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August 12, 2014

BMR Morning Market Musings…

Gold has traded between $1,305 and $1,319 so far today…as of 8:15 am Pacific, bullion is up $7 an ounce at $1,315…Silver is off 3 cents to $19.88…Copper is down a penny to $3.17…Crude Oil is 82 cents lower at $97.26 while the U.S. Dollar Index is up one-tenth of a point to 81.56…again, the Dollar Index and Gold are rising together…

Both the TSX Gold Index and the Venture are technically positioned for bullish moves which suggests Gold may be gathering energy for a near-term breakout through a critical resistance band between $1,320 and $1,330…John has an updated TSX Gold Index chart below…bullion has shown excellent support in the $1,280’s, in the immediate vicinity of its 200-day moving average (SMA)…there’s also plenty of Fib. support in the $1,280’s…

Russia said a convoy of 280 trucks left for Ukraine today carrying humanitarian aid, amid Western warnings against using help as a pretext for an invasion…while geopolitical tensions boil over different parts of the globe, the seemingly disengaged American President – criticized over his confused foreign policy by his ex-Secretary of State, Hillary Clinton – is enjoying a two-week vacation, playing golf at Martha’s Vineyard…the optics are awful, but this can only help Gold

The U.S. Geological Survey reported yesterday that U.S. Gold production dropped 9% year-over-year from 614,079 troy ounces in May 2013 to 556,207 oz…Nevada led U.S. Gold production for the first five months of this year with 1,990,131 oz, followed by the combined states of Arizona, California, Colorado, Idaho, Montana, New Mexico, South Dakota, Utah, and Washington with 382,593 oz of Gold output…

Today’s Equity Markets

Asia

Asia markets were mostly higher overnight, though China’s Shanghai Composite retreated 3 points to close at 2222…trading was cautious ahead of key economic data to be released tomorrow – urban investment, industrial output and retail sales figures for the month of July…Japan’s Nikkei rose 31 points to finish at 15161…

Europe

European markets were down modestly today as investors weighed corporate releases, data from the euro zone and geopolitical tensions in Ukraine, Gaza and Iraq…in Germany, the country’s widely-watched ZEW index plummeted to just 8.6 points in August (the lowest level since December 2012) vs. 27.1 in July…the ZEW index guages economic expectations…

North America

The Dow is down 40 points as of 8:15 am Pacific…the TSX is up 18 points, bolstered by a higher Gold Index, while the Venture has shed 2 points to 997…

TSX Gold Index Chart Update

The TSX Gold Index is creeping closer to a major technical breakout…the key level to watch is 210…a confirmed breakout above 210 could lead to a rapid acceleration of the Index…the only way this could occur, in our view, is if Gold were to surge through the $1,320-$1,330 resistance band…such an event would also likely cause some significant short-covering in bullion…

As of 8:15 am Pacific, the Gold Index is 4 points higher at 208…

SPTGD127

Imperial Metals Corp. (III, TSX) Update

The Financial Post reported this morning that Imperial Metals (III, TSX) doubts the Mount Polley tailings pond breach will result in delaying the start of the Red Chris mine near Iskut…Imperial plans to start production at Red Chris late next month…it has applied for, but not yet received, a permit to discharge waste from the open pit mine…

While last week’s tailings breach was indeed very unfortunate (and avoidable, though bureaucratic delays within the Ministry of Mines may have played a role in not addressing risks at Mount Polley sooner), the real tragedy of this story may turn out to be the shameless sensationalism of the media – in particular certain Vancouver outlets with an anti-mining bias who have pandered to environmental and native groups spreading misinformation…the mining industry in B.C. needs to do a better job in the public relations arena at countering the ignorant, slanderous and misleading statements that have the potential of negatively impacting its image and brand…Imperial as well could have handled this situation more effectively at the outset…

Below is a link to an excellent article on the Mount Polley situation written by geologist Steve Todoruk who’s also a Senior Investment Executive with Sprott Global Resource Investments Ltd. – readers should find this balanced view very informative, and it certainly helps counter the garbage being spewed by the toxic Vancouver tabloids…

Sprott’s Thoughts – Mount Polley

SilverCrest Mines Inc. (SVL, TSX) Update

SilverCrest Mines (SVL, TSX), down 2 pennies at $2.28 in early trading, will report is Q2 financial results after the market close tomorrow…the company has completed the new 3,000 ton per day mill and facilities commissioning at its wholly owned Santa Elena mine in Sonora State, Mexico. “We will continue to adjust and optimize all the components of the facilities in efforts to achieve through-put tonnages at or above the nameplate capacity of 3,000 tpd,” stated Eric Fier, president and chief operating officer. “Our near-term focus now turns to achieving further milestones, including underground stope production in August and free cash flow in Q3 2014.”  Santa Elena is currently transitioning from an open-pit heap-leach operation to a conventional 3,000 tpd conventional mill facility and underground operation…SilverCrest will be extracting production from the first underground stope in August using long hole stoping methods…

Garibaldi Resources Corp. (GGI, TSX-V) Update

Sonora State is rich in Silver and Gold deposits, and Garibaldi Resources Corp. (GGI, TSX-V) clearly has a “tiger by the tail” at its 45 sq. km Rodadero North project approximately 120 km of Hermosillo…to the northwest is Yamana Gold Inc.’s (YRI, TSX) Mercedes mine which produced 50,000 Gold equivalent ounces in the first half of 2014, while to the southeast are Agnico Eagle’s (AEM, TSX) La India mine which began commercial production earlier this year, and Alamos Gold’s (AGI, TSX) Mulatos mine…what gives Rodadero even greater potential and credibility is Garibaldi’s track record of success in Mexico and the fact that Dr. Craig Gibson, highly respected in industry circles with some important discoveries under his belt, is overseeing the project…input has also come from Dr. Peter McGaw, founder of Mag Silver (MAG, TSX) who’s also a member of the Garibaldi Advisory Board…

With drilling continuing at Rodadero following a high-grade, near-surface Silver discovery recently reported by Garibaldi, the possibility that this project could imminently become a major new catalyst for GGI cannot be underestimated…Rodadero has scale written all over it in addition to two deposit types already being targeted…if GGI can find structural linkage among even just some of the 11 targets identified to date at Rodadero, as Yamana did among half a dozen or so targets at Mercedes, then Garibaldi could very possibly explode to new all-time highs…what’s also critical to keep in mind regarding GGI is how the La Patilla Gold Property in Sinaloa State and the Grizzly Project in northwest B.C. are also coming together…by itself, the Grizzly has the potential to “change the face” of the company, in the words of President and CEO Steve Regoci, and GGI expects to update investors in the near future with regard to recent progress at the Grizzly…

A few days ago we conducted a 30-minute interview with Regoci, covering everything from Mexico to B.C., and from that we’re creating several short clips which we’ll be posting over the next week…below is the first excerpt – Regoci on the scale, shallowness and styles of mineralization at Rodadero…

Key Points Regarding Silver Eagle & Rodadero

  • Very shallow high-grade mineralized system at Silver Eagle (within 50 meters of surface) – open-pit potential;
  • Drill holes SE-14-03 and SE-14-06 show that Silver Eagle is widening to the south – still open in all directions;
  • Infrastructure advantages – road and water access at Silver Eagle plus power lines running through target;
  • Surface sampling and drilling have confirmed hyperspectral data at Silver Eagle;
  • 8 targets strike immediately to the south, southeast and east of Silver Eagle as defined by hyperspectral data and sampling;
  • High-grade Silver and Gold have been sampled at targets adjacent to Silver Eagle as reported last week;
  • Mineralization observed so far at Rodadero could be near-surface expression of robust system(s) at depth;
  • More than one potential deposit type at Rodadero;
  • Location makes drilling very cost effective – approximately $100 per meter;
  • Very limited modern exploration has been carried out at Rodadero – plenty of “blue sky” potential over a large area.

Isaac Newton’s First Law of Motion is that an object in motion stays in motion until acted upon by an outside force…this concept can certainly be applied to the stock market…Garibaldi has been hugely successful in a challenging junior resource sector environment because of the quality of its management and geological team, and their combined abilities to keep GGI in motion – on the ground and in the market…that motion is accelerating with no outside force in sight to stop it…that puts GGI in an elite category, the reason it has performed so incredibly well over the past 12+ months…

Reservoir Minerals Inc. (RMC, TSX-V) Update

A fantastic discovery story we’ve been following for many months is Reservoir Minerals (RMC, TSX-V) which is enjoying tremendous success with its Timok Project (100%-owned permits and JV’s) in Serbia…the company is well-capitalized with over $40 million in its treasury as of the end of May…

Technically, RMC currently appears to be in the “sweet spot” around $6 a share…you can see in this 2.5-year weekly chart how overbought RSI(14) conditions that emerged early this year have unwound to the 50% support level…in addition, the rising 200-day SMA is also providing strong support…buy pressure (CMF) is beginning to pick up again and the ADX indicator confirms a bullish overall trend…RMC is certainly a take-out candidate down the road if their success with Timok continues…

RMC4(1)

North American Nickel Inc. (NAN, TSX-V) Update 

Yet another discovery play with great exploration upside – North American Nickel Inc. (NAN, TSX-V)…drilling continues at NAN’s 100%-owned Maniitsoq Nickel-Copper-Cobalt-PGE project in southwest Greenland…one drill rig is focused on the the Imiak Hill conduit complex (IHCC) while a second drill rig is now testing regional exploration targets…a total of 3,000 m of exploration drilling is planned to test approximately 15 widely spaced targets located throughout the Maniitsoq property…

Technically, it was encouraging to see NAN hold important support recently in the mid-to-upper 40’s as John suggested it would…that was a normal retrace from the 52-week high of 65 cents, and it also cleansed the temporarily overbought RSI(14)…there is measured Fib. resistance at 72 cents, not a price target – just a theoretical level based on Fib. and technical analysis…

NAN is up 3 cents at 53 cents as of 8:15 am Pacific

NAN17

Fission Uranium Corp. (FCU, TSX-V) Update 

Interesting news yesterday from Fission Uranium (FCU, TSX-V)…it has discovered anomalous radioactivity with exploration hole PLS14-255, approximately 17 km southeast of the main discovery where high-grade mineralization has been outlined along a 2.24-km strike length…PLS14-255 is also just 330 m north of Fission 3.0’s (FUU, TSX-V) Clearwater West property, where exploration work, including Fission 3.0’s patent-pending airborne survey, has identified several high-priority basement-hosted conductive anomalies and co-incidental and possibly related surface radiometric anomalies…

Fission continues to churn out excellent results at PLS, and the possibility of a bigger fish eventually swallowing Fission seems inevitable…

Technically, the recent reversal in the 50-day SMA was a clue that was a fresh advance was in the making…the chart looks very strong…Fib. resistance levels range from $1.32 to $1.46…

FCU5(1)

Note:  John and Jon both hold share positions in GGI.  Jon also holds a share position in NAN.

4 Comments

  1. RMG finally cleaning up and looking stronger today!

    Comment by STEVEN1 — August 12, 2014 @ 8:06 am

  2. CSQ halted, news out. “Reverse circulation drill hole B-1436, drilled at the open northern extension of the Penelas East Zone, intersected 9.1 metres (30 feet) grading 11.9 g/tonne Au (0.347 oz/ton Au) at the bottom of the hole from 228.6-237.7 metres (750-780 feet) depth. Unfortunately, the hole bottomed at 237.7 metres (780 feet) in 25.9 g/tonne Au (0.755 oz/ton Au) material from 236.2-237.7 metres (775-780 feet). The full extent of this mineralized zone remains untested and will be the target of follow-up drilling.”

    Comment by Jon - BMR — August 12, 2014 @ 8:33 am

  3. Hi Jon, where we to hearly into the sheslay valley story, you have ashburton at 0.04 cent, alix at 0.025, they have to tell some kind of story just like dbv did, than you have pgx wich i seems to be the only one interested in, rg is not there yet, ggi seems prudent, you where supposed to do a visit over there, what appenned there where no valcano at the end :-p,

    Have a great day, weather in MTL, is fantastic 🙂

    Comment by Martin — August 12, 2014 @ 8:51 am

  4. CSQ.v imho buyout from 1 of 2 partners

    Comment by ChartTrader — August 12, 2014 @ 10:02 am

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