Visible Gold Mines (VGD, TSX-V)
Visible Gold Mines suffered with the overall market again last week and closed Friday at 25 cents, a loss of a penny-and-a-half for the week…the stock has declined in 6 out of the last 8 sessions and the 50-day moving average (SMA) has reversed to the downside and will now provide resistance in the low 30's…the recent technical damage the stock has endured is unfortunate given the many positive developments on the ground for this company in northwest Quebec…investors in our view likely read too much into selling of more than 300,000 shares by Pinetree Capital’s (PNP, TSX) Sheldon Inwentash, but that’s what started the nosedive the week of September 19 which stopped the stock’s momentum and rattled some nerves…the overall market’s plunge then accelerated the selling along with a weakening of VGD’s technicals…as everyone knows, and has been painfully reminded, junior exploration stocks can be extremely volatile and aren’t for the faint of heart…but the rewards can be big…VGD is no exception- there are risks with this but the company is well positioned for success at two major projects…its Wasamac-area land package is in the heart of a promising new mining camp that is beginning to emerge west of Rouyn-Noranda…what’s highly significant for Visible Gold Mines is that much of the area around Wasamac has been under-explored and has obvious potential for additional deposits…VGD controls a large land position there and is also the most aggressive driller besides Richmont…in addition, VGD has some early results to prove it’s not drilling into cow pasture…VGD hit several zones of Gold mineralization on its very first hole at Wasa Creek (LBWC-11-3) as announced August 11…12 other holes (some with quite encouraging visuals) were completed in Phase 1 and assays are pending on all of those…what impresses us the most about LBWC-11-03 is that it was essentially a “blind hole” – this property has been virtually ignored in terms of any previous exploration and on the very first hole, VGD hits Gold…of particular curiosity is the 16.4-metre section that shows the same style of mineralization as the Wasamac deposit – close co-existence of Gold and pyrite disseminated in an altered shear zone…it’s still very early in the game for VGD at Wasa Creek but the right geological structures appear to exist and the company has made rapid progress with this project in just three months…as well, VGD geologists believe they may have discovered some sort of connection between the Wasa Shear and the Cadillac Fault at Wasa East with that property right in between those two Gold-bearing systems…given developments at Wasa Creek and Wasa East, along with the Joutel Project of course, news flow should be strong with VGD and some drama could quickly build…a 7,500-metre, Phase 1 drill program at Joutel has started and a second drill rig has been added…we love this property because three former Gold mines (one open-pit, two underground) and two former copper mines are within the immediate vicinity of where VGD will be drilling, just a few kilometres to the northwest and the southwest, respectively…it’s hard to imagine there aren’t more deposits in the area, ones that simply weren’t discovered in the 70's, 80's and 90's…and we can’t think of a better geologist to find one or more new deposits there than Robert Sansfacon whose re-interpretation of Canadian Malartic helped Osisko (OSK, TSX) nail down a 10 million+ ounce monster…Sansfacon is challenging some previous geological assumptions concerning Joutel and he’s applying a new model, taking a structural approach rather than a stratigraphic one as Agnico-Eagle (AEM, TSX) did previously…two-thirds of the Phase 1 drilling will test the extension of a northwest-southeast mineralized structural pattern that based on geophysical surveys appears to strike directly southeast of Agnico-Eagle’s past-producing Telbel, Eagle and Eagle West mines for two kilometres and may extend farther to the former village of Joutel and beyond…the Joutel mines gave birth to Agnico-Eagle, and the major would love nothing more than to see this old mining camp come back to life…if anyone can make that happen, it’s Sansfacon who’s highly regarded in Quebec mining circles…Visible Gold Mines has $4 million in working capital and is being driven by some exploration stories that appear to have serious “legs”…given this company’s aggressiveness and the quality of its geological team, all the ingredients are there to make VGD the next potential big play in northwest Quebec…with a current market cap of $12 million, the risk-reward ratio is certainly attractive for long-term investors…