Once each week at BMR, our technical analyst highlights a junior resource stock (outside the BMR Portfolio) that shows very favorable chart patterns. Investors/traders of course should perform their own due diligence, as always, and consider fundamental factors as well. This weekly feature is merely meant to introduce some possible opportunities that readers may wish to investigate. Today, John takes a look at Fire River Gold (FAU, TSX-V) which is developing the highly prospective Nixon Fork Gold Project in Alaska:
John: At Fire River’s Nixon Fork Gold Mine, there is high grade gold with copper and silver credits. Previous production averaged over 40 g/t Au. This is a turn key operation, fully permitted and bonded. A complete re-evaluation of the mine, mill, resource and tailings is in progress. In addition there is significant exploration upside.
On July 26 Fire River closed a $5.5 million financing and is now waiting for regulatory approval. The following day they announced the commencement of a 28,000 metre drill program at Nixon Fork. The company is certainly forward thinking and progressive and is worthy of further due diligence.
Looking at the 6-month daily chart we see that on June 10, Fire River made a major move, going from 45 cents to nearly 70 cents in 6 trading days. It then consolidated and moved higher again, to 72 cents, in mid-July and from there it has declined marginally. Although I have shown the price to be moving in an upsloping channel, the 2 highs of 70 and 72 cents, being so close, could be construed as a double top pattern. This makes little difference in interpretation. The interesting part to watch is the trend support line (green sloping line). The stock is trading close to this line and should not go below the support.
The Fibonacci levels show the price has declined to the 68.2% support level of 58 cents. So far this support has held. The next Fibonacci target is 94 cents.
Looking at the indicators:
We see that a divergence occurred between the RSI and the price, thus this latest decline was to be expected. The RSI appears to bottom out at the 40% level and is approaching that now.
The volume has been declining (mauve sloping line) during the price decline, and it’s at one of its lowest levels since mid-June. This is to be expected during a consolidation.
The Chaikin Money Flow (CMF) indicator shows that the buying pressure, while still slightly bullish, has been steadily declining since mid-July.
The Slow Stochastics shows that the %K (black line) is rising to meet the %D (red line), indicating the possibility of a crossover to the upside in the near future.
Outlook: The fundamentals are very strong for this company which could be a successful junior gold producer in the intermediate term (18 months). The chart and indicators suggest the price has found strong support at 58 cents. Once the financing has been approved, and speculation begins to set in regarding drill results, Fire River has an excellent chance to stage another powerful advance.
This Co has burned $ 2.8 million in 18 months. And what chicken guts technicals account for that?
Massive cash burn for grotesque overhead, much of it going for such things as office expenses to related Harry Barr
enterprises, is speaking for much of the dilutive unit paper issued by Fire River Resources.
On 19 June 2008, the Company issued 4,300,000 common shares of the Company at $0.001 per common share for cash proceeds of $4,300.
On 19 June 2008, the Company issued 1,950,000 common shares of the Company at $0.10 per common share for total proceeds of $195,000.
On 19 June 2008, the Company issued 1,580,000 common shares of the Company at $0.20 per common share for total proceeds of $316,000.
On 21 May 2009, the Company completed its IPO of an aggregate of 1,543,100 units at $0.30 for gross proceeds of $462,930.
On 27 July 2009, the Company completed the first tranche closing pertaining to its non-brokered private placement and has issued 4,934,044 units at $0.30 per unit
On 16 September 2009, the Company completed the second tranche closing pertaining to its non-brokered private placement and issued 1,973,673 units at $0.30 per unit
On 29 September 2009, the Company completed the third tranche closing pertaining to its non-brokered private placement and issued 2,464,000 units at $0.30 per unit
On 22 October 2009, the Company completed the fourth tranche closing pertaining to its non-brokered private placement and issued 3,264,039 units at $0.30 per unit
On 10 November 2009, the Company completed the fifth and final tranche closing pertaining to its non-brokered private placement and issued 438,000 units at $0.30 per unit
On 21 December 2009, the Company completed the first tranche pertaining to its brokered private placements with Loewen, Ondaatje, McCutcheon Limited as lead agent and M Partners Inc. and Macquarie Capital Markets Canada Inc. (collectively the “Agents”) and issued 6,000,000 units at $0.50
On 18 March 2010, the Company completed the second and final tranche pertaining to its brokered private placements with Loewen, Ondaatje, McCutcheon Limited as lead agent and M Partners Inc. and Macquarie Capital Markets Canada Inc. (collectively the “Agents”) and issued 490,000 units at $0.50 per unit
Comment by Stoxxman — August 5, 2010 @ 8:18 am
And it must be noted that the Nixon Fork property was marked up in excess of 750% as it passed from one Harry Barr hand to another. Barr Flagship PFN acquired the property for a whooping $ 500k …
Harry Barr’s PFN effectively marked up the Nixon Fork property more than 750% to FAU stakeholders. The total cost was $ 500k to PFN but the cost to FAU stakeholders was grossly more.
“NIXON FORK GOLD MINE
On 22 September 2009, the Company finalized the acquisition of 100% interest in the Nixon Fork Gold Mine from Pacific North West Capital Corp. (“PFN”) through the purchase of Mystery Creek Resources, Inc, located 56 km northeast of McGrath, Alaska.
Under terms of the Agreement;
? The Company paid US$50,000 on signing of the letter agreement
? The Company paid further US$450,000 over a six (6) month period
? Issued a total of US $2.5 million in Company’s shares (6.5m) at a deemed price of
.45 per share. In addition (1) million share purchase warrants at an exercise price of
.50 for a period of 24 months from the date of issue
? The Company refunded $773,766, expenses incurred by PFN from 1 May until 22 September 2009
Comment by Stoxxman — August 5, 2010 @ 8:52 am