For the last month, the precious metals and junior mining sectors have been in a correction phase. Gold prices have teetered between the $1800-2000 range and the share prices of most juniors have been consolidating. However, looking at the the gold price chart, we believe the juniors are on the verge of a major breakout.
The consolidating price action in gold since early August has resulted in a descending triangle pattern in the chart. More recent trading has pushed the last few candlesticks out of the upper limit of the descending triangle, which is pointing to bullish upside breakout. To increase the accuracy of our prediction, we will use a MACD indicator in tandem with our pattern analysis. Looking at the MACD, we can see that the MACD line has just crossed above the SIGNAL line, which we view as a bullish confirming indicator for an impending upside breakout.
Given the bullish indications in the gold price chart, we will be focusing our attention on two different gold deals this week: Unigold and Titan Mining Corporation.
Unigold (TSXV:UGD)(OTCQX:UGDIF)(Frankfurt:UGD1)
Price = $0.50 | Market Cap = $60 million | Shares Outstanding = 125 million
Without a doubt, Unigold is one of the most undervalued gold developers on the market today, with over 2 million ounces of gold (+1.5 g/t)and a market cap of under $70 million. The undervaluation is staggering especially when considering that the Dominican Republic government has vocalized their support for the project. Despite this, the stock has been lagging recently which we see as a major buying opportunity. Two weeks ago, legendary precious metals investor Eric Sprott purchased $2 million worth of UGD stock on the open market at $0.55. The stock currently trades at $0.50. The company will be releasing drill results from the sulphide portion of their deposit in the next 2-3 weeks. The last set of drill results from this area returned 30 metres of 9.02 g/t which was part of a larger interval of 104.1 metres averaging 3.14 g/t Au. As the company continues to drill deeper, we strongly believe the next set of results will return similar, if not better grades, especially considering the success of the last drill program which also targeted the sulphides. This will be the last chance to pick up shares at this level before drill results from the sulphide portion of the resource start getting released towards the end of the month. We will be accumulating slowly prior to the release of those results.
Titan Mining Corp. (TSX:TI)
Price = $0.53 | Market Cap = $71 million | Shares Outstanding = 123 million
Last week, Titan Mining announced a signing of an option agreement to earn up to a 100% interest in the Mineral Ridge property in Nevada from Scorpio Gold (TSXV:SGN) for cash payments of up to $42 million. Mineral Ridge is a fully permitted former producing Au camp with 350,000 ounces existing M&I resources. Titan plans to materially grow the resource base via exploration, following the typical road map of the Augusta Group. Prior to the acquisition, TI was a pure-play zinc production company. However, in recognition of the current bull run in gold prices, it seems the AugustaGroup felt that adding a gold asset would be the best way to create shareholder value. Richard Warke, CEO of Titan Mining, commented on the transaction, “We believe a portfolio of projects that fits this strategy is the best way to grow and translate into building substantial value for our shareholders.” The last few times the AugustaGroup put their weight behind a gold deal, the result was billions of dollars in shareholder value created. This is a very special situation. Richard Warke and the AugustaGroup of companies are one of the most powerful, successful, and influential groups in the business. They very rarely do new deals. But when they do, they are almost always home runs. Ventana Gold, Arizona Mining, Augusta Resource Corporation, Newcastle Gold. The list goes on and on. Below is a summary table of the returns for shareholders who held the last few AugustaGroup deals from inception to buyout.
Last week, Titan Mining announced an $8 million financing at $0.50 (half-warrant at $0.75). The offering was subscribed to by Warke and other supportive shareholders (we assume Ross Beaty). Titan CEO, Don Taylor, commented, “The raise is timely and proportional. It will allow Titan to rapidly advance the Mineral Ridge property in Nevada as well as support continued exploration on the highly prospective ground around our existing ESM mine in New York.”
- SmallCapInvestor
DISCLOSURE: Author owns shares of Titan Mining Corporation and Unigold and may choose to buy or sell at any time without notice. Author did not receive any compensation for publishing this article.
DISCLAIMER: The work included in this article is based on current events, technical charts, company news releases, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. This publication is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.