Anatomy of an Area Play. Here are my thoughts about an area play developing around NFG’s (New Found Gold) “Discovery Hole”. I hope everyone will agree, an area play can be the most exciting trading opportunity in the junior resource market. When NFG began to drill their Discovery Hole in NFLD, the rush to stake property was on. As soon as the cores were brought to the surface, everyone in the camp knew they were on to something big (it was visual…!!!). This is when the rumour mill started and the word began to spread. The quickest to stake gets the best properties before they become too expensive.
Fast forward to today, NFG was halted for a considerable time while they closed a $27 M IPO, setting the stage for a serious program to begin (and today another $4M fully exercised overallotment). There is a 30 plus person exploration team on the ground and multiple drill holes already planned (my guess there will be several drills turning). Today they received permits and a rig will be mobilized shortly. There are 3 companies close to the Discovery Hole, SKYG, RNR, and GLBN. SKYG just raised $2M at $0.10, GLDN just raised $2.1 M at $0.15 (and now is raising another $1.5 M at $0.029 as of yesterday at market close), and RNR is planning on raising $3.5 M. This means there will be potentially over $8M exploration dollars in addition to NFG’s $31 M.
Now for the good part, since the money for these Private Placements will come from across Canada and the US, the people putting money in will take an interest in what is going on and become ambassadors for the area play, they will tell friends at parties, pubs, and then these people will tell people they know. Eric Sprott for example has a huge following and many people are following where he puts his money. The result will be a flood of speculators taking positions in these plays at the cheapest prices possible. When you look at the charts of these plays you will see they have already appreciated in price (this is a good indication that an area play is real and going to be in action).
The first leg of the area play will begin to take place this fall, as everyone is pushing hard to get crews and drill rigs on the ground. If NFG pulls up more big cores, as my dad said, SKY’s the limit.