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ALERT! Breakouts in Progress!Ralph Kettell From a technical trading perspective, the six stock charts, below, are all screaming buy, buy, BUY! However, to those who don't heed their call, they will soon be changing their tune to bye, bye, BYE as they soar up, up, and away. Enough frivolity let's talk facts.
Desert Sun
Mining
(DSM.TO) Desert Sun broke through overhead resistance at $1.05 Cdn at the beginning of July. Two weeks later it tested that level and verified that the prior resistance level was now a major support level. DSM has since gained another 20%, but has pulled back to the bottom of its current trading channel. There is no guarantee that it will not go back and retest $1.05, but that seems highly unlikely at this juncture. The more likely scenario is for Desert Sun to continue its bullish trend to a near term target of $1.65 to $1.80 Cdn before taking a breather (i.e consolidating) for a few weeks. This estimate may prove to be way pessimistic if the gold bull market takes off in the near future as I have been forecasting. Desert Sun is a well managed company with significant gold reserves in Brazil. Their wholly owned Jacobina Mine contains gold resources of 1.4M ounces indicated and 2.2M ounces inferred. Desert Sun is in the process of proving up more resources on the large property which has only been 15% explored. At the same time, they are attempting to bring the moth balled 1M ton per year mill back into operation. As for the management of DSM, the CEO, Stan Bharti, is a talented mining engineer who has a great deal of experience in the mining profession. Desert Sun's technical staff is top notch and Stan runs a tight ship.
Queenstake
Resources Ltd.
(QRL.TO) Queenstake's stock chart has many similarities to DSM with the exception that QRL broke out only today, Thursday, August 7,2003. This puts their chart about 1 month behind Desert Sun. From QRL's chart there are two likely outcomes. The most probable is for the stock to run up to $0.55 to $0.60 Cdn followed by a 2 to 3 week decline back to support at $0.48 to $0.50 Cdn. Another likely possibility is for a few day plateau around $0.48 with a test of support at $0.42 (the former resistance). An investor could consider purchasing some now and then buy more on the pullback, with the price dependent on which of the two scenarios the stock decides to take. Queenstake is a well managed resource and exploration company that managed to pull off a major coup in the past few months. They purchased the Jerritt Canyon Mine from Anglogold and Meridian. In so doing, QRL has become a 250,000 oz. gold producer overnight. They are literally a steal at current prices. Buy some, stash it away and forget about it. This stock is undervalued at current gold prices, but if you factor in a rise in the price of gold this stock could literally explode in the next 12 months.
Golden Phoenix
Minerals
(GPXM.OB) Golden Phoenix's stock chart is exhibiting a classic teacup and handle formation. This is the same super-bullish formation that launched gold through the formidable $330 barrier in December. As soon as Golden Phoenix clears the $0.38 level, it should quickly establish a new base of operations at the $0.60 to $0.65 level. The chart has also formed an ascending triangle which is providing strong support at the $0.30 level. Ascending triangles normally have a bullish resolution and this is in good agreement with the teacup and handle described above. Today, Thursday, August 7th, GPXM traded 1.37M shares. The breakout cannot be very far off. Golden Phoenix has an incredible story to match their great chart pattern. They picked up the Mineral Ridge Mine, lock stock and barrel from a bankruptcy court at the bottom of the gold bear market in late 2000. GPXM paid a measly $225,000 for the entire operation. They have been working feverishly for the past 2 years to get the operation back on line. They have now done so and should be pouring their first dore (gold/silver) bars in the next 2-3 weeks. The leach pads have been extensively reworked over the past 2 months and this bear fruit quite soon. GPXM recently announced approval to add cyanide to the leach pads and it is in process. I toured the Mineral Ridge Mine and the physical plant in late June, and was able to view the work first hand. It was quite impressive, and I had plans to write a story about the operation. Unfortunately my computer crashed and those plans have been significantly delayed. I will be writing that story within the next couple of weeks so keep your channel tuned to 321gold. : I will be writing to explain the workings of the entire operation soup to nuts which will provide a great understanding not only of GPXM, but also of modern gold mining techniques. I hope you will find it half as interesting to read about, as I did seeing it first hand. Golden Phoenix has an experienced and dedicated management and technical team. Mike Fitzsimonds, the President, is a top notch mining engineer and Steve Craig, V.P. of exploration, is a great economic geologist. Between them they have managed to bootstrap this operation. Also they have three heavy hitters from the mining industry on their board of directors, David Caldwell of Nevada Pacific Gold, Allan Marter of Golden Star Resources, and Ron Parratt of AuEx, LLC, a Nevada start-up exploration company. GPXMs other two properties are quite valuable as well. The Borealis project is being advanced by Gryphon Gold under a joint venture agreement. Gryphon Gold has to spend $9M on the property in order to earn a 70% interest in the property. The Contact Copper property is not being worked at present, but the advancing copper prices may very quickly bring this property into play. The Contact Property contains nearly 1 Billion pounds of copper. This equates into over 10 pounds of copper per share. At the current copper price of $0.82/lb and assuming a 10% profit on extraction this equates to $.82 profit per share from the copper. Golden Phoenix is definitely a stock to watch. Once it breaks out of the teacup and handle formation, don't get in its way, just hang on. GPXM looks to be a sure double (or nearly so) in the next 3-5 weeks.
Pacific
Ridge Exploration
(PEX.V) Pacific Ridge has been in accumulation for the past 7 months forming a large bowl which is not even evident on the 1 year chart displayed above. In order to completely appreciate the bowl you need to look at the 2 year chart which you can find at this link : http://finance.yahoo.com/q?s=PEX.V&d=c&t=2y&l=on&z=b&q=l . What is evident from the 1 year chart is the strength of the support line which dates back to mid February. This stock is just biding its time for a gap-up day to take out the resistance and off she goes. Pacific Ridge is in the process of drilling their flagship property, Golden Arrow. Golden Arrow has a huge potential and has been under-explored for several years. The property has been through several cycles of one exploration company after another coming in and twining existing holes. This has been the standard operating procedure of many junior explorers for years. It helps them raise money and simultaneously boost their share price. Pacific Ridge is NOT repeating this mistake. They are a first rate operation and are seriously attempting to define an economic ore body. They are drilling in many prospective areas which have never seen a drill. If they are able to prove up close to a million ounces in this current drill program, look for this stock to be 2 to 3 times where it is presently trading. I understand from talking to the company that the first drill results will be announced in the few days. The management team of Badger and Company led by John Brock and Wayne Roberts have a long series of successes and have been in this business for a long, long time. John was very persistent in going after the Golden Arrow property and hopefully his persistence will payoff quite soon.
Itronics (ITRO.OB) Itronics has broken through a long term downtrend which started more than a year ago. The breakout occurred in late July and just as with DSM above, ITRO almost immediately retested the previous resistance line and established it as a new support line. It has since bounced strongly off the support on strong volume and is moving towards the middle of the trading channel (line C on the chart). Most likely it will slice right through the middle of the channel and head towards the top of the channel (line D on the chart) at $0.23. This move could happen quite quickly in the next few days. Following that it would likely consolidate in the $0.22 to $0.27 range for a few weeks. Itronics is not really a mining stock, but it is precious metals related. Itronics is an urban silver miner, that mines photographic waste for its silver content. ITRO has a patented process whereby they can remove 99.9% of the silver from the photographic waste. This detoxifies the waste and allows it to be further processed into fertilizer. The fertilizer has been proven to be quite effective in numerous field trials with fruit and vegetables netting 10% to 50% yield increases. The fertilizer sales have been on the rise and this little company is on its way to becoming a large, profitable fertilizer company and possibly one of the nations biggest silver producers as well. This is a very environmentally friendly company in that it takes toxic wastes that might otherwise find their way into our nations land, streams and rivers and recycles them to productive uses. The neatest feature of their business model is that they get paid to pick up the raw material, they get paid for the fertilizer, and finally they get paid for the silver. About 25% of their revenue comes from the sale of silver, so if silver were to double from its historically low price of $5, ITRO's sales would increase by 25% without them having to do a thing. If Jay Taylor of www.miningstocks.com is correct, then this company could be a $3-$5 stock in a few years. The management
of ITRO is highly respected. The president and founder Dr. Whitney
has worked in and around the mining business for many years.
An
interesting interview on the state and future of the silver market
with Dr. Whitney was published on the web a last week.
SAMEX (SMXMF.OB or SXG.V) SAMEX chart appears to be ready to break out and move significantly higher. For the past 5 months, it has been making a series of higher highs and higher lows. The ascending triangle formation which is readily discernible from the chart has to resolve one way or the other quite soon and the highest probability is for a bullish resolution. It may yet linger for a week or so and trade down to $0.25, but most of the ascending triangles in this gold bull market have resolved on the fourth contact with the resistance line and that is precisely where SAMEX is now. I would expect that SAMEX will break through the current resistance and move up to $0.42 with the next few weeks. It is likely that once it breaches the resistance line up to possibly $0.34 that it will come back and test support at $0.29 prior to advancing onto new highs. SAMEX is a very well run mineral exploration company with several prospective properties. The properties run the gamut of mineralogy and location. They are well diversified and are advancing three of their best properties. SAMEX traded as high as $6 per share in the gold bull rally of 1996. It is conceivable that it could again trade at those levels and more in the next few years. SUMMARY All of these stocks seem to be good buys at this time. The stocks are ready to advance to new highs. The prudent manner to invest in any industry, mining or otherwise, is to diversify. I would not suggest putting any more than 5% in any one stock. The stock with the greatest story in the world can crash and burn if a natural disaster comes along and wipes them out. Wise investors plan for the worst and are pleasantly surprised when the worst doesn't happen. I plan on tracking these stocks and making periodic portfolio comments and adjustments concerning them. August 7, 2003 Disclosure:
The data in this article has been obtained either from www.stockhouse.com or from the companies' websites. The accuracy of the information on the companies contained herein is not guaranteed, but every attempt has been made to be accurate in the analyses. Disclaimer: |
