Gold Bullion Development (GBB, TSX-V)
Gold Bullion dropped as low as 35 cents during the Monday-Tuesday market sell-off but recovered to finish the week unchanged at 41 cents…one of the first clear signs of a real turnaround in GBB will be a reversal to the upside in the 20-day moving average (SMA) but the earliest that is likely to occur is sometime in April…the 200-day SMA has flattened out and appears ready to go into decline, so that could keep the stock under pressure for a while yet…from a fundamental standpoint, however, as our recent article 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 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…a 43-101 resource estimate, expected later this year, should provide a significant boost for Gold Bullion…on the negative side, the market is concerned with the company’s dwindling cash position ($8 million at the end of December) 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…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…GBB bargain hunters should be out in full force in the event there is a significant CDNX pullback from current levels…
Cadillac Mining (CQX, TSX-V)
Cadillac fell significantly for the second week in a row, falling 4.5 cents to 20.5 cents…no stock is immune to overall market weakness…Cadillac however 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 20.5 cents, Cadillac’s market cap is only $5.2 million which allows for plenty of upside potential…technically, the stock is supported by a rising 200-day SMA at 15 cents…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 was off a penny for the week, closing at 17.5 cents…the stock has closed above its 100-day (SMA), currently at 16.75 cents, since the first trading day of the year…there is a very strong zone of technical support from 14 cents (the 200-day SMA) through to 17 cents…the 50-day SMA has flattened out at 19 cents where there is now some resistance…the Gold, silver and zinc assets this company has are much more significant than its current $19.25 million market cap would lead someone to believe, and the challenge for management is to unlock this value…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…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…this is another gem to accumulate on any upcoming CDNX weakness…
Currie Rose Resources (CUI, TSX-V)
Currie Rose fell as low as 13.5 cents during Tuesday’s market mayhem before closing Friday at 15 cents for a weekly loss of a penny-and-a-half…the stock is now trading below its still-rising 200-day SMA for the first time since last summer…the 300-day at 12.5 cents offers huge support…the rainy season has not been as severe as usual in northwest Tanzania and that’s good news as Currie Rose prepares to launch a major drill program during the second quarter…one of the key technical events we’ll be looking for over the coming 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 17.5 cents…significant accumulation started in Currie Rose during February as demonstrated by the CMF indicator…while its Tanzanian properties are the market’s major focus, Currie Rose could benefit over the coming weeks and months from continued 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 feasibility study, 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 $13 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 all the cash it needs ($2 million) to complete an initial major round of drilling (10,000 metres) this spring and summer in Tanzania, so there will not be any dilution of the stock at current levels as confirmed by President and CEO Harold Smith…
Richfield Ventures (RVC, TSX-V)
Richfield’s strength over the last couple of weeks in the midst of major CDNX weakness has been amazing to watch and testifies to the significance of its Blackwater Project which is clearly world class…Richfield gained another 64 cents last week to close at $6.64…it reached a new all-time high of $6.89…we suspect funds are accumulating…the company released a 43-101 resource estimate for Blackwater on March 2…using a 0.4 g/t Au cut-off grade, the estimated global indicated resource 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 $285 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…the gain since then has been 453%…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 $6.64 per share…
GBB at risk for hostile takeover
Comment by bob — March 20, 2011 @ 4:55 pm
With regards to GBB you say that “on the negative side, the market is concerned with the company’s dwindling cash position ($8 million at the end of December)”
Yet with regards to CUI you say that “Currie Rose has all the cash it needs ($2 million) to complete an initial major round of drilling (10,000 metres) this spring and summer in Tanzania”
Doesn’t make sense to me.
Comment by Paul — March 20, 2011 @ 7:30 pm
Paul, two completely different scenarios with two companies at very different stages and with different types of properties – GBB’s burn rate is AT LEAST $1 million per month….the LONG Bars Zone requires major expenditures to advance it at the pace the market would prefer to see….
Look at Richfield right now (comparable property) – it’s sitting on $17 million, more than twice what GBB currently has in cash….yes, the market is concerned about GBB’s dwindling cash reserves which is one reason the stock is half where it was just over a month ago…..the company did not put itself in a position of huge financial strength when it had an opportunity to do so, relative to the scope of the project……in the case of CUI, their cash reserves aren’t dwindling at the moment and the company is actually in the best financial position it has ever been in, with all the money it needs to complete a major first-stage drill program at Sekenke which could generate a lot of excitement (first time they’ve drilled the property and it surrounds two former high grade mines)…….CUI also has half the shares outstanding…….so two entirely different situations…..I’m not saying CUI is necessarily a better investment at the moment, I’m just responding to your question on cash reserves which is a good one….
Comment by Jon - BMR — March 20, 2011 @ 8:00 pm
It appears that GBB’s current cash position/ outstanding warrants/ government credits has been a matter of discussion and best guess scenarios for some time now. Bottom line – does GBB have sufficient money without going for a pp BEFORE the 43-101 is out? Most definitely YES based on what was discussed at the AGM. If you had attended the AGM you would have been reassured that this is a fact – you should also call Frank Basa if you are still not convinced. And by the way, the 43-101 is not for “later this year” but by the end of June 2011 – Frank stated this at the AGM.
Having said this, can the sp go down? – sure if there is market manipulation or investors are spooked on general market decline or make decisions on incorrect company information. However, smart investors that can read NRs and see what is going on in the Long Bar Zone know that the sp decline of GBB is NOT based on fundamentals.
Also, if you attended the AGM you would have been reassured that Castle Silver will also prove to be an excellent investment opportunity.
Ed
Comment by Ed — March 21, 2011 @ 9:08 am
You write:
.. to advance it at the pace the market would prefer to see …
… yes, the market is concerned about GBB’s dwindling cash reserves …
With these statements you imply that market’s concerns have caused the share price to go down. For all I know, the only reason the share price came down was that someone sold after the news release some 375-400K shares at market. My best guess was to trigger stop loss and “panic selling” with the intent of picking up the shares back at a lower price!
I, for one with others that I know, totally disagree with you in regards to the number of drill rigs and the timing for additional financing. Given that the market would like to see as less dilution as possible, therefore:
– GBB’s Management should be drilling on knowledge of drill results as much as possible in order to minimize useless drilling. Useless drilling would increase the need for more financing for the same result, Additional drill rigs without feedback on what has been drilled would surely have resulted in useless drilling;
– GBB’s Management should produce a NI43-101 and then do a financing – you appear to imply the opposite. Doing a financing in my suggested order should reduce substantially the dilution with a financing at a much higher price.
In addition, if you had attended the annual meeting (AGM) you would know more about the burn-rate and its projection as well as the strategy behind the Castle Silver Mine current exploration
Comment by Serge — March 21, 2011 @ 10:07 am
By the way, why didn’t you attend the AGM? You have been to the property quite a bit and for extended length of time and you didn’t go to the AGM – why?
Comment by Serge — March 21, 2011 @ 10:11 am
Serge, we value all opinions here and we appreciate your comments. I remain as bullish as ever on the prospects for the Granada Gold Property and what it could mean for GBB shareholders. And it’s a story we’re excited to be following and we will continue to follow it. I think you’re missing my point, though. If GBB had played its cards right, it would have raised more money earlier, increased support on the ground (more geologists, more technicians), and ramped up the drilling to show the market all-important momentum and progression. It didn’t go that route and as a result the share price unfortunately has suffered. What I’m saying is, there was a missed opportunity. That’s in the past now, so there’s really no use harping about it. On the positive side, results continue to be good and a 43-101 will be a value booster. I agree with what you’re saying going forward given GBB’s current situation. In terms of Castle, I like that project a lot and finally doing something with that asset makes sense – I believe it would just be wise strategy on the company’s part to not make a big deal out of Castle at the moment. The market’s focus has to be kept squarely on Granada, otherwise there is a perception of “story change” and a perception (rightly or wrongly) that Castle is draining resources and attention from GBB’s core project. I heard the AGM went well and I would have liked to have been there but I had previous commitments. Thanks for your input, Serge.
Comment by Jon - BMR — March 21, 2011 @ 11:25 am