Drill Results, Up and Down Stocks: The Norm
COMMENTARY—ProspectingJournal.com—While Greeks have been emptying their bank accounts and Euro leaders have been scratching their heads, precious metals exploration companies have been on the hunt for treasure. Though volatile, the gold price refuses to drop for too long as it marches back towards $1700 territory. Silver, on the other hand, is sitting in a stubborn position, though its long-term fundamentals remain sound.
Of course, gold may drop tomorrow—it’s hard to keep track of what is supposed to be a good day and bad day, after all. Yet with QE now being the talk of the town and summer exploration underway for the vast majority of juniors, energy is building towards what may possibly be the boom and bust season to end all seasons.
First up on the chopping block today was RJK Explorations (RJX: TSX.V). Like many juniors, RJK is attempting to poke at the ground until their well-established neighbour—Newgold—buys them out. The idea is simple: buy a land package next to a mid-tier or major; create an exploration Company and brand it with the usual bells and whistles; retain funding to drill; drill; and pray that you hit mineralization. Today’s news release announced drill results for the Company’s exploration program on its northeast properties near Newgold’s Blackwater deposit. “No significant gold or silver values were recorded in the sampling of these holes.” And the stock cut nearly in half to close at 9.5 cents. Cue hard liquor.
Yet, with money in the bank and further exploration planned, RJK still has a shot at hitting the sweet spot and joining the in-crowd. In fact, there are those who would argue that now is the time to buy in. That is, if you can stomach it.
For those who bought into Urastar Gold (URS: TSX.V), the Company shot up 17% on encouraging drill results from its El Jabali property in Mexico. Results included 24m of 3.32 g/t gold from 13.7 to 38.1 m. Like RJK, URS finds itself drilling near a big presence: Alamos Gold and Agnico Eagle. Yet unlike RJK, URS shareholders are breathing.
As the days and weeks roll in this summer and the drill cores arrive at various labs, the fate of precious metals explorers will unfold as a slow-motion thriller. In the meantime, popcorn-worthy events like the Greek election will keep nervous traders distracted and just may push the price of gold much, much higher.