Gold – Back to Support

After gold tagged $1392.60 on Sunday evening we warned that conditions were ripe for a pullback after such a large upside move. Since then we have seen gold suffer a sharp downside reversal and there is even the potential for gold to print a large bearish engulfing candlestick on the weekly chart:

Click to enlarge

Gold_Weekly

The current sell-off is also offering an important test of the uptrend which began in early January:

Gold_Daily_3.20.2014

While this week’s sharp turnaround offers ample cause for concern, price is now back to an area of major support near $1320:

Gold_Support

While there could definitely be some more near term downside volatility ahead, we are fast approaching an attractive buying opportunity on multiple time-frames in gold.

Three Reasons Why Gold Might be Due for a Pullback

After a $211 rally from the New Year’s Eve low of $1181.40 gold may finally be running out of steam. Here are 3 reasons why a pullback in gold is imminent:

1. The latest COT data shows much of the recent rally has been fueled by short covering among speculators:

Gold_COT_3.11.2014

This is more than a 50,000 contract reduction in speculative short positions since December 31st, 2013 and the smallest speculative short interest in gold futures since January 2013 (right before gold entered a steep decline):

GOLD_cot_12.31.2013

2. The gold miners just completed a bearish candlestick pattern as they flirt with a false breakout from the multi-month cup & handle pattern:

GDX_Daily_3.17.2014

3. ~$1400 is major resistance that is unlikely to be breached with ease:

Gold_Daily_3.17.2014

Today’s bearish outside reversal in gold signals that the pullback may have already begun:

GC_Bearish_Reversal

However, the previous resistance zone $1340-$1350 should offer ample support if price pulls back further over the coming days.

CGT – Columbus Gold signs $30 million joint venture with Nord Gold

Paul Isnard is located in French Guiana which hosts numerous high-grade gold deposits (Image: Columbus Gold Corp.)

Paul Isnard is located in French Guiana which hosts numerous high-grade gold deposits (Image: Columbus Gold Corp.)

Nord Gold has agreed to option an initial 50.01% interest in Columbus Gold’s (CGT:TSXV) Paul Isnard project for $30 million.  Nord Gold is listed in London, but is 85% owned by the Russian billionaire owner of conglomerate Severstal, Alexei Mordashov (net worth ~$12 billion).  Nord Gold operates nine mines globally and produced 924,000 ounces of gold in 2013.

Under the terms of the agreement, Nord Gold can earn 50.01% of the Paul Isnard project by spending at least $30 million over the next 3 years and by completing a bankable feasibility study.  Nord Gold will pay $4.2 million cash by May 21, 2014.

nord gold

Nord Gold expects to spend $11.8 million on the project this year alone (combined with their $4.2 million cash payment, this represents nearly half of the total work commitments within the first year).

Robert Giustra, CEO of Columbus Gold: “This agreement is exceptional not only by its requirement for an experienced and world class mine developer to fund a considerable amount of spending but also for the fact that Columbus Gold shareholders retain half the project at feasibility. In addition, the deal provides Columbus Gold with the option to participate in mine construction or to delegate it to Nord Gold for a resulting significant and valuable equity interest for Columbus Gold shareholders in a large producing mine.”

Columbus has the option to fund its pro-rata (49.99%) of the mine construction if elected by Nord Gold to do so.  Alternatively, they can allow Nord Gold to solely fund the capex and will be diluted to 25% based on a straight-line formula depending on the 2P reserves.

Nord Gold has agreed to pay Columbus a 10% management fee as operator of the project (roughly $1 million to be paid to Columbus over 2014 based on budget).  The London-listed gold producer has also agreed to a standstill agreement whereby they will limit their ownership to less than 20% of Columbus and will not solicit proxies over the option period.

Russian billionaire oligarch Alexey Mordashov is the 85% shareholder of Nord Gold (Image: Severstal)

Russian billionaire Alexey Mordashov owns 85% of Nord Gold (Image: Severstal)

The Paul Isnard project hosts the Montagne d’Or deposit which currently hosts a 5.37 million ounce gold deposit in the Inferred category (117.1Mt at 1.43g/t gold).  Columbus is currently working on a 26,600m, 135 hole drill program at the project, mainly to bring upgrade the Inferred resource.  The deposit has been drilled from surface to a vertical depth of 250m.  A strike length of 2.3km has been identified and trends east-west and dips steeply to the south.

The gold here is associated with disseminated, stringer and semi-massive sulphide mineralization of volcanic origin. The higher grade gold is found in chlorite bands with pyrite-pyrrhotite-chalcopyrite seams and stringers.

Investors like these types of deals whereby a larger company comes in to a fund a project for reasonable option terms.  We view this as positive for Columbus shareholders given the current cash balance (pre-Nord Gold transaction) of less than $1 million and the fact the dilution they face for the value that gets added to the project is fair.

Nord Gold is a sophisticated group which successfully put a gold mine into production on time and on budget in Burkina Faso recently.

Shares in Columbus performed well last year, despite the weak gold environment as the company continued to de-risk their Paul Isnard project.  Here’s the 12-month chart:

CGT Chart
CGT data by YCharts

Read: Columbus Gold signs $30 million definitive option agreement with Nord Gold

5 gold development stocks from the Great White North to watch

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The Northern Lights (Visual Capitalist photo)

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The North is interesting from a mining exploration perspective in several ways. First, because it is vast and unexplored, the potential for finding a mega discovery is certainly a possibility. It is no secret that millions of ounces of placer gold have been mined in the Yukon since the gold rushes of days of yore.  Alaska has also proved to contain some of the biggest deposits known to man. This includes Donlin Creek and Pebble – projects that almost boggle the mind in terms of potential. Donlin Creek, a 50/50 joint venture between Barrick and NovaGold, has 34 million oz of Au at 2.1 g/t in proven and probable reserves. The Pebble deposit, currently 100% owned by Northern Dynasty, is one of the biggest sources of mineral wealth ever discovered, with about 80 billion pounds of copper and over 100 million oz of gold in a massive porphyry system.

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The Only Metal Shinier Than Gold Is……

While gold continues to form a bullish consolidation pattern just below resistance ($1355-$1360):

Click to enlarge

Gold_Daily_3.11.2014

Another precious metal, albeit a less popular one, is shining brightly after breaking out from a 3-year symmetrical triangle last week:

Palladium_Weekly_3.11.2014

This breakout has all the makings of one that investors should not take lightly (volume, duration, and price action) – A 4-digit price tag for an ounce of palladium during 2014 is well within the realm of possibility.

There are a few ways to play a rally in platinum group metals – here are a few of our favorite names:

Stillwater Mining (SWC)

SWC_Weekly

Similar to the palladium chart in terms of the recent breakout with strong volume confirmation. Pullbacks are likely to represent buying opportunities with a $20+ intermediate term price target for SWC.

Ivanhoe Mines (IVN.TO)

IVN.TO_Daily

Recent pullback to support ($1.50-$1.70) – $2.00 is still the big upside nut to crack.

Wellgreen Platinum (WG.V)

WG.V_Daily

Energy building as price nears apex of large symmetrical triangle – upside breakout easily targets $1.25+

See also: Palladium – a new bull market

Continental Gold (T.CNL): Cash in hand, expanding resource, getting it done

Ari Sussman, Continental, Gold

Ari Sussman is the CEO of Continental Gold.

Continental Gold logoToronto-based Continental Gold (TSX:CNL) released a corporate update Thursday afternoon showing strong operating results for the year 2013, including 59,109 metres of drilling (adding to 215,300 metres for the project total), discovery of several new veins, four new precious metal-mineralized systems and – oh yeah – $117.5 million in hand with no debt to service.

In times like these, when so many gold explorers are under water (some literally), Continental’s situation is an ‘up times’ level of rosy, which may explain why their shares have doubled in value since December 1 of last year.

The company is focused on its Buritica project in Antioquia, Colombia, where it has recently discovered a new mineralized vein system it calls San Agustin. From the company, that spot is generating the following results:

  • BUSY329: intersected 0.4 metres @ 49.7 g/t gold and 163 g/t silver
  • BUUY093: intersected 3.0 metres @ 7.2 g/t gold, 43 g/t silver and 8% zinc
  • BUSY340: intersected 0.72 metres @ 31.0 g/t gold and 3 g/t silver, and 0.5 metres @ 12.0 g/t gold and 31 g/t silver.

That’s fun side stuff while the company works on infrastructure, having bought 99% of the surrounding infrastructure-based land around their property, while developing the main access tunnel, new ramps, and waiting for the final environmental permits required to build out a mine, which are in process now.

While that’s happening, it’s also drilled in other places:

In the Veta Sur vein system:

  • BUUY121: intersected 16.7 metres @ 58.7 g/t gold and 233 g/t silver, including 5.15 metres @ 184 g/t gold and 671 g/t silver
  • BUUY118: intersected 18.7 metres @ 22.4 g/t gold and 80 g/t silver, including 3.8 metres @ 99.6 g/t gold and 254 g/t silver
  • BUUY126: intersected 28.4 metres @ 20.5 g/t gold and 135 g/t silver, including 2.15 metres @ 135.3 g/t gold and 921 g/t silver and 10.9 metres @ 10.8 g/t gold and 85 g/t silver
  • BUUY149: intersected 0.5 metres @ 101.5 g/t gold and 20 g/t silver

Or maybe you like the Yaraguá vein system:

  • BUUY083: intersected 22.3 metres @ 23.9 g/t gold and 255 g/t silver
  • BUUY086: intersected 20.2 metres @ 11.4 g/t gold and 59 g/t silver
  • BUUY114: intersected 10.5 metres @ 108 g/t gold and 96 g/t silver
  • BUUY170: intersected 2.7 metres @ 830.6 g/t gold and 65 g/t silver and 3.45 metres @ 27.1 g/t gold and 11 g/t silver
  • BUUY120: intersected 1 metre @ 329.5 g/t gold and 52 g/t silver.

Also, underground channel sampling in the Yaraguá vein system resulted in significant intervals including 56.3 g/t gold and 112 g/t silver across 1.34 metres along 32 metres and 121.4 g/t gold and 775 g/t silver across 0.45 metres along 60 metres.

There’s more, but it’s really a case of more of the same. Lots of veins, lots of metres of solid gold per tonne.

You like metallurgy?

The preferred recovery process selected is gravity concentration followed by cyanidation of gravity tails. Overall metallurgical recoveries on all four 150 kilogram samples yielded 95.4% and 48.6% for gold and silver, respectively. In addition, a large proportion of the gold can be extracted using gravity separation with an average recovery rate of 73.8%.

Brothers and sisters, if Continental Gold didn’t already have the treasure of the Sierra Madre in cash in hand, I’d be giving it to them and saying, “Yeah, build this mine if you wouldn’t mind, thanks.”

I’m not going to tell you to buy Continental, mostly because I’m not your investment advisor. And I’ll admit I don’t own any of it, mostly because I like ‘em cheap and risky, and this stock has already gone through its pubescent growth spurt. Now it wants its first car, it wants to be allowed out until 2am, and it wants its girlfriend Brittany to be allowed to sleep over.

Granted, there’s still a little growth to go. It’s going to ding the Buick at least once before college.

But you’ve got to like a company that has hit its milestones, removed a bunch of risk, found a nice upward trajectory and has been saving its allowance.

NI 43-101 to come. Gold prices rising. They grow up so quick, don’t they?

CNL, Continental Gold, Stock

CEO Technician: Lovely chart: Bull flag – breakout over 5.43 targets ~$6.00 (Stockcharts.com)

Disclaimer: Continental Gold is an advertiser and we own shares which means we are biased. Please read our full Disclaimer and Continental Gold’s Cautionary Note Regarding Forward Looking Statements.

ECB Set to Launch QE on Thursday

Growing disinflationary headwinds are likely to push the European Central Bank (ECB) toward launching a 300-500 billion euro asset purchase program on Thursday morning. Such a monumental shift in monetary policy posture from the ECB could deliver an outsized impact to global financial markets (although we have clearly seen some front running of this announcement in recent weeks).

An announcement at the upper end of the 300-500 billion euro range along with open ended language (alluding to the possibility that the ECB could increase asset purchases past the 1 trillion market if needed) from ECB President Draghi could send global stocks and precious metals skyward. A few key charts from BNP Paribas help to illustrate why a QE announcement from the ECB on Thursday is quite likely:

Click to enlarge

ECB_Balance_sheet_

While the Fed has spent the last year and a half aggressively expanding its balance sheet, the ECB has allowed its balance sheet to shrink.

EURO_M3

M3 money supply growth has consistently fallen short of ECB target levels and private sector bank lending remains anemic.

All of this adds up to a powerful set of disinflationary/deflationary forces throughout much of the eurozone. Only Germany appears to be immune from the eurozone disinflation plague, whereas, much of the eurozone periphery suffers with extraordinarily high rates of unemployment and stagnant economies.

Here’s the money shot from BNP Paribas:

“Asset purchases are increasingly necessary in order for the ECB to meet its primary objective of maintaining price stability. Inflation in the euro area has persistently surprised to the downside, eroding the safety margin against deflation. „ Additional conventional policy easing will not deliver sufficient monetary accommodation for the price stability mandate to be met. Thus, the ECB will reluctantly have to follow other central banks into balance sheet expansion via asset purchases.” (Reuters – ECB to take the QE plunge this year…finally)

Mining tycoon Ross Beaty is back and he’s funding gold exploration in Brazil

Ross Beaty

Ross Beaty

Canadian mining legend Ross Beaty, who founded Pan American Silver and the Lumina Copper Franchise, and made fortunes during the last decade’s resource bull market, is quietly making moves in the junior mining sector again.

Earlier today Magellan Minerals announced a deal to sell to Ross its Pocone gold belt exploration projects in Western Brazil for $1.25 million. Magellan’s partner in the Pocone belt, a private group called ECI Exploration and Mining (ECI), will also sell their interest to Ross under the same terms. Magellan and ECI will retain 20% each in NewCo, which Ross will seed with $5 million, and own 60%. No other details were provided on NewCo, such as whether it will be a private or a public company.

According to Magellan’s press release, “The Pocone gold belt extends for at least 90km and is located in the southern part of the state of Mato Grosso. It is characterized by a series of highly deformed schists that are cut by gold-bearing vein swarms. Approximately 50 small open pit gold mines are currently in operation throughout the belt which has an estimated historic production of 6-12Moz of gold.”

We called Ross for comment this morning and he told us that this is an interesting early stage gold play, however he said it was not a significant investment for him and he doesn’t want to make a big deal about it.

So this is us not making a big deal about it… But we are pretty excited to see Ross making moves in the junior resource sector again.

Let the bull run!

Related: Tommy and the Titans, Ross Beaty: You say impossible, I say possible

DSR – Desert Star Begins Permitting and Exploration Work on Their Portfolio of US Prospects

Desert Star has a number of assets located within a 15km radius of major mining projects held by Rio Tinto and BHP (Photo: Cronkite Newswatch)

Desert Star has a number of assets located within a 15km radius of major mining projects held by Rio Tinto and BHP (Photo: Cronkite Newswatch)

Today, Desert Star Resources (DSR:TSXV) quietly announced that they had begun the first steps in exploration on their recently acquired southwest US assets.  The company completed geological mapping and sampling at its Copper King project located in the prolific Laramide belt of Arizona.  The mapping and sampling have identified diorite porphyry dikes which intrude Apache Group statigraphy and diabase sills which looks similar to that seen at Rio Tinto and BHP’s large and high-grade Resolution copper-molybdenum project.

We spoke with Desert Star’s Daniel MacNeil (Project Acquisition and Development) by phone this afternoon and he tells us, “there are two main takeaways from the release today, one, we have begun the exploration permitting process on our projects which is a significant milestone and, two, we have initiated the first steps in defining drill targets on the projects.”

The company has undergone a significant change in focus over the past year with large-potential prospect acquisitions, name change, board and management changes and financings.  Recently they closed a ~$1 million raise at $0.18.

Mr. MacNeil told us that “the plan is to complete geophysical and geological mapping and surveys on the projects including Oro which should take us into the fall at which point we should have our permits and targets defined for drilling.”

Desert Star announced in the release that they expect to conduct an additional mapping campaign at Copper King and Red Top in March, 2014.

With the prospects that they have, the company is likely to find a joint venture partner for one, all or some of their assets.  This could happen prior to gaining exploration permits, but it would seem rational for it to be after.  The company is also more than capable of drill testing these targets themselves.

Also at their Oro project in New Mexico, Mr. MacNeil and Dr. Alan Wainwright (Desert Star’s Chief Geologist) reexamined historic core data and believe they have identified a large copper porphyry target below intense porphyry-style alteration exposed at surface.  They shared their excitement about this potential during our last interview and again, Mr. MacNeil reiterated that by phone today.

Shares are up over 175% from their summer lows:

DSR Chart

DSR data by YCharts

Read: Desert Star Conducts Sampling Program and Commences Process for Drill Permitting at Red Top, Copper King & Copper Springs Projects

Disclaimer: Author has a financial interest in Desert Star Resources and the company is an advertiser, therefore the article is not to be considered unbiased and fully independent. Please read Desert Star Resources Ltd.’s Cautionary Statement Regarding Forward-Looking Statements’s carefully.

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Gold Needs a Rest

April gold futures reached as high as $1345.60 overnight for a more than $100 gain for the yellow metal during the month of February. There are plenty of signs that gold may soon need a rest, ranging from a sharp turn in sentiment to major resistance in the $1340-$1360 area:

Click to enlarge

Gold_Daily_2.26.2014

A pullback to the $1300-$1320 area would be reasonable and help to reset the market for the next push higher; eventually targeting major resistance near $1400-$1425.

Warwick Smith leaves Western Pacific Resources on stronger footing

Warwick, Smith, Western, Pacific, Resources, Vancouver, Mining

Warwick Smith / CEO.CA file photo

Warwick Smith resigned as CEO and director of Western Pacific Resources (TSXV:WRP) yesterday after a banner year of accomplishments with the company in 2013.

Mr. Smith co-founded Western Pacific in 2009, not long before junior mining markets took a turn for the worse in 2011.

Smith was resolved to make something out of Western Pacific in the dark years of the commodities downturn. He went looking for a project that was financeable, with near term production potential and low startup costs.

On February 26, 2013, Western Pacific announced intentions to acquire the past producing Deer Trail gold, silver, lead and zinc mine in Piute County, Utah.

Deer Trail had extensive underground development and a modern mill facility, and Smith tied it up for $7.5 million out of bankruptcy proceedings.

Smith then recruited a management team with extensive mine building and shareholder wealth creation experience.

Michael Callahan

Michael Callahan

Arthur Brown, who was Chairman and CEO of Hecla, the largest silver producer in the US, became Chairman of Western Pacific. Michael Callahan, a former vice president with Hecla and President of Silvermex Resources until it was acquired by First Majestic Silver, also joined as President.

Smith then found financing for his company via the Quintana Capital Group of Houston, Texas. Quintana are a private equity investor in coal, oil, shipping and other sectors. They were introduced to Western Pacific by Lawrence Roulston, publisher of Resource Opportunities, who now sits on Western Pacific’s board.

Back in December, Roulston told us Quintana sees Western Pacific as a vehicle to build a multi asset production company to take advantage of the current weakness in the mining markets, starting with the Deer Trail project.

Yesterday Western Pacific announced the closing of the Deer Trail Mine acquisition, and the closing of the first $3.5 million in convertible notes sold to Quintana. Quintana have agreed to provide up to $10 million via convertible notes and $8.5 million via metals streaming to Western Pacific, subject to certain milestones.

The news release also announced a few management and board changes, with the notable replacement of Warwick Smith as CEO by the veteran miner Michael Callahan. Callahan congratulated Smith for his “outstanding contribution” to the company over the years in helping to secure its people, projects and capital.

Smith says he will now take a couple of months off to get married and looks forward to future endeavours.

You can follow Warwick Smith on Linkedin -> 

WRP Chart

WRP data by YCharts

Western Pacific Resources Corp. is a client of Pacific Website Co., which owns CEO.CA.

Gold & Silver Sentiment Update

After a very impressive rally in precious metals and mining shares during the past couple of weeks, there is some cause for near term concern as sentiment has suddenly turned bullish on the sector.

The latest Commitment of Traders data from the CFTC clearly shows a massive amount of short covering and some renewed speculative zest from smaller traders:

Click to enlarge

Gold_COT_2.18.2014

This is the largest net bullish positioning by small speculators since last September when gold prices tumbled more than $100.

Silver_COT_2.18.2014

Massive short covering by large speculators contributed greatly to silver’s 7%+ two day rise on February 14th and 18th. 

While there is certainly some cause for concern in the near term, we know very well that sentiment is not a good market timing tool and sentiment can remain at extremes for extended periods of time – a quote from Neil Leeson of Ned Davis Research:

Investors can remain optimistic on gold just as long as they were pessimistic (nearly all of 2013). Our mantra is to go with the crowd until it reaches an extreme, and then starts to reverse. Trend, flows, and momentum are all positive; sentiment is really the only indicator suggesting caution.

Both charts of gold & silver show bullish consolidations after their recent upside breakouts:

Gold_Daily_2.22.2014

Gold has near term support near $1308 with significant resistance $1340-$1350.

Silver_Daily_2.22.2014

Silver faces stiff resistance near $22 with near term support levels below at $21.40 and $21.00.

Precious metals investors should be happy to see a further consolidation after the recent upside moves. Some cooling off in sentiment and working off a bit of the recent overbought condition in gold & silver will only serve to prepare the market for the next upside surge.

NGQ – Lundin’s NGEx Resources Hits 0.63% CuEq over 340m in Argentina

NGEx plans for 120-160,000tpd open-pit copper mine at Josemaria (Photo: Bloomberg)

NGEx plans for 120-160,000tpd open-pit copper mine at Josemaria (Photo: Bloomberg)

Lukas Lundin’s base metals explorer, NGEx Resources (NGQ:TSX) this morning released seven of fourteen holes from their 2013/2014 field season at their Josemaria project in Argentina.  The focus of their 7,302m program was to define the high-grade supergene zone near the north end of the project and to test a possible extension there.

Two of the holes successfully intersected this high-grade supergene zone with hole JMDH78 intersecting 0.54% copper and 0.11g/t gold (0.63% copper equivalent) over 340m.  JMDH80 was drilled into the indicated resource block and therefore is expected to increase that portion of the model.  They also completed several large step-out holes to test a broad area of leached cap which extends to the north and northwest.

Other highlight holes included hole JMDH81 which intersected 510m (starting at 94m downhole) of 0.35% copper and 0.2g/t gold (0.50% copper equivalent).  Also, hole JMDH80 which intersected 0.44% copper and 0.22g/t gold (0.61% copper equivalent) over 432.5m.  These two holes were drilled along the edge of the indicated block and should convert inferred resources into indicated.

Three step-out holes were drilled between 90 and 300m from the inferred resource block at Josemaria and represent an extension to the northwest of the known mineralized zone as well as the potential to host a separate mineralized porphyry centre.  The company intends to complete follow-up drilling here.

NGEx also provided a preliminary update on the engineering studies that were started in the second half of last year and aimed to determine preliminary development ideas for Josemaria.  The work focused on an open-pit operation, processing between 120 to 160,000tpd.  Within the total resource estimate there is a shallower and higher-grade component with an estimated grade of 0.44% copper (versus indicated grade of 0.35% copper and inferred grade of 0.28% copper).  The engineers are now investigated the economic pros and cons of processing this material in the early days of a potential mine.

Baseline environmental programs, including review of areas for potential infrastructure, are under way, with fieldwork in progress during the current South American summer season.

The company holds three projects within 15km of eachother which hold over 21.3 billion pounds of copper and 15.5 million ounces of gold (Image: NGEx Resources Inc.)

The company holds three projects within 15km of eachother which hold over 21.3 billion pounds of copper and 15.5 million ounces of gold (Image: NGEx Resources Inc.)

At Filo del Sol, which is located 15km away from Josemaria and straddles the Argentine and Chilean borders, the company updated investors on their planned 7,000m drill program there.  As of February 9, 2014 NGEx had completed 5,875m in 18 holes with assays pending for all of them.  The company’s focus for this years program at Filo del Sol was to provide enough drill data to compile an initial resource estimate for a stratabound, high-grade silver-copper zone.

They also are focused on testing the potential for a feeder zone to the stratabound mineralization comprised of significant copper and gold mineralization   Drilling here is expected to be completed by early March.

Between Q2 and Q3, the company was burning roughly $1.7 million per month and ended September 2013 with $18 million.  This would leave them with roughly $10 million in cash remaining (assuming a similar burn).  NGEx last raise was $34 million at $3.40 per share in January of last year.

Japan Oil and Gas National Corporation ( or “JOGMEC”) as well as Pan Pacific Copper Company Ltd. are both NGEx’s project partners for these world-class base metals projects.  NGEx is the 60% operator with JOGMEC and Pan Pacific holding 60% interests in the projects.  Pan Pacific owns 75% of the Caserones Copper and Molybdenum project located 10km north of Los Helados and had a price tag of $3 billion.

Read: NGEx Intersects 0.63% Copper Equivalent Over 340 Metres at Josemaria and
Provides General Exploration Update for Argentina Projects

PVG – Pretium Resources to Raise $20M at a Premium for Brucejack

pvg logo

Bob Quartermain’s Pretium Resources (PVG:TSX) had a less than stable year in 2013.  The shares went from a high of $13.18 on January 2, 2013 down to a low of $2.89 in November 2013 amid controversy surrounding the legitimacy of their extremely high-grade Valley of the Kings deposit in BC, part of their Brucejack project.  Since then, the company has regained investor confidence in the resource estimate and mine plan associated with the project.  The shares have since recovered to close at $7.68 today and have announced a $20 million flow-through (FT) financing to be done at $8.80 per share and $8.05 per share.

The company through BMO Capital Markets (sole bookrunner) intend to issue 568,182 investment tax credit FT shares at a price of $8.80 per share and 1,863,355 Canadian exploration expenses FT shares at $8.05 per share.  There is a greenshoe option for the agents to purchase an additional 745,342 Canadian exploration expenses FT shares for additional proceeds to Pretium of $6 million.

The company completed a successful bulk sample study which exceeded their expectations (Image: Pretium Resources)

The company completed a successful bulk sample study which exceeded their expectations (Image: Pretium Resources)

The company intends to use the money for continued exploration at the Valley of the Kings as well as towards the amended feasibility study which is expected to be released Q2/2014.  Updates to be input into the updated feasibility study include lower metal prices ($1,100/oz Au and $17/oz Ag), optimized site layout and capex as well as refinements to the mining and metallurgical processes as a result of the bulk sample program.

As of September 30, 2013, the company had $35 million in cash.  They produced 5,865 ounces of gold from their 10,000 tonne bulk-sample which should have earned them an additional $7 million (at $1,250/oz Au).  The company raised $15 million FT shares at a price of $10.10 in September and an additional $10 million of non-flow through shares with Liberty Metals and Mining at $9.35 per share.

Read: Pretivm to Complete a $20 Million Flow-Through Share Private Placement