Summer junior gold rally, GMA, MOL, ELR, and LVN

Danny Deadlock Danny Deadlock, TickerTrax
1 Comment| June 20, 2014

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Stockhouse Ticker Trax is published to subscribers every Monday (annual cost only $195). We focus on best-in-class high growth small companies trading on the TSX and TSX.V between 5 cents and $3 with a market cap below $300 million.

Equity Analyst Danny Deadlock has 30 years of experience speculating on Canadian penny stocks and targets capital gain opportunities and diversification in metals and minerals exploration, energy, and technology.

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1) SUMMER RALLY POTENTIAL IN JUNIOR GOLD STOCKS
 
High quality Junior Golds with large economic reserves and cash, plus the two Primary gold miner ETF's Direxion Daily Gold Miners Bull 2X Shares (NYSE: NUGT, Stock Forum) and Market Vectors Junior Gold Miners (NYSE: GDXJ, Stock Forum) are doing VERY well in June. They did well on Thursday as gold jumped $40 but for the two weeks prior they have been producing strong gains – a leading indicator on the price of gold and the sector itself.
 
As an example, four of the gold stocks from my Ticker Trax cash rich list (35 TSX and TSX Venture companies) gained the following in the past two weeks:
 
 
Asanko Gold Inc. (TSX: T.AKG, Stock Forum) $2.70 > 30% / Guyana Goldfields Inc. (TSX: T.GUY, Stock Forum) $2.63 > 35%  / Sabina Gold & Silver Corp. (TSX: T.SBB, Stock Forum) $0.90 > 38%  / Premier Gold Mines Ltd. (TSX: T.PG, Stock Forum) $2.88 > 40%
 
When this happened coming out of the December 2013 sector lows, it resulted in three months of substantial strength for junior gold stocks – the optimism of which spilled over to many other microcap stocks (and sectors) across the TSX and TSXV.
 
This recent strength MAY be a good leading indicator that a summer smallcap and microcap rally is a real possibility – at least for the better quality companies with healthy balance sheets and strong growth potential.
 
It will be interesting to watch as gold enters this new phase. Over the past couple years, professional gold traders have attacked gold during periods of strength and created gut wrenching volatility for junior mining investors.
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2) GEOMEGA Resources Inc. (TSX: V.GMA, Stock Forum) (29 cents) - www.ressourcesgeomega.ca
 
In Q1 I had high hopes for junior rare earth company GeoMegA and broad optimism across the TSX Venture helped fuel high prices that now seem as distant as peace in the Middle East!  The GeoMegA story is far from over but the correction in price was a combination of several factors that included:
 
a) A strong correction in junior mining stocks that started late March and accelerated through May.
b) U.S.  Rare earth giant Molycorp Inc. (NYSE: MCP, Stock Forum) collapsing the 1st week of May on poor earnings
c) GMA’s CEO trying to handle IR on his own and doing nothing but frustrating shareholders.
 
The fundamentals remain the same as they did months ago but now we are at the mercy of the CEO for releasing news. I am very frustrated with him as he has yet to meet a deadline that he targeted in Q1 for releasing an update 43-101 and also their initial pre-feasibility study.
 
Not only was I told target dates that were missed by a mile, but so were many others that contacted him. I have no reason to believe he did this intentionally, but no matter what industry it is, you don’t tell shareholders, potential investors or analysts, dates, numbers or news that are inaccurate. It does nothing but damage the credibility of the CEO and the company as a whole.
 
I still personally hold a sizeable position and will ride GMA out through the summer. If the CEO gets his act together we will see updated resources numbers in July and pre-feasibility numbers in (??). Initially I was told to expect economics in June but obviously that is not happening.
 
The main problem he faces when those numbers are released - will anyone care?  In Q1 the junior miners were doing great and GMA had a very large audience of investors with positive outlooks and strong bank accounts. Now it is just the opposite. A gold sector rally would help to change that but this remains a wildcard.
 
The following 3rd party interview was published this week and provides some good insight (along with a reason to remain optimistic). My frustration level with the CEO remains very high but I continue to believe their resource and REE technology hold strong promise.
 
http://rareearthinvestingnews.com/21329-geomega-resources-montviel-quebec-physical-ree-separation.html
 
Side Note: It is pointless for small investors to put pressure on the CEO - simply because the big money that invested $3 million at 60 and 70 cents only three months ago will do that for them! They have now lost half their investment. If anyone is angry and wants to see this stock higher - it is them.
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3) Moly Mines Ltd.  (TSX: T.MOL, Stock Forum) (7 cents) - The China Virus
 
I am throwing in the towel on this one as I don't trust their board. Unfortunately I wrote it up at 11.5 cents and 8.5 cents because of their very large bank account - $70 million worth almost 18 cents per share.
 
One Chinese investment group owns more than half the stock and it is very apparent they don't care about the retail shareholder.  They were notified this month that they will lose their TSX listing and they stated that they have no intention of retaining their public listing in Canada - they could have moved to the NEX or CNSX until a merger or acquisition is found.
 
I suspect they are happy to keep accumulating paper as cheap as possible (as people throw in the towel). They are likely content to let their public listings be suspended and could then take it private at a huge discount or distribute the cash.
 
Something “questionable” is going on with this company and going forward I have Zero interest in owning or following anything controlled by investors from China. I see this behavior far too often in small public companies closely associated with China.
 
http://www.stockhouse.com/opinion/ticker-trax/insights/2014/04/25/mol-t-$70-million-on-fire-sale-8-5-cents
 
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4) Eastern Platinum Ltd. (TSX: T.ELR, Stock Forum) (11 cents) – www.eastplats.com
 
ELR was one of my favorite cash rich bottom fishing stocks in 2014. Ticker Trax subscribers are up almost 70% and even readers of this free weekend column would be up almost 50% - my last public report was April 4th at 7.5 cents
 
http://www.stockhouse.com/opinion/ticker-trax/insights/2014/04/04/will-russian-sanctions-help-elr-break-7-5-cents
 
As I previously discussed, their $84 million cash was worth about 8 cents per share so the large PGM mine (on care and maintenance) in South Africa + the reserves were all valued at zero by the market. This made no sense even considering the risks of that region.
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5) Levon Resources Ltd. (TSX: T.LVN, Stock Forum) (26 cents) – www.levon.com
 
For Ticker Trax subscribers the past couple months, this has been another favorite cash rich bottom fishing opportunity near 22 cents. Levon has a very large low grade silver project in Mexico that reflects little value as their $43 million is worth approx. 20 cents per share.
 
With the recent strength in gold and silver, this is still worth looking at.
 
Corporate Presentation:
http://www.levon.com/i/pdf/Presentation-May2014.pdf
 
  ** TWITTER NOTE:  I maintain a twitter page at - twitter.com/tsxalerts  
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Disclosure: Danny Deadlock owns 70,000 shares of GMA / 100,000 MOL / 250,000 ELR / 150,000 LVN
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Tags: INDUSTRIAL METALS & MINERALS GOLD

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BaystreetBenny
INV on TSX $18 Million Cash . Former IAMGOLD Multi Million ounce High Grade Gold Property. M Cap $14 Million. Big Catalysts approaching to Rocket the Share Price.
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June 24, 2014
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