Dear Lou,
Could you kindly comment on Northern Dynasty Mineral(NDM.TO) when you are free.

Thanks very much.

Binh

Hi Binh,

Northern Dynasty Minerals Ltd. ( NDM TSX) is sitting on a significant copper, gold, molybdenum deposit in southwest Alaska called the Pebble Project.  They have two mining giants involved in their efforts, Rio Tinto, and Anglo American. The biggest challenge in the development of the project is that its located in an environmentally sensitive area.

Bristol Bay is one of the world’s premier fishing grounds and you can bet that it will take great effort, money, and time to overcome concerns about how mining and fish habitat can coexist.

Lets consult the charts for a review of the past and anticipation of the future.

The three year chart outlines the pop and the drop the shares experienced as it broke above resistance at $10.00 in November of 2010. The stock ran to its all time high near $21.00 in February of 2011 but there were signs that the run was coming to an end.

Both the RSI and MACD generated strong signals in February that it was to take some money off the table as the buying momentum was starting to lose steam. Currently NDM is trading at $8.30 which represents a 60% retreat from the high.

The six month chart traces the decline that started in early February with the RSI slipping out of overbought territory and the MACD crossing below the signal line. The lesson that we can learn from a chart like this is that there were plenty of opportunities to get off the ride to preserve capital or protect profits. Book profits when they are available because on many occasions they are not.

The best case scenario would be for the stock to catch a bounce off of $8.00 and start to build a base. If $8.00 doesn’t hold then we might have to test support at $7.00.

NDM has a long path to travel before it actually starts to bring ore to market from their operations at the Pebble Project. All along that journey the stock will provide many trading opportunities.

MAKE IT A PROFITABLE FATHER’S DAY AND HAPPY CAPITALISM!

Hi Lou,
I am looking to buy some venture stocks and wanted to know your opinion on CUU?
I would appreciate your comments
Thanks,

Ravish

Hi Ravish,

Copper Fox Metals Inc. (CUU TSXV) is totally focused on developing their Schaft Creek Project in north western British Columbia. The 2011 milestones for the company  include completing the feasibility study for the project and drilling eight thousand meters to further extend their understanding of the resource. The feasibility study is forecast to be completed by end of the third quarter of 2011.

Schaft Creek is touted as one of the largest undeveloped copper, gold, molybdenum, silver deposits in Canada. Based on historical estimates of the resource the company believes that the proposed mine would operated for 22.6 years.

The charts will provide further insight in helping you decide if CUU is the type of investment that meets your profile.

The three year chart outlines the wealth created by the shares as they advanced from the late 2008 lows below $0.06. I have always said that when you grab hold of a thirty four bagger, members of your immediate family should stand stand and applaud when you enter the room and call out “El rey”.

What is observable on the chart is that the shares have formed pennants twice over the advance and it appears that a third is currently forming. A pennant is a continuation pattern that informs investors that there is more to come.

 The first pennant started to form in April of 2010 with a breakout August. The second pennant began to form in September of 2010 with a breakout in late December. The third pennant started in March of 2011 and has yet to make a move higher.

Now the only question that needs to be answered is if there is more in the tank for investors who are just now thinking of getting on the ride.

The six month chart depicts the sell signals generated by the RSI and MACD as the shares hit the April 2011 highs in the $2.60 range.  Currently CUU caught a bounce off support at $2.00 and the RSI and MACD look to be indicating a move up.

With the 2011 drilling program underway and the expected completion of a new resource estimate to support the feasibility study there appears to  be ample fuel for another advance. But please make sure you understand the risk associated with a junior exploration company. They are working towards a mine but they don’t have one yet. In the mining game no mine means no revenue. 

MAKE IT A PROFITABLE DAY AND HAPPY CAPITALISM!

Dear Lou,

Thank you very much for your articles – very helpful and to the point!

I was wondering if you could provide insight on rare-earth company Great Western Minerals Group – GWG-X. It has a very interesting chart, with a huge run-up from $0.15 to $1.23. It has recently pulled back, but there seems to be resistance around $0.70. Is this stock primed for higher gains or am I setting myself up for a big loss?

Thanks,

Konrad
In GWG’s hometown of Saskatoon, Saskatchewan

Hi Konrad,

Thanks for the assignment. I think the issue with Great Western Minerals Group Ltd. (GWG TSXV)  is that the excitement for all things rare earth may have taken a breather. As sure as Carter has pills  the hot money finds a new new thing that is offering some action and having profited it moves on. Lets consult the charts for a sense of direction of this stock.

The three year chart illustrates the aggressive move since the summer of 2010. Nothing wrong with a six bagger in six months. The RSI and MACD both signaled a shift in momentum from the buy side to the sell side as we came into February. You have to expect that investors who were sitting on tidy profits were motivated to book some profits and maybe head over to the Delta Bessborough in Saskatoon and enjoy some some fine dinning.

The six month chart depicts the selling that developed in February taking the stock from the high of $1.20 to a retest of support at $0.70. You have to hate giving up just over 40% in a couple of weeks. There was a bit of a rise to $0.90 then another retest of $0.70 and now another challenge of resistance at $0.90.

The trend right now is down and if you are sitting on a profit I think you want to protect it. The upside always takes care of itself. Its the downside you have to protect. When you are in cash you can always make another decision if GWG starts to mount a new uptrend.

Happy Capitalism.

Hi Lou,

I regularly listen to you on AM640 every morning and I thank you very much for the sobering and inspirational thought that you inject into the economic issue of the day.

Quick question about Noront Resources Ltd. (NOT) and the [Ring of Fire] Chromite discovery:

1. Do you feel that NOT is a viable investment based on their ability to bring Chromite to the market, future Chromite prices, the world supply & demand from major consumers (emerging economies China/India)?

2. Given that there is no spot price for Chromite, how could the ore price be standardized so that mining companies would have some way to project future profit? Do you see this as a near-term or future reality?

Please feel free to post this on your column and thank you very much again for your inspiration.

Kind regards,

Sheldon.

Hi Sheldon,

I last analyzed Noront Resources Ltd. ( NOT TSXV) for Brian  on July 24, 2009 . At the time  it appeared that there was a pennant formation present on the chart. A pennant formation is a continuation pattern that in the majority of occasions results in a further advance. The stock was trading at $1.38 and it did advance to $2.50. But that was then and in the interim the stock has been in a long term sell off.

You have asked two great questions neither of which I can answer, but I can direct you to the charts that will at the very least tell us if we want to put capital at risk with NOT.

The three year chart renders a clear understanding of what is happening to the stock. Its going down and has been for an extended period of time. NOT hit resistance at $2.50 for the second time in December of 2010 and since then it has lost 66.8% of its value. Ouch!

The old saying on the street is that the best time to buy a stock is when it is going up. Clearly this is not the case with this stock. There is resistance all along the downtrend line. Every attempt to move higher has failed. Could NOT make a turn at some point? Yes but its not doing so now and there are no indicators suggesting that it will in the near future.

The six month chart further embellishes the decline. A slow steady loss of value is never a pretty sight. My best guess is that NOT may have to retest support in the $0.60 – $0.55 range before it can attempt a breakout.  I would not be tempted to risk capital on this stock. On a technical basis there are just too many things going against it. A long term downtrend, no signals from the RSI or MACD that it was about to move higher, and finally no reversal patterns to suggest that buyers had taken control of the market. Sellers rule - buyers drool.

Happy Capitalism!

Hi,

Looking at QuadraFNX would appear they have good prospects to come out ahead by year’s end, however the recent less – than – stellar production results seems to have hit pretty hard.

In looking at the Weekly view vs. Point and figure I am now quite confused about whether to cut my loss or continue believing they have a brighter outlook based on the fundamentals of supply & demand in the copper market.

Any thoughts you could offer are appreciated.

Dawn

Hi Dawn,

I last posted on QuadraFNX Mining ( QUX TSX) on June 14, 2010 for May. At the time the stock was trading at $12.25 and had been giving up ground from the highs of March 2010. The stock continued its retreat until August of 2010 when it formed a double bottom and reversed the downtrend. The charts will provide some guidance as to trend, support, and resistance.

The three year chart clearly illustrates the resistance at $18.00 which has proven difficult to overcome since January of 2010. The stock has support at $10 which where the double bottom formed in August.

The six month chart depicts the double bottom in August of 2010 and the MACD signalling the trend reversal at the same time. The run from $10.00 to $17.00 in early November was nothing short of sweet. A 70% gain in 10 weeks will usually see people standing and applauding when you come through the door. Sadly that door isn’t often to your home or office.

The big drop in January appears to have started before the news hit the street that QUX would miss its production target of 300 million pounds of copper for 2011 and guided output to 240 million. As mentioned many times guys in the the know; know.

At this point it looks like the stock is trying to hold onto support in the $13.00 range but the MACD and RSI are not confirming a reversal of the selling just yet. Typically your first loss is your best loss. It sounds like you want to get off of this ride so follow your gut and see if there is a better point to get back on.

Happy Capitalism!

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!

Good day, Lou:

Teck Resources (TCK.B) has enjoyed a terrific run over the past couple of years, surging to nearly $60 from around $10. But do you think it can continue this torrid pace?

Kind regards,

Gerald

P.S.: Your readings of the charts and analysis is excellent! The Globe & Mail is lucky to have you on board.

Hi Lou,
What is your opinion on Pinetree Capital limited ?
Cheers !
Tony

Hi Tony,

Thanks for the assignment. I last covered Pinetree Capital Ltd. ( PNP TSX) on July 22, 2009 and since that time the stock has had lots of movement but unfortunately it is now trading at almost the same level as fourteen months ago. That’s not a bad thing it just means we have to treat this one as something other than a buy and hold stock. Lets consult the charts for a better understanding of how to harvest this tree.

The three year chart indicates that PNP broke below support and tested  the $1.00 level. The chart doesn’t suggest a buy and hold strategy which only rewards investors when the stock is moving higher. Trading PNP would have produced some nice returns for investors who took advantage of the moves in 2010.

The chart indicates that through most of the last  two years the stock held support at $1.45 which it breached in June of 2010. The stock pulled back to $1.00 where it found support and caught a bounce. The move higher  has the stock currently  finding resistance in the $2.o0 range. The swing from $2.00 to $1.00  and back is not something that should be ignored.

The six month chart tells the tale of a stock that hit a rock bottom in July of 2010 with the MACD signalling a reversal of the downtrend. The current advance seems to be losing some momentum with the RSI depicting an overbought situation in September and the MACD looking to be turning lower.

What is positive on the chart is that the stock is trading above its 50 and 200 day moving averages but it looks like PNP is taking a breather and could be ready to pull back.

Happy Capitalism!

Lou,

I have followed your advice with keen interest for years and appreciate your insights, I’ve learned a lot. You have been bullish on gold for some time now, it appears ready for a breakout by this fall.

I am interested in your views on International Tower Hills Mines (ITH TSX ) trading at $6.67 today . It has been moving sideways since about March/April with what appears to be an ascending flag. Or is a longer view (since November/December 2009) that it has a reverse head and shoulders?

It is spinning out 2 smaller properties but appears to have good reserves and is in a very friendly & stable geopolitical environment (Alaska).

Merci,

Dan  from Sudbury

Avec Plaisir Dan,

You are correct my friend. I am on record calling for  gold going to $2,000 by 2015. But lets be clear that is by no means a guarantee that it will!!  International Tower Hill Mines Ltd. (ITH TSX) has an interesting opportunity at their Livengood gold project in Alaska and they have spun out their other assets into Corvus Gold so they can focus on that project. Shareholders will get one share of the new ITH and 1/2 a share of Corvus for every share of ITH they own. ITH will then become a pure play on Livengood. Lets get to the charts

The three year chart tells the tale of a runner that is consolidating and building a base. What I see is a stock that has been trading in a range since October of 2009 and needs to break above resistance to reach new highs.

The move from the December 2008 lows provides a great example of a stock that doing exactly what you want.  It broke above resistance at $1.50, a golden cross formed in February of 2009 and from there it hugged and kissed its 50 day moving average all the way to the highs in December of 2009. Whats not to like?

The chart does seem to be generating a rising wedge pattern which is a bullish signal. The reverse head and shoulders you mentioned is not as well defined as you might want but its there.

The six month chart provides an example of the current action and the range its been trading in tightening with resistance at $7.60 and support at $6.60. Best thing that could happen is that it continue to trade in this range till new information hits the wires. Right now the MACD isn’t signalling a change in momentum to the upside so you’ll have to be patient. Gold enjoys a period of seasonal strength from mid July to early October ,according to seasonality expert Brooke Thackray, so the waiting may soon be over. 

ITH intends to drill 65,000 meters this year to further define the scale of the deposit with resource updates planned for Q3 and Q4.  Livengood is forecast to produce 459,000 ounces over a 12.6 year mine life. The drilling scheduled for this year could change that forecast significantly.

MAKE IT A HUGE WORLD CUP AND HAPPY CAPITALISM!

I want to ask your opinion on Fortune Minerals, FT on the Toronto Exchange. With two positive feasibility studies and exposure to gold, bismuth , cobalt and coal, is the market ignoring the long term potential of this company over the next five years?

John

Hi John,

Fortune Minerals Limited ( FT TSX)  is a development stage mining company that is advancing their NICO  cobalt, gold, bismuth deposit in the Northwest Territories and the Klappan anthracite coal deposit in British Columbia. The company intends to use their Klappan holdings to raise cash to cover the equity portion of the budget needed to bring NICO to production by 2012. BNP Paribas has been engaged to secure $200M – $250M in financing for NICO. Lets see what trends are in place.

The three year chart tells the tale of a stock that has broken below its 50 and 200 day moving averages and its trend line which are yellow flags. A nice advance has taken a breather. The RSI indicated that FT was overbought in January of this year and its been bleeding profits since then. The MACD also signalled a reversal at the same time. It did catch a bounce off the 200 day moving average in late March but it wasn’t enough to get FT back on the rails and headed higher.

The six month chart provides a tighter shot of the recent action. The volume has also thinned out considerably and as we know, you must have volume for a stock to climb.  I would tend to agree that the market might be overlooking the potential of FT but lets look at the roadblocks.

They need to find a joint venture partner, a buyer, or some other form of liquidity for the coal asset in order to fund the development of  the NICO deposit. They also need to secure loans to push NICO down the track. These both introduce additional risks to the operational and geological risk in the project.

These risk factors are also why you can buy shares in FT at these prices or perhaps lower. Many years ago Ted Carter taught me that when we are speculating on a mining stock treat each unknown as a question posed by investors. Right now the questions are when and how will FT finance its equity share of development and will BNP Paribas secure the loan package it needs.

The market response has been to sell until there are more details forthcoming.

Happy Capitalism!