A couple weeks ago, I wrote a report on Winds of Change I was seeing in the junior mining space, and this week I see a bunch of companies that have announced good results and their stocks have moved significantly. They are all following a similar path to success, not too much stock out and delivering with the truth machine.
Those common denominators are crucial to investor success in the space. Too much stock out, and even with exceptional news, the stock has a hard time moving. They have an anchor of so much stock to eat through which makes them ripe for traders that flip for a penny.
On the other hand, with less stock out and delivering with the drilling, can lead to remarkable performance in a short period of time. This week, we got news from several companies that are picks and a new company that are all good examples of the formula for success. Don’t have too much stock out and go find something serious with the drilling.
Voisey’s Bay 2.0 is Game On
In the past couple months, I turned from a vocal bear to vocal bull onGaribaldi Resources (GGI.V) and also bought a full trading position. What made me switch, is the same thing that I focus on to pick explorers, the truth machine.
Last drilling season, I saw that they made discoveries of extreme high-grade nickel, copper and other metals, but it looked patchy to me, in the holes and also where the holes were located. Basically, I thought it would be hard to connect the dots of the hits, into something of size.
The early news that started to have me change my opinion came from this year’s drilling was they done more follow up drilling, near the drilling from last season, and have shown there is a significant lense of high-grade. That told me alright, the dots can be connected and it can hold together into significant deposits.
Another key thing that changed my mind about the company is last season it looked like they were being very safe and trying to get the handle on what they had found. Then this year I started seeing pictures of where they had drill rigs on the mountain.
Looking at the various rock packages, and the geophysical targets, it became very clear to me that they were no longer being safe and going for the gusto. They had some news out this week, recently the stock had been getting pounded relentlessly hitting new yearly lows, right after the news it popped off the bottom.
Last year when the stock went ballistic, a couple things caught the markets imagination. The high-grade nickel and other metals, it is also a volcanogenic massive sulphide story like the famous Voisey’s Bay discovery. But up until this week, folks had been losing faith in the potential of a VB 2.0 emerging in north western BC.
The news that got the market seeing visions of VB 2.0 again was the announcement that they hit a new zone. This one looks like it could have more size than the lense, this is super important because with the extreme high-grade up there, it doesn’t take a lot of size to have a world-class mine. They also announced that they used an XRF device in the field and the responses are just like the stuff in the discovery lense.
XRF analysis is useful in the field for quick analysis of rock to sample and for an indication of the grades in the core. It is better with some material, they are good with uranium and massive sulphides, which is why IIROC would allow them to report on them. Now it looks like we have bigger size and realistic expectation of the high-grade as well. When I saw the news, my first comments are VB 2.0 is Game On!
In the quote in the news release from Steve Regocci, he mentioned something that I find crucial to point out. He said that the system has deep roots. This combined with the zones they are finding, the outcropping massive sulphides and massive sulphide boulders, the geophysical anomalies, the rock packages, and the drill pad locations all over the mountain are all pointing in the same direction. That this is a very large system, and when you add that in with extreme high-grade, it is clear VB 2.0 is alive.
They have a big budget and been busy drilling and are still drilling. Those folks drilling at the top of the mountain are rugged and I thank them as a shareholder and market commentator for all their hard work. All that hard work is paying off as they have been able to drill more than a few kilometres of core. They will have strong news flow from testing the core, with explosive news potential.
These big nickel discovery stories don’t come along very often, this is the second one, Voisey’s Bay being the first, during my 25 year career in exploration. I clearly remember the feeding frenzy on the stock and I think it is becoming much clearer that Garibaldi can deliver that kind of excitement.
A Big Hit In The Golden Triangle
Not long after I got back from the PDAC earlier this year, I wrote a report onGT Gold (GTT.V) about why I was so optimistic about their exploration season. Recent news from drilling this season has exceeded my hopes and the stock has really come to life.
Originally what got me interested in the company was the high-grade discovery, then in my report after the PDAC, I also talked about their big geophysical anomalies. One of them has been where they made a big porphyry discovery, which tend to be low-grade but big tonnage. This one, for that style of deposit is returning grades on the high side, so it is big tonnage plus handsome grades for that style of deposit.
When they announced the grades and thickness, I believe it shocked a lot of people, me included. Now they have the high-grade zone and the new big discovery zone. If you read the news release and the comments from their VP Exploration, his excitement jumps off the page.
He made comments about the potential to step out to make it larger and they have two drill rigs that are pounding away until the end of the season. I’m expecting strong news flow for the next few months, with the potential for more market moving news that will drive them to a higher valuation.
Just Off The Highway Gold Discovery
A new one to pop onto my screen is Westhaven Ventures (WHN.V) when they announced their recent high-grade gold discovery in south British Columbia, a couple hours drive from Vancouver.
I’m not usually one to jump on something after a big spike, and so I would caution folks to be careful when buying. It could easily give back some gains after a big spike like it recently had. But the reason I think it is important is, first off it is high-grade, it is also close to infrastructure and in a place where they can work year round. This brings costs of exploration and development down and the high-grade can bring high margin ounces of gold to mine.
Despite its good location, this area is still very under explored and I’m already hearing comments about similarities to Fruta del Norte. Those are some pretty big shoes to fill. But they have sure got off to a great start hitting the veins they are after, at the depths they are interested in, and got back some eye opening high-grade gold.
Next steps are they want to test along strike and at depth from the key horizons they are after for the high-grade. They should have a steady flow of news and if they can keep returning that high-grade this could get exciting.
The company also has a key shareholder in Gren Thomas of Aber Diamonds fame, his son Gareth Thomas is the President and CEO. The past successes of the Thomas family, bring access to funding and a high-profile in the investing community.
They have their hands on an exciting gold discovery, in an under explored area, with good infrastructure, this will make for low cost exploration with the potential to over deliver. I’ll be watching closely for any weakness in the stock, especially before their next batch of assay results.
My Little Company With A Big Story
Last night, I was doing some homework on Advance Gold (AAX.V), and I came across a video of a presentation by Peter Megaw of MAG Silver. There are some takeaways from that video that nicely wraps up the common denominators of all the companies I reported on in this and my other reports.
He was talking about their Juanicipio mine near Fresnillo, Mexico, in the most important silver camp in the world. As he was going through the numbers, you could see his enthusiasm and excitement for how impressive they were. But despite all the work of finding and building a mine, they still only had 80 million shares.
MAG Silver has one of the lowest cost mines in the world with a very high margin. And not a long of stock out, no wonder the stock has done so well over the years. Which is the key point that I wanted to make in this report about companies with not a lot of stock out that deliver with the truth machine.
I’m looking for the MAG Silvers of the future, but keeping a focus on development that keeps the stock down and delivering high-grade results, is the formula for success I look for. In fact, it is the model that I am using to build Advance Gold.
We are not very far from MAG Silver with our Tabasquena project, where we have found a cluster of 9 epithermal veins so far. Five of those veins were blind discoveries, which is a similarity to the Juanicipio vein and several of the veins around Fresnillo, Mexico.
Advance Gold has a much smaller float of stock than any of the companies I follow in the reports and I’m a large shareholder. We recently announced the completion of 3 drill holes and have assays pending.
Since I changed the format of my reports and went back to an email newsletter format, I’ve gotten into a pretty good flow of doing the reports on the weekends.
Plus, the winds of change are happening, and it is lifting the kind of quality juniors that I like to follow up. So, it is making writing the reports a lot of fun and even getting some nice action on the stocks of the picks makes it worthwhile as well.
All the best,
Allan Barry Laboucan
Allan Barry Reports
Advance Gold (AAX.V)
P.S. my reports are for information purposes only, before making any investment decisions it is important to do your homework and speak with your financial advisers.