Wild ride in gold yesterday, strong buying in Tocvan.Tocvan closed Friday at $0.59 on 123,000 shares, supported by strong buying given the downturn in gold and silver yesterday. Overall, a very strong week of buying with volume over 768,000 shares.
I always keep my eye on the trading volume and closing price each week as they provide clues about shareholder support and progress by the company. In the case of Tocvan, the average trading price this week was $0.56, higher than the week before, and when combined with a very high weekly volume, it suggests to me a strong shareholder base is forming in the mid $0.50 range.
It is higher consecutive weekly closes that excites investors; first, by attracting speculators simply because of the activity, upward price movement, and rumors; and then secondly, by encouraging current shareholders to not sell and even perhaps average up because of the progress.These combine to put upward pressure on the price as demand outstrips supply. All one has to do is look at Tocvan's chart, the price has moved from $0.35 to over $0.60 in about a month's time frame (very bullish).
Gold posted the biggest daily decline in more than a year, down 2.5% closing at $2,330 USD. Spot silver slipped 5% to $27.22 an ounce, its biggest daily decline in over three years.
There were a number of factors that came together at once that resulted in the drop of gold, for example, the reduction of Middle East tensions, jobs report in the US, and China's central bank didn't buy any gold last month, ending a massive buying spree that ran for 18 months that helped push the precious metal to a record high in May. I highly doubt China is about to completely stop buying gold. It appeared that part of the rapid decline was artificially created by aggressive selling through automated algorithms.
What does this mean for Tocvan? I wouldn't get too worried about the frantic volatility in gold and silver, the value proposition for Tocvan is stronger than ever, especially since the release of more data from cores this week.
"The results today give us numerous reasons to be excited about the potential of Pilar." commented Brodie Sutherland, CEO. "Not only are we continuing to increase the resource potential on the outer edges of the Main Zone but have successfully hit significant mineralization in two exploration holes 700 meters away."
For me, hitting significant mineralization 700 meters away means the potential for a larger and larger resource.
Over 2,700 meters have been drilled to date for the 2024 program. Results for eight drill holes are currently pending analysis and drilling is ongoing at Pilar.
But in my opinion, the big news is a Major Producer has initiated a 30-Day Site Review of the Expansion Area. "One of the top gold and silver producers of Mexico will initiate a 30-day site review of the Pilar Expansion Area during the month of June to assess the potential of the area. Four personnel including two geologists along with assistance from Tocvan technical staff will conduct the review for the purpose of assessing future agreements.
Tocvan has 100% interest in the Expansion Area where recent surface sampling has begun to delineate sizable footprints of mineralization that have yet to be tested with drilling. Surface results include: 5.6 g/t Au and 106 g/t Ag, 3.2 g/t Au and 1,225 g/t Ag, 7.3 g/t Au and 177 g/t Ag; also 5.5 g/t Au and 80 g/t Ag."
Tocvan has indicated they may have encountered the "Feeder System" that supplies gold and silver where placer mining is ongoing in old river beds at lower elevations. Just the thought of potentially finding the feeder system reminds me of the phrase, "Blue Sky Potential".
I am very excited that one of the top gold and silver producers in Mexico is sending 4 personnel (including two geologists) for 30 days. This is a big commitment and certainly indicates that the newly acquired land package has piqued the serious interest of a Major (yet unknown). Who knows where this could lead, perhaps a JV to develop the property with the intent of bringing the "Expansion Area" to production, or perhaps developing a resource as feedstock for the more advanced Pilar property once production is reached.
No matter what happens, Tocvan will need more money for drilling, thus a JV might be a good way to fund an accelerated drilling program designed to delineate a resource. Brodie Sutherland has stated many times that his goal is to keep Tocvan's share structure as low as possible prior to production, providing maximum financial return to shareholders who have been with, and supported the company for many years.
My dad loved to use this phrase, "the first sign of smoke is generally followed by fire". I think the analogy goes something like this, the engagement of one of the top gold and silver producers in Mexico is the smoke and the potential completion of a definitive agreement to advance the "Expansion Area" is the fire. Whether this ends up as an Agreement or not - time will tell.
My experience has been that if we are getting near a significant agreement with this Major, it will be reflected by increased buying and speculation in the market. The Major will bring along with it a new set of investors looking to get a position simply because of the track record of the Major. It is early days in their due diligence process but as we have come to find out with Tocvan, 30 days goes by very quickly. This combined with results pending for 8 drill holes and the drills still turning, we should continue to see an upward price trend.
I now understand why Tocvan took a year off drilling to negotiate and acquire 100% of the surrounding land package. I believe this was a well spent year for Tocvan and will bring significant benefit to shareholders.