The Grandich Letter
New Gold – Extends Blackwater Mineralization on Northern Half of Property– According to Trevor Turnbull – One of the best holes, BW 162,announced included 318 m of 1.39 g/t in the northwest section of theproperty. This hole is a strong follow up hole BW 146 from May located100 m south that had 378 m of 1.09 g/t. The northern half of Blackwateris a joint venture (NGD 75%: SQI 25%). We expect these results willcontinue to add resources within the $1,000/oz pit shell outline. Aswell this pit shell is likely to expand as step out drilling continues.New Gold plans to spend $20 million on 40,000 – 50,000 m of drill thisyear to expand the resources. New Gold should benefit from the ongoingdrill results of what will likely become its flagship gold asset withpotentially the largest resource base and production profile within thecompany. https://newgold.com/Theme/NewGold/files/documents_news/Blackwater_June_2011_Drill_Results_FINAL.pdf
And Silver Quest (SQI-CN, not covered) who owns 25% of theNorthern Half of the Blackwater Property called Davidson announces thismorning a Shareholders Rights Plan – Scotia Mining Salesbelieves Silver Quest is a likely takeover candidate for New Gold who islikely interested in owning 100% of this project and especially giventhe epicenter of the gold resource (according to Trevor Turnbull) ispointing to the North.
It would be easier to find a needle in a haystack versus whenI used the word spectacular to describe results from a client of mine.Such a word would not be out of line when describing the results SQI announced todayfrom it’s JV with New Gold on the Davidson Property. Not only shouldthe results give New Gold some strokes on its “full price” purchase ofRichfield Ventures, but it also supports my argument that SQI was a veryattractive “Yukon Gold Rush” play because it had an asset that seemedto support its then total market capitalization.
The fact that the best by far results are now coming from the JV partof the Davidson, that the deposit remains open and the fact that NewGold announced it’s going to drill the crap out of it now, all make forvery good days ahead for SQI in my bias opinion.
I suspect SQI’s share price could get a re-rating in the days andweeks ahead to the $1.25 – $1.50 area and with that in mind, I like tonote two things:
- Don’t forget my sell half when one has a double or more in any junior
- SQI is likely going to have to do a financing to fully fund its share of the JV now that New Gold is going to drill the crap out of it.
I continue to believe that New Gold doesn’t want a JV partner by thetime this project is ready to become a producer and SQI must know that.By showing its fully funded to earn its part, SQI can be in a very goodbargaining position if and when the time comes.
In a business where failure is the norm, Randy Turner has done a superb job in apparently making SQI an exception to the rule.
Source:
https://www.grandich.com/
Guy