to a power line, highway and rail line…a large smelter is located just 300 kilometers away by rail…
Greencastle Resources (VGN, TSX-V)
Greencastle fell another 3.5 cents last week, closing Friday at its 200-day rising moving average (SMA) of 20 cents which should provide support…this is a company with a market cap ($9 million) just 50% above its cash value of approximately $6 million…the potential of higher oil prices in the coming months will help bolster Greencastle’s monthly cash flow of $100,000+ as it receives royalties from heavy crude production at Primate in Saskatchewan…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…there hasn’t been news from Greencastle since November 30…however, with approximately $6 million in working capital, three Gold properties and monthly cash flow from an oil royalty, it doesn’t take a rocket scientist to figure out that VGN is a bargain at current levels…volume has been light on the move down which confirms there’s nothing to be concerned about here…Greencastle will shine again soon enough…the long-term chart remains very bullish with rising 200 and 300-day SMA’s that are in no danger of reversing…it’s also interesting to note that President and CEO Tony Roodenburg, a large shareholder in VGN, has refrained from selling any of his holdings in recent months despite the fact the stock price more than tripled in value on high volume…this is different from past runs 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 first half of 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 in the weeks and months to come…Greencastle is up 43% since we added it back in to the BMR model portfolio nearly five months ago…
Adventure Gold (AGE, TSX-V)
Adventure Gold suffered with the overall market and fell to a low of 57 cents last week, closing Friday at 62 cents for a weekly loss of 12 cents…the stock remains in an overall long-term uptrend with the supporting 100-day moving average (SMA) at 49 cents…the 10-day SMA is now declining for the first time since late January but on a positive note the 20-day is still advancing, at least for now…the company released results recently from the first two holes at its Pascalis Colombiere Gold Property near Val d’Or…both holes were drilled approximately 150 metres west of the former L.C. Beliveau Mine and intersected Gold-bearing structures at various depths which is encouraging…the system is showing strong similarities to the one observed at L.C. Beliveau…hole #13 returned 5.4 g/t Au over 20 metres which included 2.9 metres grading 34.6 g/t Au…hole #14 intersected 7 g/t Au over 4.8 metres…results from seven more holes are pending…six of them were drilled west of the former mine while the other, which may prove to be very important, was drilled at depth to test the geometry of the Gold system below the underground workings…this former mine was a low cost producer and holds excellent potential for extensions laterally and at depth…it’s still early but Adventure Gold appears to be on track with its exploration goals at this property based on these early results…we expect AGE will begin drilling its Granada Extension Property in the near future…last month’s results from Gold Bullion and the latest drill map on the GBB web site reveal exciting new potential over the far western portion of GBB’s Preliminary Block Model which supports Adventure Gold’s geological interpretation that it holds part of the western extension of the LONG Bars Zone…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 34 cents October 28, so the gain since then is 82%…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…when completed it’s estimated the hole will provide a deep cut on the projected target area at about a vertical depth of 2,600 metres…this will enable shallower wedge cuts to be considered if significant mineralization is found to be present in this area…the initial deep hole was collared on LSG’s Timmins mine property last August…if this deep hole succeeds, AGE could absolutely explode…
Sidon International (SD, TSX-V)
There is no sugar-coating this one…it was a rough week for Sidon as it fell below important support and hit a low of 5.5 cents after drill results came out from Morogoro that fell short of market expectations…deeply oversold by Wednesday, bargain hunters stepped in and the stock closed at 6.5 cents Friday, giving it a market cap of approximately $7 million (down substantially from late last year)…the six shallow holes that were drilled in December did not 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 should help in future drilling…exploration, especially at such an early stage, is never easy and disappointing initial results don’t necessarily mean a property doesn’t hold excellent potential…the company is also trying to develop a placer operation at Morogoro and has also acquired ground near Canaco’s (CAN, TSX-V) discovery, so there is certainly hope here for better days ahead…from a technical standpoint, previous support between 9 and 10 cents will now provide resistance over the short term…
Seafield Resources (SFF, TSX-V)
Seafield was off sharply for the week, declining 7.5 cents to 34 cents, but certainly not for a lack of decent drill results…on Monday the company reported assays 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 nine holes have now been drilled at Dos Quebradas with 11 planned for this phase of drilling…last month, the company reported that a second drill rig would start testing the nearby Santa Sofia Property by the end of February…the company has identified a promising porphyry target measuring 1,050 metres in length and 850 metres in width at Santa Sofia…a third target, La Loma, also appears very interesting…the geological case for Seafield’s Quinchia land package is compelling and we’re looking forward to more results from Dos Quebradas and elsewhere…the company has already outlined a 43-101 resource of nearly 800,000 ounces at its Miraflores Property, a number that’s expected to increase following the 12-hole, 4,000 metre program recently completed there…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…the company is sitting on at least $15 million in cash and has a very modest market cap of just over $51 million…
what role do you think the ban on Quebec shale gas will play on VGN? It seems as though the stock took a bit of a hit on Thursday and Friday potentially due to this news
Comment by Bill Hurley — March 12, 2011 @ 12:56 pm
Jon, Seafield may have come out with good drill results but they’re nothing new. The second DQ hole you mention was drilled by Anglo in 2006 (shorter, but essentially the same). Same story with Miraflores and the “spectacular” drill result last December it was another Anglo hole just drilled again. Seafield has land that borders with Anglo at Dosquebradas and, I think around 800,000 ounces. It’s low grade, the same as Miraflores. Until Seafield come out with a good presentation for an exploration programme with new holes and keep shareholders updated they will continue to lose shareholder confidence. In retrospect I find that Brent Cook was 100% accurate in his synopsis of Seafield last December. The conference call on 15th February started off poorly with Tony Roodenburg repeating “maybe there aren’t any questions” and he didn’t want to get into the Ian Parks story even though that’s why they had a conference call! No news, old news, bad news doesn’t promote shareholder value and that’s all Seafield have offered. The “impatient” investors that sold were, in my opinion, the smart ones – they can always buy back in at a much fairer sp should Seafield demonstrate that they have the capability of transparency and communication with investors. With GQC trading at the same price as SFF it would seem, to me, to be the much better option.
Comment by Andrew — March 12, 2011 @ 1:28 pm
Shale gas exploration in Quebec does not have a moratorium or ban. The industry will evolve with excellent environmental regulations as studies are done over the next three years. It is permissible to drill, case and cement wells, it is only the fracturing that has to be done as a scientific study. Questerre and Talisman will likely continue with their shale gas exploration and participation in setting up the regulations. Greencastle only have 6000 hectares, so I would expect them to sit on it and wait for the regulations. Questerre were and are instrumental in consulting with the Quebec landowners and environmental groups and they want this industry to evolve with the correct standards. Mike Binnion (Questerre) made numerous visits to Quebec to meet with interested parties and he has an excellent blog that is well worth reading.
Comment by Andrew — March 12, 2011 @ 1:55 pm
VGN’s shale gas interests have not been factored into the stock price, IMHO……not since 2008………overall market weakness is to blame, plus the fact the company hasn’t put out news since the end of November……
Comment by Jon - BMR — March 12, 2011 @ 1:55 pm
Hi Andrew, I understand what you’re saying….but Anglo barely scratched the surface at Dos Quebradas….extensive soil sampling and geophysics by Seafield have outlined a much broader picture at DQ, so my point is I’m extremely confident they will drill well outside where Anglo did and make a discovery…there are some excellent porphyry targets over a wide area……this will take time, obviously, but the geological potential is clearly there…….this is a rich district………Miraflores has never excited me a great deal but Dos Quebradas does…….we’ll see what happens…….the company has plenty of cash in the bank and the pace of drilling has picked up considerably with the addition of a second rig…….the rock at DQ is also a lot easer to drill into than that at Miraflores…….by the summer, I’m convinced the current situation with Seafield will be entirely different….
Comment by Jon - BMR — March 12, 2011 @ 2:03 pm