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7 @ 7:00 - BullMarketRun.com

May 18, 2017

7 @ 7:00

Check back later today for potential additional posts and tomorrow morning for BMR Morning Market Musings.

1. This is a special early edition of 7 @ 7:00 due to travel in preparation for some BMR special coverage…Morning Musings returns tomorrow…Gold, after yesterday’s strong surge, traded between $1,253 and $1,263 overnight…as of 3:00 am Pacific, bullion is unchanged at $1,261…the metal is aiming for a 6th straight winning session today…immediate resistance is $1,260 which is also just $3 above the 200-day moving average (SMA)…the U.S. Dollar Index has broken below a short-term downtrend line as it faces continued pressure…the greenback has recovered slightly this morning but the outlook for the balance of the year is growing increasingly negative from at least a technical standpoint, and that’s bullish for both Gold and the Venture

2. Crude Oil prices are trying to reestablish support at $48 a barrel…U.S. data yesterday showed that stockpiles of Oil and fuel continued to drop and Oil production slipped for the first time since February…U.S. oil stocks fell by 1.75 million barrels last week, the 6th consecutive weekly decline, as refiners ramped up their purchases of Crude, according to the U.S. Energy Information Administration…the decline fell short of the 2.2 million barrel decline forecast by analysts and traders, but was a more bullish figure than the 882,000 barrel increase reported Tuesday by the American Petroleum Institute…stockpiles of gasoline and diesel fuel also fell last week, and the relentless rise in U.S. Oil production paused for the first time in 13 weeks (fell by 9,000 bpd) as falling production in Alaska offset increases elsewhere…

3. Canadian Oil output is expected to hit an all-time high this year at around 4.7 million barrels a day – growth of around 200,000 bpd as some long-planned projects come online…just like American shale drillers across the border, Canadian producers have also benefited from improved technologies and increased efficiency as they cut costs…earlier this month, the number of rigs drilling for Oil rose to an annual average of 86, the highest since December 2015, according to data from Oil services provider Baker HughesCenovus Energy (CVE, TSX), one of Canada’s biggest Oil sands producers, says it has cut per-barrel operating costs by 30% between 2014 and 2016…the company expects its production to double this year, helped by expanding capacity and new acquisitions…yesterday, CVE announced that it has closed its previously announced purchase of assets in Western Canada from ConocoPhillips after receiving all necessary regulatory approvals for the transaction…investors have reacted negatively to that deal announced at the end of March as it increased Cenovus debt and pushed it into the largely unknown territory of Natural Gas…

4. The Venture’s 5-session winning streak was snapped yesterday, though the Index lost just a fraction of a point to close at 807.87 after hitting an intra-day new monthly high of 813…the Venture’s EMA(8) and EMA(20) have each reversed to the upside and have converged at 800 which is new Venture support again after the Index closed below that level for 9 straight trading days…May will finish much differently for the Venture than it began…U.S. markets had their worst day of the year yesterday as mainstream media hysteria over Everything Trump injected some fear into the equity markets…the Dow lost 370 points, recording its worst day since September last year…on the data front today, U.S. jobless claims and the Philly Fed Survey will both be released at 5:30 am Pacific

5. Nighthawk Gold (NHK, TSX-V) hit a new 5-year high of $1.15 yesterday as the company announced that it has received conditional approval from the Toronto Stock Exchange to graduate from the Venture and list its common shares on the TSX where it will continue to use the stock symbol NHKNighthawk started a 25,000-m drill program early last month at its 100%-owned Indin Lake Gold Property in the Northwest Territories which includes the Colomac Project and multiple other targets within a highly prospective regional package with obvious multi-million ounce potential…

6.  With Gold trading at more than $1,700 CDN, juniors with significant ounces in the ground and near-term production possibilities have become very attractive takeover targets as demonstrated earlier this week when Eldorado Gold (ELD, TSX) announced it’s acquiring Integra Gold (ICG, TSX-V) in a deal valued at nearly $600 million…we can’t help but think that Granada Gold (GGM, TSX-V) is drawing some attention from certain players after releasing a resource update Tuesday…it was highlighted by a maiden Inferred resource of 10.4 million tonnes grading 4.6 g/t Au (1.5 million ounces) at a cut-off grade of 1.5 g/t Au over 600 m of strike length in a new discovery area at depth immediately north of its previously outlined LONG Bars Zone near-surface deposit at the Granada Gold Property near Rouyn-Noranda, Quebec…only a fraction of the total area of 1.8 km x 2.1 km north of the Measured and Indicated LONG Bars Zone has been drill-tested, and GGM will be targeting additional tonnage and even higher grades in this under-explored part of the property…meanwhile, the company’s updated Block Model reveals 4.98 million in situ ounces at Granada (1.53 million M&I, 3.45 million Inferred) in areas drilled to date, nearly double the amount estimated in the initial 2012 Block Model…DRA Global, one of the world’s leading vertically integrated engineering firms, continues to examine innovative solutions to put the open-pit deposit into production…technically, GGM has confirmed a breakout above 7 cents and a downsloping channel going back 1 year…Secutor Capital’s flow-through share supply is also rapidly dwindling and the near-term removal of that supply from the market will have bullish implications…

7. EnGold Mines (EGM, TSX-V) released assay results last night from 2 more drill holes at its Lac La Hache Property, but nothing spectacular…best result came from G1707 which targeted mineralization 50 m south of G1703G1707 intercepted 6.05 m from 351.25 to 357.3 m downhole grading 1.01% Cu, 0.18 g/t Au and 8.02 g/t Ag…assays are pending from holes G1709 and G1710, which targeted intercepts 50 m west and east of holes G1704 and G1703, respectively, and encountered mineralization over significantly narrower widths than holes G1601, G1703 and G1704…an intercept of approximately 11 m from hole G1711, located 50 m north of discovery hole G1601, is now being prepared for assay…holes G1712 and G1713 are still in progress…mineralization appears to be narrowing to the south, east and west, as suggested by the local magnetic and gravity geophysical anomalies in the discovery area…the anomalies define a trend extending to the north of the discovery hole where EnGold will continue to test potential extension of the zone…EGM still commands a market cap in excess of $80 million after yesterday’s 45-cent close…

The most popular recent BMR articles…

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  1. Hopefully the lull before the storm…. very quiet

    Comment by Weatheritout80 — May 18, 2017 @ 8:30 am

  2. Time for an update Mr.Regoci!Would be nice to hear something before the long weekend.

    Comment by pole — May 18, 2017 @ 8:42 am

  3. well,kinda thought yesterday would be a one day event,how skiddish are the markets….

    Comment by Laddy — May 18, 2017 @ 11:35 am

  4. Ahhh your finally becoming a seasoned GGI investor Pole.

    Comment by Weatheritout80 — May 18, 2017 @ 1:41 pm

  5. Weatheritout80….not trying to be negative but I don’t expect a storm simply because of seasonal factors. I know almost every newsletter writer (no disrespect intended here BMR gang as you do a great job) in the junior sector will find a reason why this year it will be different when it comes to the summer months but it is usually not different. I don’t have great expectations in this sector right now (for the next few months) and I have positioned my portfolio accordingly. Still hold some positions in companies that may have significant news (ie. GGI) but not full positions.

    Comment by Danny — May 18, 2017 @ 2:31 pm

  6. In March, I purchased 85,000 shares of Mariana at $.91-.93 which were very cheap because of a lack of news and due to perceived risk in Turkey. I posted on BMR to indicate how good of a buy they were. The stock firmed to the $1.20 range. A few weeks later, I sold my 130,000 shares at $1.71 due to the Sandstorm buyout.I guess what I am trying to say is that good, high grade deposits that make you excited because of exceptionally high grades and long strike lengths are wherever they are located. In the last 3 days, I bought 192,000 shares of Salazar (SRL) at $.14 and up and plan to buy more. The smart money wanting to buy it out have large positions in it and management have around 37% of the outstanding stock so the amount of free floating shares are around 31% if the total. The grades are outstanding and with further drill results the stock will likely be many multiples from where we are now, I expect. This is an intermediate size company which benefits from a low royalty rate(4%) locked in with locals running it. I believe this is a huge advantage as the government of Equador is far less likely to try to make unreasonable demands on local ownership. Freddy Salazar was involved in the beginning development of Aurelian.


    Comment by Bishkek — May 18, 2017 @ 4:42 pm

  7. Pole, companies often take 6 weeks to report VTEM results. That would take GGI into mid-June but I highly doubt that’s going to occur because I’m sure they’re proceeding with interpretation at a blazing speed with some of the best experts in the Nickel sulphide business, and a sense of urgency.

    I’m also certain we’ll hear from GGI before the end of this month and I’ll boldly predict (again) that this VTEM is going to light up like a Christmas tree because of all the other evidence regarding this deposit, the immediate surrounding area at the E&L and the nature of this district.

    Nickel Mountain is ripe for a major Ni-Cu massive sulphide discovery, so fasten your seatbelts everyone – this is going to get very serious very soon, within days IMHO.

    Comment by Jon - BMR — May 18, 2017 @ 7:24 pm

  8. CSR closes an unannounced PP (hard dollars) out of the blue…could be overseas investors who like what they see with the company’s direction and Re-2OX process…


    Castle Silver Resources Inc. has closed the first tranche of a strategic private placement, raising gross proceeds of $500,000. The company issued 2.5 million units at a price of 20 cents per unit and expects to soon close a second and final tranche of up to an additional $250,000.

    Frank Basa, president and chief executive officer, stated, “Underground access at the Castle mine and our unique Re-2OX hydrometallurgical process to create high-purity cobalt powders for end-users in the battery sector have established CSR as the innovation, exploration and development leader in Canada’s richest cobalt-silver district.”

    Financing terms

    Each unit comprises one common share and one share purchase warrant. Each warrant will entitle the holder thereof to purchase one additional common share of the company at an exercise price of 30 cents per share for a period of two years from closing, subject to TSX Venture Exchange approval.

    Finders’ fees were paid in connection with the initial tranche in the amount of $30,000 cash and 150,000 broker warrants on the same terms as the purchaser warrants, subject to exchange approval. All securities are subject to a four-month-and-a-day hold period expiring on Sept. 20, 2017, in accordance with applicable securities laws.

    About Castle Silver Resources Inc.

    Castle Silver Resources (formerly Takara Resources Inc.) is a TSX Venture Exchange-listed junior natural resource company focusing on the exploration and development of former silver and cobalt mine properties in Northern Ontario, including the Castle silver-cobalt mine near Gowganda, and the Beaver and Violet mines near Cobalt.

    We seek Safe Harbor.

    Comment by Jon - BMR — May 19, 2017 @ 3:45 am

  9. It is great to see more hard dollar financing at Castle.

    Comment by donald — May 19, 2017 @ 4:59 am

  10. And completely out of the blue, donald…what that tells me is that some strong market players really like where this is headed, especially after the news earlier this month…

    Comment by Jon - BMR — May 19, 2017 @ 5:11 am

  11. Jon – so why the need for a full warrant???

    Comment by jeremy — May 19, 2017 @ 5:19 am

  12. Jeremy, I’ll explain why…this PP has the look and feel of some well-heeled investors from overseas getting positioned in CSR…some company representatives were over there just recently…these investors would also have the ability to attract a much wider audience for CSR outside of North America…the full warrant is certainly a sweetener for their participation, better than any IR program a company could put together…

    Comment by Jon - BMR — May 19, 2017 @ 5:38 am

  13. Thx mate… but if the investor came to them why would the pot have to be sweetened??? just trying to understand .. at 500K its not a big deal..

    Comment by jeremy — May 19, 2017 @ 5:55 am

  14. Mr. David D’Onofrio reports


    White Gold Corp. has entered into a binding purchase agreement dated May 18, 2017, with Kinross Gold Corp., pursuant to which the company has agreed to acquire the entities holding 100 per cent of Kinross’s properties in the White Gold district, Yukon, consisting of the White Gold, Black Fox, JP Ross, Yellow and Battle properties. The acquisition consolidates and expands the company’s already substantial land position in the White Gold district, and adds approximately one million ounces of gold grading between 2.7 and 3.19 grams per tonne (g/t) gold (Au) on the Golden Saddle area based on historic estimates of measured and indicated resources on the White Gold property. Total consideration to be paid to Kinross for the White Gold properties will consist of the issuance of 17.5 million common shares of the company, an upfront cash payment of $10-million, which will mostly be financed from the proceeds of a non-brokered private placement with Agnico Eagle Mines Ltd. and up to $15-million in future milestone payments (as discussed below).

    Following the completion of the acquisition and the Agnico financing, Agnico and Kinross will each own approximately 19.9 per cent of the company.

    Key highlights:

    High-quality exploration projects in White Gold district: adds another approximately 86,000 hectares of land adjacent to the company’s properties. Postacquisition, the company will own 19,438 claims representing over 390,000 hectares of land, representing approximately 40 per cent of the White Gold district;
    Historic high-grade gold resource: historic estimates of measured and indicated resources ranging from 840,000 to 1,044,570 ounces grading from 2.7 to 3.19 g/t gold, and inferred resources ranging 125,000 to 407,410 ounces grading from 1.8 to 2.52 g/t gold, from the Golden Saddle on the White Gold property;
    Strong exploration potential: numerous identified exploration targets on the White Gold and JP Ross properties, and prospective ground on the Black Fox, Yellow and Battle properties, to be followed up by using the company’s proven exploration techniques;
    Support of Agnico and Kinross: posttransactions, Agnico and Kinross, two established gold producers, will each own approximately 19.9 per cent of the company; access to first-rate technical service teams with extensive skills;
    Strong rerating potential: increased scale and additional validation improve corporate profile and access to capital.

    Shawn Ryan, chief technical adviser of the company, commented: “We are very excited to be acquiring Kinross’s Yukon portfolio, including the White Gold property. The acquisition adds significant exploration potential to our already dominant land position in the White Gold district. Our ultimate goal in the Yukon is to leverage our team’s track record of successful exploration and discovering mineral resources in order to discover additional gold deposits, and this acquisition greatly enhances our prospects. Historic reported resources on the White Gold property indicate the potential for approximately one million ounces of gold grading between 2.7 [and] 3.19 g/t gold on the Golden Saddle in the measured and indicated resources categories, and we look forward to getting on the property to expand the mineral footprint. Furthermore, we are very pleased to now have strong support from both Agnico and Kinross as we advance our exploration programs in the Yukon. Both companies are world-class, top-tier gold producers and bring unique benefits to our other shareholders.”

    “Agnico Eagle looks forward to working with White Gold and Kinross, and to leveraging our respective expertise and experience to advance the exciting opportunities in the district,” said Sean Boyd, Agnico Eagle’s vice-chairman and chief executive officer.

    “We look forward to working with Agnico Eagle and White Gold Corp. to support the pursuit of quality development opportunities in this highly prospective and largely underdeveloped district,” said J. Paul Rollinson, president and CEO of Kinross. “This investment will allow the three companies to pool their expertise together to strengthen their position in this excellent mining jurisdiction.”

    Summary of the consideration paid for the acquisition

    The purchase price for the acquisition consists of:

    17.5 million common shares of the company, which will be subject to a contractual four-month hold period;
    A $10-million upfront cash payment upon closing of the acquisition;
    $15-million in future milestone payments related to the advancement specifically of the White Gold properties, payable as follows:
    $5-million upon announcement of a preliminary economic assessment;
    $5-million upon announcement of a feasibility study on the White Gold properties;
    $5-million upon announcement of a positive construction decision.

    In connection with the issuance of the common shares of the company to Kinross, Kinross and the company will enter into an investor rights agreement, similar to the existing agreement between the company and Agnico, pursuant to which, and subject to certain conditions, Kinross will have the right to participate in any future equity offerings by the company in order to maintain its proportionate interest in the company and to nominate one person to the board of directors of the company. Until such time as Kinross beneficially owns less than 10 per cent of the common shares of the company for the first time following completion of the acquisition, the company will have a right to designate a purchaser of first instance in the event that Kinross wishes to sell a block of more than 5 per cent of the issued and outstanding common shares of the company. Kinross will also be subject to a standstill restriction until Dec. 13, 2018, which will prohibit Kinross from taking certain actions, including acquiring more than 19.99 per cent of the issued and outstanding common shares of the company, subject to certain exceptions.

    Summary of the White Gold properties

    The White Gold property

    The White Gold property is located approximately 95 kilometres south of Dawson City, Yukon, and consists of 1,835 claims covering approximately 36,265 hectares. The property was historically explored by Underworld Resources from 2007 to 2009, and included the discovery of the Golden Saddle and Arc zones. In 2010, Underworld reported a resource estimate of 1,004,570 ounces contained in 9.80 million tones at a grade of 3.19 g/t Au in an indicated category, with an additional 407,410 ounces contained in 5.02 million tonnes at a grade of 2.5 g/t Au in an inferred category on the Golden Saddle. At the Arc zone, the initial resource included 170,470 ounces contained within 4.37 million tonnes at a grade of 1.21 g/t Au in the inferred category (reported in Underworld Resources new release dated Jan. 19, 2010, and the National Instrument 43-101 report titled “White Gold Property Dawson Range Yukon, Canada” dated March 3, 2010, prepared by Lars Weiershauser, PGeo, Marek Nowak, PEng, and Wayne Barnett, PrSciNat, of SRK Consulting (Canada) Inc.). Kinross purchased Underworld shortly after the initial resource was released in 2010 and explored the property from 2010 to 2012. In 2013, Kinross released the results of a resource estimate on the Golden Saddle zone and reported a resource of 840,000 ounces within 9.79 million tonnes at a grade of 2.67 g/t Au in an indicated category, with an additional 125,000 ounces within 2.17 million tonnes at a grade of 1.8 g/t Au in an inferred category (reported in Kinross’s 2016 mineral reserves and resource statement). Both Underworld’s and Kinross’s resource estimates are considered historical estimates, and the company is not treating them as current mineral resources. Although the company believes these sources to be generally reliable, such information is subject to interpretation, and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process, and other inherent limitations and uncertainties. In addition to the Golden Saddle and Arc zones, there are numerous other targets known on the property that warrant follow-up work (for more information, see Yukon assessment report Nos. 095338, 096206, and 096207).

    The JP Ross property

    The JP Ross property is located approximately 70 kilometres south of Dawson City, Yukon, and consists of 2,251 claims covering approximately 45,600 hectares and numerous placer gold bearing creeks. Historic exploration performed on the property by Underworld and Kinross include geochemical surveys, trenching, airborne magnetic and radiometric surveys, and 8,592 metres of diamond drilling over 64 holes. Fourteen target areas are currently known and large portions of the property are unexplored (see Yukon assessment report Nos. 096204 and 096204 for more information).

    The Black Fox, Yellow and Battle properties are early-stage properties with limited historic exploration performed on them to date consisting of prospecting, reconnaissance soil sampling and limited drilling (Black Fox). Collectively, the three properties consist of 238 claims covering approximately 4,895 hectares of ground (see Yukon assessment report Nos. 095270, 095338, 096202, 096206 and 096207 for more information.)

    Additional information on all the properties and the company’s planned exploration activities will be reviewed in future news releases.

    Additional information

    The White Gold properties are subject to two pre-existing annual advance royalty payments in the aggregate amount of $130,000 that will remain in force should commencement of commercial production begin with respect to certain claims, and three pre-existing net smelter returns royalties equal to 4 per cent, 2 per cent and 2 per cent, respectively, each relating to different claims and each subject to reduction options. Furthermore, if either mineral reserves, measured mineral resources or indicated mineral resources are located on certain claims comprising the White Gold properties and are disclosed in a National Instrument 43-101, standards of disclosure for mineral projects, technical report, then the company will be obligated to pay a royalty equal to $1 per ounce for any ounces of gold (using a cut-off of 0.5 g/t). Each of these royalties is held by Mr. Ryan. In connection with the acquisition, the company, Kinross and Mr. Ryan have entered into an agreement, pursuant to which the company has, among other things, agreed to assume the royalty payment obligations in respect of the White Gold properties, and the parties have agreed that the company may elect to satisfy part of its $130,000 advance royalty payment obligation through the issuance of common shares of the company. The amending agreement, which will be effective upon closing of the acquisition, also provides for the issuance to Mr. Ryan of 70,500 common shares of the company upon completion of a bankable feasibility study with respect to the White Gold properties. The entering into of the amending agreement by Mr. Ryan will be considered a related party transaction pursuant to Multilateral Instrument 61-101, protection of minority securityholders in special transactions. The company will be exempt from the requirements to obtain a formal valuation or minority shareholder approval in connection with the entering into of the amending agreements in reliance of sections 5.5(b) and 5.7(a) of MI 61-101.

    Agnico financing

    In connection with the acquisition, Agnico has exercised its right to maintain its approximately 19.9-per-cent equity ownership in the company. To maintain its equity ownership, Agnico will subscribe for approximately 4.4 million common shares of the company at a price of $2.01 per share on a non-brokered basis for gross proceeds to the company of approximately $8.75-million. The common shares of the company to be issued to Agnico will be subject to a statutory four-month hold period. The net proceeds of the Agnico financing are expected to be used to substantially finance the upfront cash payment portion of the acquisition as more particularly described above. Closing of the Agnico financing is expected to take place concurrently with the closing of the acquisition.

    Following the completion of the acquisition and the Agnico financing, the company expects to have approximately $22-million of cash on its balance sheet.

    Completion of the acquisition, the Agnico financing and the transactions contemplated by the amending agreement are subject to a number of standard conditions, including receipt of all regulatory approvals and the acceptance of the TSX Venture Exchange. The transactions are expected to close during the second quarter of 2017.

    Advisers and counsel

    The company has retained GMP Securities LP as financial adviser, and Cassels Brock & Blackwell LLP as legal adviser.

    Qualified person

    Unless otherwise indicated, the scientific and technical information contained in this news release has been reviewed and approved by Jodie Gibson, PGeo, of GroundTruth Exploration Inc., who is a qualified person within the meaning of NI 43-101. GroundTruth Exploration is owned by the spouse of a director of the company.

    About White Gold Corp.

    The company owns a portfolio of 15,134 quartz claims across 25 properties covering approximately 305,000 hectares representing approximately 30 per cent of the Yukon’s White Gold district. Preliminary exploration work has produced several prospective targets. The claim packages are bordered by sizable gold discoveries owned by majors including Kinross, Goldcorp Inc., and Western Copper and Gold

    Comment by Jon - BMR — May 19, 2017 @ 6:11 am

  15. Jeremy, investors-financiers with market power and the ability to move a stock have plenty of leverage to ask for a full warrant. 2.5 million shares of Castle is not insignificant, especially when that position can be increased to 5 million shares.

    Comment by Jon - BMR — May 19, 2017 @ 6:31 am

  16. Hi Jon how does white gold and Integra command such premiums and major players while Ggm languishes? Are the majors dumb or are the shareholders?

    Comment by donald — May 19, 2017 @ 10:11 am

  17. Majors are often conservative and late in arriving at certain key conclusions, Donald…in the case of GGM, the fundamentals are there and the chart is actually very positive with the breakout above the downsloping channel (new support) at 7 cents…the last thing in the way is Secutor…that flow-through paper must be fully soaked up as we’ve mentioned…more than 80% of Secutor’s paper has been absorbed and the balance should disappear shortly (they trade and dump thru ANON quite often)…primary trend in GGM is now clearly to the upside and that’s the big change over the last little while…many investors are often late in picking up trend changes and they are the ones that typically jump on the bandwagon and chase later on…

    Comment by Jon - BMR — May 19, 2017 @ 10:39 am

  18. It seems like all,the majors want more projects in North America after getting burned or delayed overseas. That now includes eldorado with Integra , Agnico with white gold, somebody with kaminak , and lots of 19.9 % deals to get a cheap,foothold in many Junior explorers.

    Comment by donald — May 19, 2017 @ 8:17 pm

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