It was an ugly day on the markets overall and Visible Gold Mines (VGD, TSX-V) was not immune from the selling pressure. Just last week, VGD was as high as 43.5 cents – more than double where it was at the end of June which has made it one of the best-performing stocks on the CDNX since that time. The reason for investor enthusiasm regarding VGD has made perfect sense – Visible Gold Mines has enjoyed early exploration success at its Wasa Creek and Wasa East Properties immediately adjacent to Richmont Mines’ (RIC, TSX) growing Wasamac deposit 15 kilometres west of Rouyn-Noranda. This is one of the most important and exciting exploration areas along the entire Cadillac Trend at the moment as we’ve been pointing out to our readers. Today, Richmont hit another new all-time high of $13.39 – nearly double where it was just over a month ago.
There’s a very good chance the Wasamac area could host additional deposits, and no company is better positioned to make another discovery than Visible Gold Mines which controls a total land position of 6,000 hectares immediately east, west and south of the Wasamac Property. They have advanced their Wasa Creek Property in rather remarkable fashion in just three months, thanks to a top-notch geological crew led by Robert Sansfacon.
What’s unfortunate for Visible Gold Mines‘ sake is that Pinetree Capital’s (PNP, TSX) Sheldon Inwentash has sold over 300,000 shares since the middle of last week (he’s classified as an “insider” simply because his company, Pinetree, holds a 10% position in VGD). That seems to have rattled the nerves of some investors though making buy and sell decisions based on what an “insider” does can be dangerous. Who knows why Inwentash sold some VGD, or even if he’s aware of it (yes, individuals of his stature with positions in so many companies don’t necessarily make their own trades – they often have others doing that for them). Insider trading reports show that no VGD directors or management have been selling stock.
We encourage investors to stay focused on the “big picture” with Visible Gold Mines. VGD is blessed with one of the finest geologists in all of Quebec (Sansfacon), the company is in a strong cash position ($4.2 million with an exploration credit of approximately $2 million coming from the Quebec government), it has two first-rate exploration projects (Lucky Break including Wasa Creek and Wasa East, and Joutel), and it’s aggressive which we like. At today’s closing price of 32.5 cents, VGD has a modest market cap of just $15.4 million.
Given today’s events, we asked John for an updated chart on VGD to get a technical perspective on what’s happening. Interestingly, the stock has retraced exactly to the Fibonacci 50% level. Some of the selling today was technically-driven but there appears to be strong support at and immediately below today’s closing price.
Note: Both John and Jon hold positions in Visible Gold Mines.
Thanks for the update guys, looks like a buying opportunity, isnt there like 12 holes that VGD should be getting results on at anytime? I am pretty sure that the CEO mentioned that in the interview?
thanks again
p.s. looking for that chart on Kaminack tomorrow too
Comment by GREG H — September 21, 2011 @ 4:32 pm
Yes, results on 12 holes are pending. What I like is how much VGD has advanced its understanding of structure at Wasa Creek (and Wasa East). Drilling a bunch of holes and finding some mineralization is one thing; interpreting structure and figuring out what you need to do in order to nail down a deposit is another. VGD has come a long way with Wasa Creek in just a few months—-this property was previously unexplored.
Comment by Jon - BMR — September 21, 2011 @ 4:35 pm
Read on the GCU (gold canyon) board that Sheldon purchased 200,000 shares of GCU on monday at $3.02, maybe he sold some VGD because he sees more value in GCU right now and fiqures he has plenty of time to come back to VGD? also GCU dropped today to $2.74.? like BMR says who knows, if Sheldon knew something about GCU insider info, would he have bought it at 3.02 on monday? maybe he does have some traders buying and selling for him, I have a conspiracy theory I am working on, will post later.
Comment by GREG H — September 21, 2011 @ 4:59 pm