First Gold Exploration Inc. now more of a REE play

Jan 19th, 2011 – 1 Comment

It looks like EFG has found support in the $0.30 range but please trade this stock for income. Until it establishes a sustained uptrend its not a buy and hold candidate.


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Dear Lou,

Sure could use your help on First Gold.
Lots of decent drill results for gold and rare earth elements but this stock has got me completely confused. Looks like a descending triangle but it just cannot get hold. Is it range bound or just a bad deal ?

Regards

Rob

 

Hi Rob,

First Gold Exploration Inc.(EFG  TSXV) is a junior exploration company  that is developing a variety of projects and using them as stepping stones towards becoming a producer. The company developed their Croinor deposit in Quebec to the point where they decided to sell their interest for cash and stock. They are now focused on their Lac Pivert/ Rose lithium project where they are actively drilling.

EFG also has a base metal, and a silver project that are in development. EFG just closed a $2.9 million private placement which consisted of flow through shares and warrants. That’s the way junior exploration companies roll sometimes. At one point you own a gold company and the next its hunting rare earth elements. It is a very entrepreneurial sector and you have to be able to deal with changes on the fly.

The charts will give us a better idea of the trend for the stock .

The three year chart illustrates the big spike to $1.00 when the company announced its drill results at Pivert/Rose but as you would expect there was ton of profit taking. The sell off that ensued took the stock all the way back to $0.20.  The lesson here is to take profits when they are available. Money management is crucial in managing investments in the the junior mining sector. You can not leave money on the table when it should go into your pocket.

The six month chart depicts the reaction of investors to a news release outlining drill results at Pivert/Rose that came out September 19, 2010. The stock caught a bounce off of $0.22 all the way up to $0.44 in just a couple of weeks but again pulled back to the $0.30 range.

EFG will rise and fall depending on how investors react to new releases concerning drilling activities at the companies various projects. Rare earth elements  reported today and perhaps base metals or silver tomorrow

It looks like EFG has found support in the $0.30 range but please trade this stock for income. Until it establishes a sustained uptrend its not a buy and hold candidate.

Happy Capitalism!

Categories: Mining
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