Gold continues to show tremendous resilience and the outlook remains strong … so this week we will look at a couple promising juniors on the OTCBB and the TSX venture.
1) Xtra-Gold Resources (OCT: BB: XTGR, Stock Forum)
This company, which is also on Thom Calandra’s radar as a Ticker Trax Planetary Prospect, is being reviewed not only for its growth prospects, but because I believe its objective is to dual list on the TSX by mid-2010. Xtra-Gold will be doing more drilling on its project in the Kibi Gold Belt of Ghana. The company plans to drill as many as 200 holes this year on their Ghana project, which appears to sit on the same geological formation as Keegan Resources (TSX: T.KGN, Stock Forum), which moved from $1.25 to $8.00 over the past year on its drill results.
Normally I am worried about "too much" liquidity on the OTC as often the market makers are more like "mess makers." In the case of Xtra, there may not be "enough" stock trading at current levels. It’s something a person has to watch carefully, and with any stock on this exchange, I recommend against the use of market orders.
Snapshot
Ghana is one of the more business-friendly countries in Africa. It has 13 large-scale mining operations and some of the most significant recent discoveries on the continent. Recently Xtra-Gold added two industry powerhouses to the board of directors and advisors: Bob Castelli who is the Chief Geology Officer for Franco Nevada and PDAC 's Prospector of the Year, and David Bell who was widely heralded as discovering the Hemlo Gold Mine.
Xtra owns five concessions in the Kibi Gold Belt in the eastern region of Ghana. The properties had more than $20 million spent on them from 1990-1994 to define the reserves of the placer deposit and place them into production. Operations were suspended in 1994 due to low commodity prices and difficulties finding financing for the properties. There was no further development until 2001 when they were purchased for $5 million. Xtra has raised more than $12 million, which it has spent on work to discover the sources of the placer deposits, and which led to the discovery of the Kibi Gold Trend.
Xtra is held by some well known institutions including Sprott Asset Management, LDI Funds run by Michael Reator who spends half his time on BNN as a commentator, Puntner Asset Management, and many others.
We will follow up more with this company as drilling progresses in the months ahead. Please see: Thom Calandra’s Ticker Traxreporting (pdf) on X-Tra Gold Resources.
2) Oro Gold (TSX: V.OGR, Stock Forum)
This company went vertical in the spring of 2009 running from 25 cents to $1.05 in two months. Last month it reported strong drill results from its gold & silver project in Mazatlan Mexico and has reported grades as high as 8.5 grams per tonne over 61 metres (hole 08TR012). This mineralized trend is 12 kilometres long and the company has three rigs running in a 10,000 metre drill program for the first half of 2010.
In addition to the recent results, Oro is also targeting a region called San Cristobal that is 3 kilometres in length and which hosts a strong gold anomaly. Any drill success here could generate a fair amount of excitement.
Its share structure and valuation are attractive with 63 million shares outstanding and approximately $8 million in the bank. Oro Gold appears to have strong support in the low 40-cent range and with three rigs running, we should see good news flow between now and summer. The small stocks have been quiet this past month but any solid break on gold above $1140 could generate substantial interest in the sector again.
Market & Economic Insight: From a list compiled over the past decade, we track 60 of the world's best money managers, market strategists, and economists. Weekly we will summarize the most relevant insight
1) Both the “Panic/Euphoria” model and “Cyclical Expectations” model are now approaching their 2009 lows suggesting the equity markets may continue to face near-term pressure. [Citi Strategist Tobias Levkovich]
2) Not every market `tell is whispering a benign message. Trading volume has been weak during this bounce, with Thursday's turnover the second-slowest of the year. And corporate insiders have picked up their selling activity in recent weeks. No doubt the market's quick retrenchment from the January highs left plenty of investors remorseful for not having lightened up more on stocks. If this gentle levitation act pushes the indexes closer to those levels, the inside sellers will likely start hitting the market's bid [`senior editor for Barron`s, Michael Santoli]
3) The reason stocks begin to work from here is that the data that came out of the fourth quarter was generally positive, visibility is improving and now we are starting to see that delinquencies are stabilizing. The macro trends are all moving in the right direction. [Thomas Lee, chief U.S. equity strategist at J.P. Morgan].
4) Devised by Edwin Coppock in 1962, the Coppock Indicator is used to spot key turning points in leading market indices. When the curve turns up it is supposed to signal the start of a bull market. As much as it sounds like visiting a Tarot Card reader, it is oddly accurate. The Coppock indicator flashed a “buy” signal last June and is now in the “hold” position. So, unfortunately, the charts are not providing a strong signal either way.
Disclosure: Danny Deadlock owns 20,000 shares of OGR and 5000 shares of XTGR
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Danny Deadlock has specialized in microcap and smallcap companies for over 25 years and is a registered member of the Stockhouse community since 1997. You can find his website at www.MicroCap.com - a service which has specialized in TSX and TSX.V penny stocks since 1998. You can also email Danny at microcap@telus.net