Ron Struthers of Struthers' Resource Stock Report takes a look at results from two mining companies, and picks the one he considers a winner.
I think a comparison of Garibaldi Resources Corp. (TSX: V.GGI, (GGIFF, Forum) and Silver Bull Resources Inc. (TSX: T.SVB, OTCQB:SVBL,Forum) would be a very good exercise. Both are hitting some high-grade sulphides: Garibaldi, nickel and copper with precious metals; and Silver Bull, zinc and lead with silver.
GGI had a high-grade intersect of 7.2% nickel and 3.4% copper over 4.8 meters with 0.82 g/t palladium, 0.78 g/t platinum, 0.40 g/t Au, 10 g/t Ag and 0.195% cobalt. Based on current metal prices that 4.8 meters by GGI is worth around $1,018 per ton.
SVB hit 9 meters @ 20.7% zinc, 1.0% lead, 98 g/t silver and 0.26% copper including 3.65 meters @ 47.8% zinc, 2.5% lead, 105 g/t silver and 0.26% copper from 3.55 meters to 7.2 meters. Based on current metal prices that 3.65 meters by SVB is worth around $1,498 per ton.
So on yesterday's drill results the Silver Bull intersect is worth about 50% more than GGI's intersect, but GGI is valued 1,200% higher, or 13 times. If you own GGI and not SVB it is obvious what to do. Regardless this exercise points out the extreme undervaluation of SVB, and I am not factoring the deposit SVB already has.
GGI market cap: 96.7 X $3.80 = $367 million
SVB market cap: 199 X $0.14 = $28 million
Garibaldi (recent price $3.80; entry price $0.21) Opinion: Hold
GGI put out news Nov. 20 that drill hole 17 has hit a new zone of mineralization and the company released the assay results for the first four holes. Although it hit some good grades and decent widths I believe the stock was pricing in much longer intercepts. We have already taken out good profits so I am content to hold the rest longer term.
Hole 4 had a high-grade 7.2% nickel and 3.4% copper over 4.8 meters within a 48.2-meter interval grading 1.1% nickel and 0.69% copper. Hole 3 hit 13.5 meters of 1.05% nickel and 1.0% copper. Hole 2 hit 18 meters of 0.69% nickel and 0,80% copper. Hole 1 hit 60.5 meters of 0.54% nickel and 0.53% copper.
These are some good results but nothing compared to Voiseys Bay, and I am sure the stock price was looking for much more. The company is also hitting gold, platinum and palladium. There are plenty more results to come and we will get a better idea of this discovery in time. For now I will watch the stock price and may suggest buying some position back if it gets low enough.
Otherwise hold remaining positions. The stock opened strong, going above $5 and then some reality sunk in.
From the company news release:
Fourteen holes over 3,671 meters have been completed to date (new photos, maps and an updated presentation will be posted soon at GaribaldiResources.com). EL-17-04 cut 7.2% nickel, 3.4% copper, 0.82 g/t palladium, 0.78 g/t platinum, 0.40 g/t Au, 10 g/t Ag and 0.195% cobalt over 4.8 meters at the bottom of a broader 48.2-meter interval from 108.4 meters grading 1.1% nickel, 0.69% copper, 0.38 g/t palladium, 0.23 g/t platinum, 0.16 g/t Au, 3.1 g/t Ag and 0.032% cobalt;
• EL-17-04 also intersected a second zone of mineralization within a variable-textured gabbro featuring 1.08% nickel and 0.68% copper over 12 meters starting at a depth of 189 meters;
• EL-17-03, cutting across part of the historic northwest zone, intersected 13.5 meters grading 1.05% nickel and 1.0% copper within a broader core interval of 39 meters featuring 0.91% nickel and 0.74% copper beginning at a depth of 42 meters;
• EL-17-02 intersected broad core intervals of disseminated sulphide mineralization between a depth of 58.5 meters and 190.5 meters. Significant intercepts included 18 meters @ 0.69% nickel and 0.80% copper, and 24 meters @ 0.56% nickel and 0.65% copper. The hole was drilled toward the east into a previously untested area. Valuable data was generated from the downhole probe;
• EL-17-01 was drilled away from the historic northwest zone toward the untested east, providing the best platform to collect important data from the downhole probe. Encouragingly, the hole intersected two long core intervals of disseminated sulphide mineralization totaling 176 meters to a depth of 332 meters, highlighted by a 60.5-meter section grading 0.54% nickel and 0.53% copper. Higher grades of copper (0.80%), palladium (1.26 g/t), platinum (0.60 g/t) and gold (0.60 g/t) were intersected over 4.5 meters.
The best positive factor that the market probably likes is that the high-grade intersect in hole 4 was at the bottom so it probably continues deeper.
There are a few observations on the chart. There is a triple top around $5 and that will now be very difficult to overcome.
Quite possibly a significant correction might take grip. Support is around $3.30, and if the stock falls below that it will probably trade down to around $2 and fill the gap between $2.20 and $3.20.
Silver Bull (recent price $0.14; entry price $0.12) Opinion: Strong buy; back up the truck.
Everyone should own a position in this stock before the market catches on to this. There was a $0.08 financing; most of that (18 million shares) became free trading last week and that might be some of the pressure holding the stock back. I believe it is not very wise to be a seller here, but some just see a good profit, take it and run?
The Nov. 20 press release headline reads: Silver Bull intersected 9 meters of sulphide mineralization grading 20.7% zinc, 1% lead and 98 g/t silver, including 3.65 meters of massive sulphide mineralization grading 47.8% zinc, 2.5% lead and 105 g/t silver on its Sierra Mojada project in Coahuila, Mexico. SVB is hitting better numbers than Garibaldi; the stock is a steal here. Zinc is not priced as high as nickel, but the SVB zinc grades are much higher—and so are the precious metals, because the silver grades so high; 537 g/t silver is like 10 g/t gold.
Highlights from the four holes announced in this news release include:
Hole T17010: 9 meters @ 20.7% zinc, 1.0% lead, 98 g/t silver and 0.26% copper including 3.65 meters @ 47.8% zinc, 2.5% lead, 105 g/t silver and 0.26% copper from 3.55 meters to 7.2 meters.
Hole T17009: 3 meters @ 537 g/t silver, 3.9% zinc and 1.06% copper including 1 meter @ 1,280 g/t silver, 14.8% zinc and 2.3% copper from 0 meters to 1 meter.
Holes 7 and 8 had no significant hits.
This drilling was on the second of three sulphide structures that Silver Bull has identified, and this second one seems more dominant in zinc compared to copper in the first structure.
Tim Barry, president, CEO and director of Silver Bull states, "We are extremely pleased with the results from this batch of drill core. The new sulphide zone is proving to be very productive for high grade sulphide mineralization. The drilling summarized in this news release targeted the second of three steeply dipping, discreet structures we have identified in the sulphide zone.
Drilling from the first structure previously announced in the news releases of holes T17001 to T17006 was dominated by high grade silver-copper sulphide mineralization grading up 1,300g/t silver and 6% copper. This second structure is dominated by extremely high zinc sulphide mineralization, grading up to 48% zinc and suggests a metal zonation in the mineralization we see at Sierra Mojada and provides very useful information in helping us vector into an intrusion, interpreted as the source of metals currently defined on the project.
In addition to vectoring in on an intrusive source we can now project the mineralization we are currently drilling into the extensive channel sampling and drilling completed at the eastern end of the deposit and show a target over 3 kilometers in strike length. When you consider this, coupled with the fact we have identified three structures in this east-west trend similar in style, dip and grade of mineralization, we see some very significant immediate targets at Sierra Mojada. In addition to the drilling, work is currently underway to access some of the underground workings further east to confirm the style of mineralization."
Ron Struthers founded Struthers' Resource Stock Report 23 years ago. The report covers senior and junior companies with ample trading liquidity. He started his Millennium Index of dividend stocks in 2003 - $1,000 invested then was worth over $4,000 end of 2014 and the index returned 26.8% in 2016. He retired from IBM after 30 years in customer service, systems and business analyst, also developing his own charting software. He has expertise in junior start-ups and was a co-founder of Paramount Gold and Silver.
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