₪ David Pescod's Late Edition September 4, 2007
GOLD $691.50 +9.60
ANDINA MINERALS (V-ADM) $2.95 +0.31
Graeme Currie and associated mining analysts at Canaccord have asked the question—What To Do After The Labour Day Long Weekend? (Particularly in light of the sharp sell off over the past six weeks).
They are keying on “market commentary more focused on the potential for the Federal Reserve in the US to lower interest rates further, we ask the question: how this could impact gold?...Our perspective—should rates be lowered further in the US-would be expectations for further declines in the US dollar.”
Which gets us to the US Dollar Index and the chart that Currie and Associates use, which measures that currencies performance against a basket of foreign currencies.
They note “how precariously close the index is to the 80.0 point level and over the long term this level could be considered a key technical level.”
He continues, “From this point forward, we will take a “what if” approach should the DXY drop below the 80.0 level. The impact of such a decline could serve as a catalyst for gold to indicate a new bull phase.”
We note that gold stocks over most of this year have lost their luster while everyone in the good times was chasing the commodity of the day whether it was molybdenum, tungsten or you-name-it and so while gold prices haven’t really been hurt at all, gold stocks lost 20% to 40% of their value. It’s also been hit with more expensive costs of operation than expected on many operating mines and higher than expected costs on many developing mines.
But back to Currie’s look on the charts and he suggests that “gold is under accumulation and any further pressure on the US dollar could create a breakout scenario for gold.
In our opinion, the key levels to monitor appear to be the US$685 mark followed by the May 2006 high of US$725/oz.”
One of our favorites remain Andina Minerals and the chart on Andina shows how it, like many other gold stocks, has faired for much of this year, but like many other gold stocks, now appear to be putting in a bottom.
For a copy of Currie’s “Junior Mining Weekly” plus the “Precious Metals Weekly” just e-mail Jennifer at Jennifer_lagdamen@canaccord.com.
SELKIRK METALS (V-SLK) $0.97 +0.02
SAN GOLD CORP. (V-SGR) $1.18 +0.08
We caught up with Alfred Stewart today, an investment advisor for Canaccord in Vancouver and also the guy that is in charge of finding good junior mining stories to put in the super successful Cordilleran funds. His two favorite stories are still Selkirk Metals and San Gold and he suggests that both of them are of interest today.
On Selkirk, they announced some more drilling results on their Ruddock Creek property, Creek Zone and they have results that he suggests is more of the same. Your looking for 10% combined lead/zinc and that’s what they are coming up with.
His other favorite story these days is San Gold, but like many other golds, as we’ve mentioned earlier, has corrected quite a bit over the last six months. He suggests that people should go on they’re website at www.sangoldcorp.com and on the home page, the fourth article, the review of Rice Lake Deep Drilling posted August 14th, and give that article a serious review.
The company writes, “The phase 1 drill program at Rice Lake is generated strategically significant results that will completely transform the nature of mining over at Rice Lake previously since 1932 mining occurred in relatively high grade and narrow vein deposits using classic shrinkage method of mining. The exceptional widths grades encountered with this round of drilling are suitable for more efficient and mechanized mining methods which will be employed in this area by San Gold”…punch it in and read it yourself. Stewart points out that since they’ve started work on the Rice Lake mine, they’ve increased reserves from roughly 700,000 ounces to 1.4 million ounces and he wouldn’t be surprised to see that number up to 2.0 million ounces or more in the coming while and that’s why he is a big believer in this story.
ITHACA ENERGY (V-IAE) $2.70 +0.10
Of the many Canadian players in the North Sea, Oilexco has emerged as one of the big winners in the area. There are many juniors that have drilled a lot of holes and so far not come up with that much, but Ithaca Energy looks like it’s on the right path and so far gone two for two. Maybe we have a junior Oilexco in the making.
Today, Ithaca announced that they’ve commenced drilling operations in the outer Moray Firth of the North Sea and they’re working on the Athena accumulation which has been estimated by Sproule International to contain probable reserves of 28 million barrels of oil, 19 million net to them.
However, they point out that this well will test an area that has not been previously accredited with reserves and as such, if successful, may provide additional reserves. Ithaca has a 70% interest in the project. It is expected to take 30 days to drill and test.
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