Small Cap Explorers for Fall Bull Run

For the smaller mining and resources equities, that are riskier, but that have had recent news, I presently hold positions in the following, in alphabetical order:

Avnel Gold Mining (AVNZF, TSX:AVK) is partnered with IAMGOLD (IAG) in their Kalana Gold mine in Mali, Africa.  IAMGOLD is the project operator.   Recent news.

Compliance Energy (CPYCF, TSX:CEC) is partnered with Itochu Corp. and LG International for 60% of the Raven coal deposit on Vancouver Island, Canada. Compliance also holds 17% of Copper Mountain, which just has started producing copper concentrate.  Recent news.

CuOro Resources (CRUOF, TSX:CUA) is drilling a high grade copper/gold sulphide prospect in Columbia.  Recent news. The Goombarh believes the history of this property bodes well for the company future.

Ethiopian Potash (ETPHF, TSX:FED) is a potash explorer in the Danakil Basin of Ethiopia.  They are adjacent to Allana Potash Corp (ALLRF) and South Boulder Mines (SBMSF) of Australia.  The deposit that they are looking to confirm is shallow, suitable for open pit extraction.  Recent news.

Primary Petroleum (PETEF, TSX:PIE) is a oil/gas explorer active in the Bakken formation in Alberta and Montana.  They hold large sections of prospective properties.  Recent news.

Tarsis Resources (TARSF, TSX:TCC) is a gold/metals project generator and explorer active in Mexico and the Yukon.  Kinross Gold has taken a 10% share of this company.  Recent news.

Tuscany International Drilling(TIDZF, TSX:TID) is a growing drilling services provider focused on South America and Africa.  They have just initiated a second acquisition to increase their service potential.  The Goombarh believes drilling services equities are much undervalued.

Vast Exploration (VSTFF, TSX:VST) is partnered with NIKO Resources (NKRSF) who is testing their oil/gas prospect in Kurdistan, Iraq.  This stock has dropped over 60% on this news release July 11, 2011.  The Goombarh has just tripled his holdings, due to the intermittent oil found and possible deepening of hole to test the Kometan formation..

Westernzagros Resources (WZGRF, TSX:WZR) is partnered with Talisman Energy (TLM) and has hit oil in Kurdistan, Iraq.  Westernzagros will drilling a their Mil Qasim - 1 prospect in the 3rd quarter and Talisman will be redrilling their Kurdamir 2 prospect by 4th quarter.

The investor is advised to perform their own due diligence as these small cap investments are risky.  For investing in these smaller mining and resources equities, I am expecting that most will turn out to dwindle to nothing but if only one exhibits good price appreciation, that will do just fine. 

Important Disclaimer

The information and opinions contained within this document reflect the personal views of the author and should be viewed as food for thought and amusement only. The author may from time to time have a position in any of the securities mentioned. There are no guarantees of the accuracy, reliability or completeness of the information contained herein. Independent due diligence and discussions with one’s own investment and business advisor is strongly recommended. These writings are not to be construed as an offer or solicitation with respect to the purchase or sale of any security or as an endorsement of any product or service. We do not request or receive compensation in any form in order to feature companies in this publication. It is prohibited to copy or redistribute this document to any type of third party without the express permission of the author. This document may be quoted, in context, provided proper credit is given.

2011 Summer Bottom for Mining and Minerals is In!

Goombarh 64 - July 7, 2011

Good day,

I hope this note finds you well and enjoying your Summer.  A couple of good articles and the possible market bottom leads me to come out with this note.

Firstly, the Shanghai Composite appears to be leading the SP 500 to new highs:

The SSEC has bottomed on strong resistance level, and the Chinese tightening to reduce growth to 7~8% has now all been priced in.  The latest bank rate increase is also behind us, so the demand for commodities should continue.  As to precious metals, I hold the view, that we are continuing higher into the fall.  There is a strong analysis, that I am in agreement with, of the Chinese impact on the world economy going forward by Julian Philips:  The link is here:

http://www.kitco.com/ind/AuthenticMoney/jul042011.html

The SP 500 is moving to new highs?

With the regular markets in a strong positive mood, this makes the riskier small miners, that I am interested in, all the more stronger.  There is a Ken Fisher, outlook, that makes a good general primer on what to expect for the second half of this year.  It is attached as a PDF document.

The TSX Venture ETF as a proxy for the Venture exchange has turned around:

The rebound in the Venture exchange has brought my portfolio back a bit from the declines, and now is possibly the beginning of a fall rush.  It does seem a bit early, compared to previous years, but Gold is strong, the SP 500 is strong and the Venture is rebounding.  Anyways, how can anyone predict the future?  The main point is that this is the time to be adding some speculative investments with the idea of good PR's coming and the Fall run for metals and commodities; it is just time to prepare for that.

The Agricultural ETFs, DAG, that I was monitoring have taken a fall, and now may be a good time to nibble.

I am playing around with the idea of using DAG as a cash holder.  The possible gains from DAG are good, but are not high enough for me compared to speculative miners.

So, good fishing to you as you pick your speculative investments for this Fall's run!

Until next time,

Marco G.

http://goombarhsedge.blogspot.com/

http://seekingalpha.com/author/marco-g/articles

Silver Bull in Wave 3 - Feb 16, 2011

Goombarh 33,  Feb 16th, 2011

Good Morning,

Just one chart to show where we are at in the Silver Bull.  Came across this quite accidentally when surveying my positions and watch list stocks.  The chart is of SIL, Silver miners ETF.

A longer time frame certainly improves the vision and perspective, doesn't it.  Sometimes one can not see the forest for the trees obscuring the view! 

This chart reminds me of Elliot Waves, where just impulse wave 1, 100% (double) move has occurred this fall and wave 2, a 50% correction has just ended on Jan 25th or so.  Then we are in the beginnings of Impulse wave 3, which as you students of Elliot may know, will be the most powerful and longest up wave.

The author has not seen this view of the charts anywhere recently, and so you the reader should treat this information as an early participant, to take advantage of this information.

What is this chart telling us...We are in the middle of a massive Silver Bull!

Where are we headed in this Silver Bull...well, wave three according to Elliot theory is expected to be 1 to 1.63 times the length of wave 1; this may take the SIL chart to....an estimated $34 to $42 range or an estimated 41% to 75% gain from today's price

Does this work?....Yes, mostly, my experience is that Elliot is a pretty good predictor of value or stock price...within the accuracy range of 20% or so.

Can I apply the same info to my stock...Yes, you may be able to roughly translate the 41% to 75% move to your own Silver stock.  Of course your Silver stock will be different dependent upon the stock characteristics, but you now know and have the comfort that the portended trend is upwards for another 50% in the next half year or so.

The weakness of Elliott, in my experience, is that the time frames are not very finite...that is the dates for the peaks are uncertain.

What else is the chart telling us?

1.      Miners are leveraging the Silver metal itself; note the red trace is for SLV the Silver metal ETF.  Note that SIL leveraged upwards but did not leverage downward in the pullback, which just indicates the strength of this move, and continued bullishness from the market participants.

2.      Volume increase is up; bullish move.

3.      True Strength has bottomed and is moving up.

4.      Chaikin Money flow has bottomed and is moving up.

Is this infallible?....Of course this is fallible...this is the stock market ...which is an extension of our world...and anything is possible for the future.  There are no hard and fast future crystal ball predictions, just possible indications.

So position yourselves readers, the best is yet to come for Silver miners!

Until next time,

Marco G.

http://goombarhsedge.blogspot.com/

Sample Notes and Flash for Readers on Email List

As we enter the year 2011, the markets are just as inscrutable as previously.  The possibility of a global economic recovery is promising, yet there are still many reasons to be wary.  Where should one dip their toe into the investment markets?

I am a firm believer in the rise of emerging markets and a firm recovery in North America.  I believe the safest and most reliable gains will be in the basic materials sector.  For myself, I am positioned in smaller miners and precious metals explorers and special mining situations.

For readers, interested in a sporadic notes email, just pop me your email address and I will put you on my distribution list for my market thoughts and occasional flashes.

Marco Goombarh

================================================
Goombarh 20, Jan 4th, 2011

Good Morning,

Just sitting and examining the news, looking for a bit of inspiration here, while Gold/Silver is showing volatility and dropping about 2%.  Just wondering about the AGQ, double bull Silver ETF down 4%.

Floods in Queensland is affecting world coal production.  About 50% of the world's coking coal comes from there and may be affected for a few months, due to the widespread flooding covering an area the size of France and Germany.  See Bloomberg news here:

http://noir.bloomberg.com/apps/news?pid=20601087&sid=amQzBzMmHCtY&pos=8

Interestingly, the US coal miners have just been on a tear in the last week.  CLF, MEE, PCX, CLD.  Similar for the US listed China Coal miners, SCOK, LLEN, PUDA.

An interesting posting about mining at Seeking Alpha:

http://seekingalpha.com/article/244392-2011-the-year-of-the-tsx-and-precious-metal-junior-miners

Noticed Alco is up 4% while rest of miners are sagging.  Support for the idea of Aluminum in a new upswing.

Copper has hit new highs and is driving copper miners.  Norsemont and Mercator Minerals are both up.

Rare earths are certainly in a frenzy, with AVL and REE up large, but I am afraid, that I have no insights or comments about those, except that I am not a participant and I don't plan to be. 

Almaden (AAU, TSX:AMM) is up with anticipation of the epithermal gold drilling results to be released in one large batch.  My previous thoughts on that:

http://seekingalpha.com/article/241250-exploration-techniques-hint-at-possible-gold-company-successes

As stated previously, I am expecting good news from Great Basin Gold (GBG) and am nibbling to increase my position prior to the results expected at the beginning of February.

Longer term, I am expecting to pull some monies out from Gold companies as they rise and re-deploy to the smaller base metals miners.  I see rises for aluminum, Zinc, Nickel and other metals that will be needed in recovery, but have not yet participated in gains.

Overall, I am doing nothing, but just sitting, watching and digesting the news, as I am keeping steady with the previous positioning and awaiting an inspiration for any new trading ideas.

Marco G.

http://goombarhsedge.blogspot.com/

============================================

Goombarh Flash 11, Dec 24th, 2010

Good Morning,

Just had a chance to go over the Great Basin Gold (GBG) transcript of their conference call on November 16th.   Wow, they are talking of 5000 tons of Gold ore that averages 15 ounces per ton, on page 15:

"WE CURRENTLY -- IF YOU JUST TAKE THAT YOU'RE LOOKING AT ABOUT 4,500 OR 5,000 TONS, AND WHAT WE'VE SEEN IS THAT IN

THE HIGH-GRADE AREA WITH A VEIN PHYSICALLY IS, WE CAN MINE CURRENTLY OUT OF THAT 80 IS COMING UP WITH ABOUT 15

OUNCES PER TON --. 15 -- YES, ONE, FIVE."

Link to transcript:

http://greatbasingold.com/gup/filez/GBG-Q3-earnings-conference-call-transcript-16Nov2010.pdf

Link to quarter presentation:

http://greatbasingold.com/gup/filez/GBG-Q3-2010-presentation-16Nov2010.pdf

Also on page 4, Ferdi's talking about being cash flow positive in this quarter ending December 31st:

With the increased production from Hollister and first production ounces from Burnstone, we expect to be cash flow positive from operations in quarter four 2010.

What with the possibility of some of the super bonanza high grade Hollister ore hitting the books and also turning cash flow positive, GBG should have some great news in mid -February, 2011.

Smart people should begin to position themselves appropriately. 

Marco G.

http://goombarhsedge.blogspot.com/

The Year of the Golden Bunny!

The Year of the Golden Bunny!

December 19th, 2010

By:  Marco G.

http://goombarhsedge.blogspot.com/

The upcoming year 2011, in the Asian Zodiac, is the year of the "Metal Rabbit", or if you will, the year of the "Golden Bunny", in following the tradition, there is a 60 year Golden Cycle for these zodiac animals.  This new Asian lunar year is poised to begin on February 3, 2011.  We are looking forward to the "metals" aspect of the Rabbit year to help us obtain a bit of an edge in the equities markets for this upcoming Golden Bunny year. 

Fall of the Tiger Year

Looking backwards at the soon passing year of the Tiger, the author is thankful for the numerous messages from the many stoic supporters; never mind the exasperating events and the volatility of the irrational and maddening markets.  This year was a much memorable one in that we have seen many and varied changes in the evolving landscapes and horizons of the equities markets.  It was breath taking and challenging to be able to wade in and participate in and possibly profit a little in the markets' remarkable bull rise off the summer malaise. 

The general North American equities markets have enjoyed an amazing fall run, with a gain of about 17% for the S&P 500 since the FOMC announcement of August 27th, 2010 for equities market support.  This run was given a further jolt by the FOMC's injection of treasury support on November 3, 2010.  As the year ends, more and more economic and market indicators are turning positive while the myriad voices of the bear detractors are still calling for caution and uncertainty. 

In examining the performance this fall, the author has created a comparison chart following for the market items of interest:  (click to enlarge)

Figure 1:  Fall 2010 Action in the Markets.  The S&P 500 (^GSPC) has gained about 17%.

The base trace is that of the S&P 500's 17% move, illustrated above in red and green candlesticks.  The precious metals have moved forward with Gold (using GLD as proxy in green trace) moving upwards about 11% in the same time span.   The major Gold equities in the HUI index (red trace) of the 14 largest Gold companies has moved higher about 15%.  Note that beginning in December, the HUI has broken upwards leveraging the Gold price; we shall refer to this later in this posting.  The 30 large cap Gold equities in the GDX ETF (brown trace) has moved up about 13%.  The Gold price and major Gold equities have been moving higher together with the general equities, albeit underperforming the action of the S&P 500.  This is a bit unusual for Gold to be that closely correlated to the general equities markets, but then this is a year of change.  Also, the author was a bit surprised to see the S&P 500 outperform Gold and the Gold equities by up to 4%.  Again, this is against my preconceptions, of the precious metals being in a bull run rally mode and yet being outdone by the S&P 500 index.

Now looking at the upper traces on the chart, the GDXJ consisting of 60 varied Gold Junior equities (light green) shows an impressive 35% gain this fall.  The Gold Junior mining equities have roughly doubled the rise of the S&P 500 and have more than doubled the large Gold equities and the Gold price, which is as it should be in a precious metal bull run rally.  The Gold Junior equities should be generally the leaders in this rally.

The top two traces on the chart are quite intriguing with the Silver (SLV Silver ETF as proxy in yellow trace) price surging forwards over 50% this fall.  Again, this is generally accepted wisdom, for the Silver price to lead in a precious metal bull market.  The ultimate trace on top is the SIL ETF of the 30 Silver companies, which sports a spectacular 59% gain for the fall.  So, this is a prime example of the Silver equities leveraging the gains in the rise of the Silver metal.  For Silver going forward, Mr. Anathan Thangavel paints a very cohesive story as to why the demand of Silver is increasing. 

Readers who have been following the authors writings and others that have spotted the rising precious metal trend and who have entered the markets, should now be sitting on some gains for this fall season.  Correction, anyone at all, who has been in the equities markets this fall, should all be sitting on some pretty gains this fall.  Such is the power of the rising confidence tide in these equities markets;  the rising tide should have lifted all equities (boats), to give one a nice year end feeling of success.

Golden Bunny Outlook

The question then is what is the outlook now for next year, the year of the Golden Bunny?

The author found a marvellous quotation as to what is happening in the world equities markets given by an astute Seeking Alpha commentator,  "Venerability" who states:

Commodities are a positive GROWTH trade. The Commodities Bull Market is secular. And it is extremely long-term.

We are still in the very early stages of nothing less than the World's Second Industrial Revolution.

It is even bigger than the World's First Industrial Revolution, which brought the US, Europe, Japan, and a few other lucky countries and their populations into the modern world.

Yes, the author also believes, we are seeing the rise of the emerging markets, not just of China, India and BRIC, but also of Columbia, Bolivia, Mauritius, Oman, Latvia, Morocco and many other countries that you may not have heard from for years.  The whole world is in throes of change, driven by advances in information technology; everyone everywhere is seeking peace, health and the right to a modern fruitful life.  We in the modern world, truly have a lot to be thankful for.

These small steps taken towards the modern technological world, requires acquisition and consumption of a varied basket of metals and commodities.   The author has taken the 2010 fall performance of commodities (using the Jefferies TR/J CRB Global Commodity ETF as a proxy - CRBQ) and compared it to the S&P 500 and Gold in the chart following:  (click to enlarge)

As stated previously, and shown in the chart above, all the traces shown, everything has been uplifted by the rising confidence tide.  Again the red and green candlesticks are the motions of the S&P 500.  The red trace is the CRBQ commodities ETF and one can see that it has risen together with the S&P 500.  Then in November and again in December, the CRBQ starts trying to outpace the S&P 500.  The CRBQ has gained about 18% for this fall.

Figure 2:  Comparison of Commodities to the S&P 500.  Note the surprising action of the Copper price.

The yellow trace is for OIL, (iPath S&P GSCI Crude Oil TR Index ETN as proxy for oil price) is shown above as following along with the rising S&P 500 index.  OIL has gained about 14% for this fall.  Note that OIL, is more volatile, and the relative performance is vastly affected by the choice of the starting date for the comparison. 

The green trace the is for the JJC Copper, (iPath DJ-UBS Copper TR Sub-Idx ETN as proxy for copper price) which is the leader in gains for the fall with an exceptional 23% rise.  Does it surprise you that copper has gained more than twice as much as the Gold price this Fall? 

As first postulated by the author, earlier on August 27th, 2010, Copper with its industrial dependencies will be leading the markets forward this fall.  Then later on November 15th, 2010, the author again establishes a bullish case for mining, commodities and the general markets.  Finally, on December 12, 2010, the author forecasts a copper shortage forthcoming in 2011.  The industrial and investment demands are driving the copper price, while the production shortfall is resulting in a squeeze higher.  Therefore, lead by "Doctor Copper", the author's new year outlook is bullish for the general markets, for the commodities and for the continuation of the precious metals bull.

Positioning for the Golden Bunny

For the general markets going forward, I will make no recommendations as this is not the author's specialty, and besides, there is a plethora of information and opinions available on Seeking Alpha.

For the precious and base metals going forward, this is the author's specialty and following are some possible prospects for positioning.  I stay away from the large cap major Gold miners such as Barrick (ABX), Goldcorp (GG) and Newmont (NEM) but am invested instead in Junior mining equities.  Even though, from the first chart previously, the HUI large cap Gold index which the above 3 top Gold miners are part of, has broken upwards in December and is now showing some leverage to the Gold price.  This leverage breakout by the HUI is indicating the movement of large investors and institutions into the large cap Gold miners and bodes well for the continued advancement of the precious metals bull in the imminent Golden Bunny year.

In the following specific mining equities that I have a position in, I qualify them with two main criteria.  Firstly and most important is the quality and competence of the company management.  The management need to be focused upon creating value for the shareholders.  Secondly, the companies' specific stories of the value creation need to be very compelling and capable of driving and sustaining the share price even if the markets are uncertain and may pull back a little.

So to start off, in the precious metals space, my favorite Gold mining Junior is:

Great Basin Gold (GBG, TSX:GBG) - here is an exclusive interview with their CEO Mr. Ferdi Dippenaar.  Great Basin is a Gold miner that will leap from mine developer to mid-tier gold producer status by 2012, in producing close to 350k ounces of Gold per year.  Their Hollister Nevada mine is the highest grade production Gold mine in the world, with expected production of about 110k ounces of Gold equivalents per year.  They have just recently uncovered super bonanza grades above one of their existing ore veins at Hollister.  In addition, Great Basin's Burnstone, South African mine is starting ramping up to full production of 250k ounces of Gold per year.  This quarter or next, Great Basin will turn the corner to profitability and the markets will re-rate the stock price.  I believe out of all my stock selections, Great Basin Gold will give the most payback for the lowest risk.

In the Silver space, my favorite Silver mining Juniors are: 

Silvermex (GGCRF, TSX:SLX) - here is an exclusive interview with the former Genco CEO, Mr. James Anderson,  The new Silvermex is formed from the merger of the old Silvermex and Genco Resources.  The new management includes former and present executives of Hecla Mining (HL) and Silver Standard Resources (SSRI).  Silvermex has over 250 million ounces of Silver resources and they anticipate increasing their Guitarra Mexican high grade Silver/Gold mine output by multiples.  I believe that this Silvermex stock has the highest growth possibilities of any Silver Stock in the market.

Canadian Zinc (CZICF, TSX:CZN) - here is an exclusive interview with their COO, Mr. Alan Taylor.  Canadian Zinc owns the previous Hunt Brothers Prairie Creek Silver, Zinc, Lead mine in northern Canada.  The mining infrastructure is 90% complete and Canadian Zinc is awaiting environmental approval for water usage which is due in 1st or 2nd quarter of 2011.  I believe that with the environmental approval,  Canadian Zinc will be re-rated to a multiple of its existing share price.

US Silver (USSIF, TSX:USA) - is described here in a previous article.  US Silver operates the joint Galena, Coeur and Caladay mining areas in the Silver Valley of Idaho.  They are rehabilitating the Coeur mine shaft for increasing their Silver production.  I believe that US Silver is a much underrated production Silver miner and they will be acquired by Hecla Mining (HL) or Coeur d'Alene (CDE), who are situated nearby.

In the precious metals exploration space I am interested in the following:

Victoria Gold (VITFF, TSX:VIT) - which has shed 30%+ on the back of an error in resource definition for their Cove project.  Victoria Gold is busy drilling proving up both their Cove deposit in Nevada and their Dublin's Gulch multi-million ounces Gold deposit in the Yukon.  I believe that they will be acquired by Kinross (KGC) or Newmont (NEM) in the Golden Bunny year.

Tarsis Resources (TARSF, TSX:TCC) - is drilling their Erika epithermal Gold/Silver deposit in Mexico.  They are also active in many projects in the Yukon.  I believe that they will strike Gold in their drilling of the Erika project as the property is part of the Mezcala Gold skarn district, and it abuts the Torex Gold (TORXF, TSX:TXG) El Limon Gold deposit, and further in that their geological expertise is shared with Almaden Resources(AAU, TSX:AMM), which has already struck Gold.

Almaden Resources (AAU, TSX:AMM) - which are drill looking for the deeper high grade core to their Ixtaca epithermal Gold/Silver discovery in Mexico.  Almaden has over a score of properties joint ventured out and under exploration.  Of course, I believe that they will hit the high grade Gold/Silver motherlode in their present drilling.

Torex Gold (TORXF, TSX:TXG) - which is expanding their reserves and resources (4 million oz.) at their El Limon Gold deposit in Mexico.  They currently have 9 drills on site and expect to have 11 drills working in 2011.  I believe that Torex will be acquired by Goldcorp (GG) which operates Mexico's largest Gold mine, the Nukay/Los Filos in the adjacent property

Atac Resources (ATADF, TSX:ATC) - own the huge RAU project in the Yukon where they have discovered a large Nadaleen Trend which they compare to the Carlin Trend in Nevada.  Early prospecting and drilling has uncovered Gold in multiple locations along the Nadaleen Trend.  Atac expect to have 8 drills in operation in 2011.  I believe in the Atac Resources assessment of their Carlin Trend geologic cousin, as they are backed by the geological expertise of Archer, Cathro & Associates, renown Yukon geologists with many discoveries to their credit.

Caerus Resources (CAEUF, TSX:CA) - is negotiating for the Antioquia Gold project in Columbia which is adjacent to the Aragua Mine owned by Continental Gold (CGOOF, TSX:CNL).  I believe that Caerus will be successful in acquiring these prospective artisanal mining claims.

In the base metals mining space I am interested in the following:

Norsemont Mining (NOMFF, TSX:NOM) - is proving up their Constancia copper/Gold project in Peru.  They are presently drilling to increase the 43-101 resources in a new report due 1st quarter of 2011.  A 2009 feasibility study indicates a NPV (8%) of $931million, and an IRR of 27%.  I believe that Norsemont is an ideal copper/Gold takeover candidate.

Belvedere Mining (BLVDF, TSX:BEL) - is a Nickel, Gold, Cobalt miner operating the Hitura nickel mine in Finland.  They have an advanced Gold property in Kopsa, which is 15 km away.  Belvedere's plan is to develop the Gold property and run the ore through the Hitura mill.  I believe that the management of Belvedere will be able to create value with Gold mining, as they have been meeting all targets promised ahead of schedule.

Adex Mining (ADXDF, TSX:ADE) - is re-opening the Mount Pleasant tin, indium, tungsten and molybdenum mine in New Brunswick Canada.  Adex is partnered with a Chinese company, Great Harvest of Hong Kong.  Adex owns the world's largest and richest Indium resource and North America's largest tin deposit.  They also own significant resources in tungsten and molybdenum.  I believe that the re-start of the Mount Pleasant mine will generate considerable value in the scarce metals that they mine.

Zaruma Resources (TSX: ZMR.h) - is owner of the Luz del Cobre copper project with the adjacent San Antonio Gold project in Mexico.  They are focused on the re-start of the Luz del Cobre heap leach mine in 2011 with the financial support of Gravity Ltd.  I believe that the timing is right for Zaruma to bring this mine on-stream in 2011, the year of the Golden Bunny.

Finally, for an oil exploration story that I am interested in:

Westernzagros Resources (WZGRF, TSX:WZR) - is drilling in the Kurdistan region of Iraq with partners Talisman and the Kurdistan Regional Government.  Their exploration block of 2000 square kilometers is prospective for a super-giant type billion barrel oil field, similar to the Kirkuk field, which is 150 km distant.  Their present Kudamir 1 well has proven gas, natural gas liquids and prospective oil resources on the flanks of the anti-cline.  They will be re-entering their Sarqala 1 well which has previously encountered oil.  Westernzagros is also proposing to drill a shallower Mil Qasim well.  Here is the link to their latest corporate presentation.  I believe that further drilling in 2011 will prove the immense quantities of prospective oil on their claim block.

As a side note, the author posts his more developed writings here, but has more scattered ramblings and musing notes available for interested parties, that are sent out in an email distribution list.  To be added to the distribution, please just send me your email address.

Summation

So in examining the progress this fall and the prognosis for the future, we have interpreted the market indicators that are continuing to point towards a bullish outlook for the general markets.  The emerging world is ramping up their demands for commodities and this will serve to drive the equities markets.  On top of this, we are in the middle stages of a multi-year precious metals bull market.  We as investors are truly blessed and have a lot to be thankful for.   I am eagerly anticipating the arrival of the sixty year cycle of the Golden Bunny!

Disclosure: The author is long junior resource equities and may have positions in all the equities mentioned.

Important Disclaimer

The information and opinions contained within this document reflect the personal views of the author and should be viewed as food for thought and amusement only. The author may from time to time have a position in any of the securities mentioned. There are no guarantees of the accuracy, reliability or completeness of the information contained herein. Independent due diligence and discussions with one’s own investment and business advisor is strongly recommended. These writings are not to be construed as an offer or solicitation with respect to the purchase or sale of any security or as an endorsement of any product or service. We do not request or receive compensation in any form in order to feature companies in this publication. It is prohibited to copy or redistribute this document to any type of third party without the express

Great Basin Gold's (GBG) Bonanza Grades - A Closer Look

Great Basin Gold's (GBG) Bonanza Grades - A Closer Look

November 9th, 2010

By:  Marco G. http://goombarhsedge.blogspot.com/

Great Basin announced the highest "Bonanza Grades" of Gold found, 2560 ounces per ton,  that the author has ever encountered this morning:

Great Basin Encounters Bonanza Grades in Blanket Style Mineralization at Hollister

VANCOUVER, Nov. 9 /CNW/ - Great Basin Gold Ltd. ("Great Basin" or the "Company"), (TSX: GBG; NYSE Amex: GBG; JSE: GBG) announces that trial mining in the Blanket Zone above the Main Clementine vein (number sign)18 at its Hollister project in Nevada has encountered bonanza grades of gold and silver. The Company cautions investors and readers that we are making this announcement out of an abundance of concern over interpretation of this information and, as the information may be known locally in the region of the mine site, the Company felt obligated to make it public.

Channel sampling carried out in conjunction with trial mining in the Blanket Zone has encountered the bonanza grades over a strike distance of 170 feet (57 meters).Channel samples taken every 10 feet (3 meters) gave values ranging from a low of 1.5 oz/ton(52.0g/t) Au and 3.2 oz/ton(111.9 g/t) Ag to a high of 2,560.4 oz/ton (88,845.9 g/t) Au and 1,829.8 oz/ton (63,494.1 g/t) Ag over channel widths from 0.3 to 2 feet wide. The current stope is continuously mineralized along its 180-foot (60-meter) length. Diluted over 3.5 feet (the width of the stope development), the average sample values were 66.4 oz/ton (2,404 g/t) Au and 78.5oz/ton (2,723.9 g/t) Ag. Muck piles have also been sampled; grabs are taken over the pile to collect as representative a sample as possible (between 10-15 lb. are collected every 10 feet). The fully diluted value of the muck samples taken from the stope to date averages 22.3 oz/t (773.8 g/t) Au and 23.4 oz/ton (811.9 g/t) Ag.

The Blanket style mineralization at Hollister is typified by very fine grained disseminated gold hosted by tuffaceous horizons in the Tertiary (10-15 million years old) volcanics that lie unconformably on the basement Ordovician (~430 million year old) metasediments. These zones of mineralization are thought to be "mineralization plumes" directly related to the activity of fluid which has focused in structures that control the underlying epithermal quartz - adularia veins, and propagated into the Tertiary volcanic pile.

Blanket mineralization was previously exploited by opencast methods during 1990-1992 by the Touchstone - Galactic Joint Venture. According to historic records, 115,000 ounces of gold were produced by a heap leach operation that treated low grade ore (~0.003 oz/ton or 1 g/t Au). Great Basin modeled all 46 drill intersections above the Tertiary unconformity, and +1 g/t grade shells generally locate above known mineralized quartz - adularia veins. In general, this style has been located in the first ~30 feet (10 meters) above the unconformity, and may have dimensions in excess of 150 feet (50 meters) long and 60 feet (20 meters) wide. Grades from these 46 drill intersections average 0.45 oz/ton Au (15.4 g/t) and 1.7 oz/ton Ag (59 g/t).

Extrapolation of stope 3000N 1E to surface (approximately 200 feet or 67 meters vertically above), places this zone 300 feet (100 meters) west of the historical Clementine mercury mine. It supports the near surface working metal zonation and gold deposition model for the Hollister mine, and indicates additional exploration potential.

Ferdi Dippenaar, President and CEO, commented: "In the past, we have identified the Blanket Zone as a target area worth exploring, and trial mining at the top of vein (number sign)18 has turned out to be a great way to test the prospective nature of this style of mineralization. Although we have encountered a limited amount of this high grade material through trial stoping, drilling is underway to determine the full extent of mineralization. More information will be made available as and when it becomes available. Based on our experience in the Main Clementine vein (number sign)18, we are evaluating the possibility of returning to previously stoped out areas above the Gwenivere high grade veins."

Great Basin Gold's Hollister Mine in Nevada is already one of the highest grade Gold producing mines in the world, with 1.64 million ounces of Gold estimated at an average grade of measured and indicated resources at 1.3 ounces of Gold per ton.   This morning's news of such bonanza grades certainly bears some examination.

From previous background knowledge and from researching the terms within the news release, the author pieces together what this is may mean.  For help in understanding the basic geology, the author had his assistant "My Right Hand With Mouse" put together a rough diagram displayed following:

Figure 1:  Model of Great Basin Gold's bonanza gold grades found above their Clementine Vein.

With reference to the above diagram, Great Basin's Hollister mine is constructed to mine the underground Gold veins.  These veins are in the basement sedimentary rocks, which refers to the lower layer of rock geology, the "Ordovician" which are 439 million years old.  This basement is covered with a more recent geological layer of volcanic rocks named the "Tertiary", which are only 10 - 15 million years old.  The meeting point of these two rock layers is termed the "Unconformity", or joining between the two rock types. 

The Gold veins that Great Basin are mining are formed from magmatic fluids that originated deep in the Earth's crust and flowed through faults and fissures in the basement rocks coming up to the surface.  There are two main types of deposits formed from these magma fluids, high sulphidation and low sulphidation deposits. 

Great Basin's geologists believe that Hollister is an example of low sulphidation deposits.  As the fluids left the Unconformity and entered the Tertiary volcanics, the fluids encountered groundwater.  The magma fluids then interacted with the ground water causing violent boiling and depositing of the metals and minerals.  The act of depositing minerals seals off the fault and so the magma fluids seek another way to surface.  Again, more groundwater is encountered and more furious boiling occurs.  The boiling drops the minerals and seals the fissure again.  These cycles of furious action results in more and more of the minerals being deposited in the fissures within this area of volcanics above the Unconformity. 

Eventually the magmatic fluids reach near surface and dissipates and mixes thoroughly with the surface rocks.  This results in a broad disseminated layer of mineral deposits that is termed the "Blanket Zone" at Great Basin's Hollister mine.

In this style of low sulphidation depositing at Hollister, the minerals deposited by the repeated action of the magma encountering ground water has resulted in very high Bonanza grades of Gold and Silver that Great Basin has just announced.  These high grades appear to be concentrated above the existing Hollister Gold veins, between the existing mine tunnels and the surface Blanket Zone.  These high grades positioned where they are gives Great Basin a large amount of  bonanza mineralization in a location where it will be easy to mine. 

Another way of looking at this is the average grade of their "muck".  Muck is the broken rock ore, that will be refined in the mill circuit.  Their average muck grade is spectacular at:

The fully diluted value of the muck samples taken from the stope to date averages 22.3 oz/t (773.8 g/t) Au and 23.4 oz/ton (811.9 g/t) Ag.

Compare this grade of 22 ounces of Gold per ton with anything else, you read about gold miners anywhere.  Compare this with the grade at their Burnstone mine in South Africa, which has an average grade of 5 grams (.15 oz) Gold per ton, which is considered high grade.  This grade is at least two orders of magnitude or 100 times higher.

Great Basin are understating in saying, that this model, " indicates additional exploration potential".

Disclosure: The author holds shares of Great Basin Gold (GBG).
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