A look at two notable news releases and trade setups in the junior mining sector.
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One of the more controversial stocks in the junior mining sector, Garibaldi Resources (TSX-V:GGI), delivered an intriguing NR Friday morning. The news release had a key punchline pertaining to hole EL-19-53 which still has assays pending:
"EL-19-53 is the most extraordinary hole drilled so far at Nickel Mountain given 18 meters of massive sulphide, 4.5 meters of net-textured to semi-massive sulphide, 7 meters of sediments containing semi-massive sulphide, and 56.5 meters of mineralized orbicular gabbro (moderate to strongly disseminated) in a thick continuous 86-meter intersection with increasing sulphide percentage downhole (vs. 16.75m of massive sulphide within a 40.4m core length interval in discovery hole EL-17-14 - see Dec. 8, 2017 news release)."
The NR was masterfully upbeat and investors/traders will be eagerly awaiting the next update from the company which will hopefully include assays for hole EL 19-53, in addition to other holes, as Garibaldi continues to conduct its most extensive drilling program ever at Nickel Mountain.
After a volatile month of July which saw GGI shares rally as high as $2.25 before dropping back below $1.40 at the end of the month, GGI began last week testing its rising 50-day moving average and important support near the $1.30 level:
GGI.V (Daily)
It's worth noting that CEO.ca Pro Level 2 Market Depth showed a strong order book on the bid side for GGI shares on both Wednesday and Thursday:
On Wednesday in particular (first 15 seconds of above video) it's easy to see how robust the bid side of the GGI order book was as price climbed from its opening print at $1.31 to $1.45 in the first hour of trading. The combination of a solid technical chart setup and real time level 2 market depth offered astute market participants an opportunity to get in ahead of a positive news surprise Friday morning.
It's drilling season in the junior mining sector as many Canadian explorers take advantage of the warmer weather to carry out drill campaigns. Assays are starting to trickle in and there should be a consistent flow of assays through the end of the year from all of the summer drilling.
I want to point out another junior exploration company that released drill results last week. Tudor Gold (TSX-V:TUD) delivered a breathtaking 370 meter intercept containing 1.095 grams/tonne gold, Including an Interval of 252 meters containing 1.268 grams/tonne gold.
This was the TUD chart heading into last week (pre-assays):
TUD.V (Daily - as of the close on August 2nd, 2019)
The uptrend is clear on multiple time frames and last week's good news only served to extend the strong uptrend in TUD shares:
TUD.V (Daily)
TUD shares traded as high as $1.07 on Wednesday (which meant that TUD shares were up more than 300% year-to-date), before ending the week at $.91. My point of bringing up TUD is not to delve into the company's Treaty Creek property or the virtues of hole GS19-42, but to point out how the assay surprise occurred in the direction of the preceding trend. Just as Garibaldi delivered a positive surprise after GGI shares rallied into Friday's NR, TUD shares were already in a strong uptrend heading into last week's good news.
There is a rule among traders and technical analysts that news 'surprises' tend to occur in the direction of the controlling trend. This phenomenon could be due to the fact that these positive surprises aren't a surprise to some market participants who may have already weighed in with their opinion by buying/selling shares in the market.
I will conclude by saying that the market reactions to the Garibaldi and Tudor NRs are not only a positive for the companies in question, but also for the entire junior mining sector. In bear markets even good news is often used as a liquidity event and an opportunity to sell shares into a deeper market. This is particularly true for stocks that had risen ahead of the positive news. Both Garibaldi and Tudor shares rose ahead of news and still managed to tack on additional gains after the news was released. This is bull market action and further evidence that animal spirits are slowly returning to the junior mining sector.
Disclosure: Author has no positions in either of the stocks mentioned in this post.
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DISCLAIMER: The work included in this article is based on current events, technical charts, company news releases, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The views expressed in this publication and on the EnergyandGold website do not necessarily reflect the views of Energy and Gold Publishing LTD, publisher of EnergyandGold.com. This publication is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.
