FIRST QUARTER 2012 & RECENT HIGHLIGHTS

Financials

• Revenue of $24.4 million.
• Net income of $7.3 million, $0.08 per basic share.
• Cash flows from operating activities before changes in non-cash operating working capital and other items of $8.1 million.
• Cash on hand was $17.8 million at March 31, 2012.

Gold Production and Cost

• Ounces loaded to pads: 44,169 gold ounces and 861,644 silver ounces.
  • El Castillo: 35,283 ounces (up 25% from Q1 2011); La Colorada: 8,886 gold ounces and 861,644 silver ounces
• Production of 20,884 gold ounces in the first quarter of 2012.
  • El Castillo: 17,799 gold ounces
  • La Colorada: 3,085 gold ounces and 17,182 silver ounces
• Cash cost per gold ounce sold – $639.

Operational Improvements:

• Cash expenditures of $12.3 million on mineral properties, plant and equipment.
• The Company’s El Castillo mining contractor expanded the mining fleet to 18 trucks (100 tonne capacity).
• Leach pad 7A west side pad construction initiated at El Castillo and will be commissioned in the second quarter.

Exploration:

• El Castillo - Three additional drill core holes were sent for testing during the first quarter of 2012.
• La Colorada – 14,860 metres from 54 drill holes were completed during the first quarter. Three drills continue work on a planned 35,000 metre drill program.
• San Antonio - Completed 3,285 metres from 14 drill holes during the first quarter.

This press release should be read in conjunction with the Company’s unaudited interim condensed consolidated financial statements for the first quarter ended March 31, 2012 and associated management’s discussion and analysis (“MD&A”) which are available from the Company’s website, www.argonautgoldinc.com, in the “Investors” section under “Financial Filings”, and under the Company’s profile on SEDAR at www.sedar.com.

Financial Results – First Quarter 2012

During the first quarter of 2012, revenue was $24.4 million from gold sales of 14,498 ounces compared to $25.7 million from sales of 18,461 ounces in the first quarter of 2011. Cost of sales was $12.1 million for the quarter compared to $14.6 million for the first quarter of 2011. Cash cost per gold ounce sold was $639 compared to $590 in the same period of 2011. (Cash cost per gold ounce sold is a non-IFRS measure, see note below).

During the first quarter of 2012, gross profit was $12.3 million compared to $11.0 million gross profit in the first quarter of 2011. During the quarter, profit from operations was $9.7 million compared to $9.1 million for 2011. Net income for the quarter was $7.3 million or $0.08 per basic share versus $5.9 million or $0.07 per basic share in 2011.

Cash on hand decreased from $34.9 million at December 31, 2011 to $17.8 million. Capital expenditures in the first quarter were $12.3 million primarily as a result of expanding operations at the El Castillo and La Colorada mines. The 2012 capital expenditures and exploration programs for Argonaut Gold includes $38-$48 million at El Castillo, La Colorada and San Antonio which includes pre-production stripping at La Colorada of approximately $6 million. Cash flow from operations before changes in non-cash operating working capital and other items was $8.1 million during the quarter, compared to $9.3 million for the first quarter of 2011. The cash flow used in operating activities in the quarter was $5.3 million after taking into account the buildup of inventory and other working capital.

CEO Commentary

Mr. Pete Dougherty, Argonaut’s President and CEO states: “The Company continues to benefit from the gold production and cash generation at El Castillo, which has enabled us to fund construction of the La Colorada mine. The developments at La Colorada since acquiring the project have been quite impressive. The mine has been put back into production less than one year after finalizing the acquisition. The startup of gold production at La Colorada will provide growth to the Company’s production profile in 2012 through reprocessing the previous run-of-mine material. Expansion of the processing facility continues with final construction taking place on the desorption and recovery plant. 2012 is an important step in growth for the La Colorada mine. While much has been accomplished, there is much more work to be done with important milestones expected to be achieved in the second and third quarters.”

El Castillo Summary of Production Results

Total tonnes mined increased by 25% for the first quarter 2012 over first quarter 2011. The total ounces loaded to the pad were 35,283 in the first quarter of 2012; this represents a 25% increase over the first quarter of 2011.

The strip ratio of waste to ore was 0.96 compared to a strip ratio of 0.88 in the first quarter of 2011.

2012 guidance at El Castillo is for 75,000 to 80,000 ounces at a cash cost between $625 and $650 per gold ounce.

La Colorada Summary of Production Results

Non-commercial mining at La Colorada began in the first quarter of 2012. Initially, production generated at La Colorada will come from reprocessing of run-of-mine (“ROM”) material on site. 2012 guidance at La Colorada is for production of 13,000-17,000 ounces at a cash cost between $625 and $650 per ounce.

There was no inventory at La Colorada prior to the first quarter of 2012.

Looking Forward – 2012:

The Company plans on investing between $38 million and $48 million on capital expenditures and exploration initiatives in 2012.  These expenditures are expected to include the following:

• $26-34 million of capital expenditure investments
  • El Castillo – Capital expenditures are primarily for expanding West heap leach pad capacity and operational improvements including a conveying and stacking system.
  • La Colorada – Capital expenditures are primarily for new infrastructure including crushing, screening and conveying, heap leach pad construction, a gold recovery plant and refinery, and other infrastructure.  Additional expenditures are expected to include land acquisition, and permitting.
  • San Antonio – Capital expenditures are allocated for engineering and environmental studies, land and water rights purchases, permitting for the project and infrastructure improvements.
• $5-6 million for La Colorada pre-production stripping costs
• $7-8 million exploration program
• El Castillo – 1,400 metre core drilling program to collect mineralized sulphide ore for further metallurgical test work.
• La Colorada – 35,000 metre drill program to expand resource areas and test multiple exploration targets within the Company’s land position is in progress.  Planned drilling on mine dumps and stockpiles was completed during the quarter.  The main resource targets for 2012 are El Creston and Veta Madre.
• San Antonio – 10,500 metre drill program to test multiple exploration targets and complete condemnation drilling in areas of planned processing facilities is ongoing.

Non-IFRS Measures

The Company included the non-IFRS measure “Cash cost per gold ounce sold” in this press release to supplement its financial statements which are presented in accordance with International Financial Reporting Standards (“IFRS”). Cash cost per gold ounce sold is equal to cost of sales less silver sales divided by gold ounces sold. The Company believes that this measure provides investors with an improved ability to evaluate the performance of the Company. Non-IFRS measures do not have any standardized meaning prescribed under IFRS. Therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Please see the MD&A for full disclosure on non-IFRS measures.

Technical Information and Mineral Properties Reports

The technical information contained in this document has been prepared under supervision of, and reviewed and approved by Mr. Thomas H. Burkhart, Argonaut’s Vice President of Exploration, and a qualified person as defined by National Instrument 43-101 (“NI 43-101″). For further information on the Company’s properties please see the reports as listed below on the Company’s website or on www.sedar.com:

About Argonaut Gold

Argonaut is a Canadian gold company engaged in exploration, mine development and production activities. Its primary assets are the production-stage El Castillo Mine in the State of Durango, Mexico, the La Colorada Mine in the State of Sonora, Mexico, the advanced exploration stage San Antonio project in the State of Baja California Sur, Mexico, and several exploration stage projects, all of which are located in Mexico.

Creating Value Beyond Gold

Cautionary Note Regarding Forward-looking Statements

This news release contains forward-looking statements that involve risks and uncertainties that could cause results to differ materially from management’s current expectations. Actual results may differ materially due to a number of factors. Except as required by law, Argonaut Gold Inc. assumes no obligation to update the forward-looking information contained in this news release.

Contact Information
Argonaut Gold Inc.
Nichole Cowles
Investor Relations Manager
(775) 284-4422 x 101
nichole.cowles@argonautgoldinc.com
www.argonautgoldinc.com

We begin with a daily chart of Gold which shows its daily closing prices and a volatility indicator. The percentage figure refers to the percent bullish reading from the daily sentiment index. As we noted recently, each bottom in Gold (except 2008) has come during a period of low and declining volatility. Volatility is currently at a 9-month low while only 7% of traders are bullish on Gold.

Next, let’s take a look at the current Commitment of Traders Report (COT) for Gold which shows the commercial short position and open interest at the bottom. The current commercial short position has reached a 3-year low while open interest recently touched a two and a half year low.

Moving to Silver, we see the metal is nearing significant support at $27. Silver closed at $28.93 and has a bit of room to fall before testing $27 and the 600-day moving average, which has been an important pivot point since late 2008. The current daily sentiment index is 16%. We think, with another day or two of weakness in Silver, the daily sentiment index would decline to single digits. We also want to note that $26 is the 50% retracement of the entire bull market.

Silver, unlike Gold, has seen more interest recently as open interest has increased since late last year. However, open interest would have to rise 40% to reach the old high. Commercial traders are net short 17.9K contracts, which is a within a whisker of the 10-year low which was reached at the end of last December.

We remain encouraged that a bottom is developing in the mining equities. Below we show a weekly chart of GDX. Last week GDX bounced from $41, which is the 50% retracement from the 2008 low to 2011 high. $41 also marks the strongest pivot point since $52. Furthermore, GDX’s volume was very close to a 3-year high. Note how strong volume has market past bottoms.

Breadth indicators suggest the gold stocks are near a major bottom. The chart below is from SentimenTrader.com. The McClellan Summation index is near levels last seen at bottoms in 2008 and 2006. The bottom row shows the percentage of stocks in the sector that closed above their 200-day moving average. The figure has been at zero percent for more than a month. The last time that happened? 2008.

The next chart, also from SentimenTrader.com, shows the assets in the Rydex Precious Metals Fund. Since the late 2010 peak, the fund has dropped by 40% while the assets in the fund have declined by 70%! Interestingly, the assets in the fund declined by 70% in 2008. The difference is the fund’s price declined by 73%. In other words, we are seeing the same amount of outflows as in 2008 yet the market has declined by 40% and not 73%.

While technical analysis and sentiment indicators make a convincing case that a major bottom is near, it is important to note the fundamental considerations which support our thesis. In recent editorials we’ve noted the trend of weakening data in the US. Obviously, should it continue into the summer, then it would raise the odds of Fed action. Shifting east, Europe is headed for a recession and monetization is badly needed first to prevent debt contagion and second to prevent economic contagion. Germany, the lone hold out against monetization, indicated last week it might budge a little bit. Continuing eastward, China cut the reserve ratio for its banks and is likely to do so again reports the Wall Street Journal. Also, India and Australia recently cut interest rates.

Consider these emerging fundamentals and then consider our technical analysis. Technicals always lead fundamentals and markets tend to look six to nine months into the future. We are not predicting imminent action from the Fed or imminent money printing from the ECB. However, we are noting the emerging positive developments which will drive precious metals higher into 2013. Policy from the east is shifting towards easy. Europe will have to embark on some major money printing likely by the end of the summer. Finally, continued weakness in US data along with the strength in US Bonds and the US Dollar will facilitate the environment for the next round of Fed action.

We anticipate a bottom this month to be followed by a higher low in July or August. The fundamentals should become more clear by the end of the summer and would drive the precious metals complex much higher during the seasonally strong period. Remember, major bottoms take some time to develop. We believe a bottom is at hand and that is why last week we began to scale into some positions. If you’d be interested in professional guidance then we invite you to learn more about our service.   

Good Luck!

Jordan Roy-Byrne, CMT
Jordan@TheDailyGold.com

2012 FIRST QUARTER HIGHLIGHTS

• Earnings per Share (basic) amounted to $0.25, representing a 5% increase from Q1 2011
• Cash Flow per share (non-GAAP) of $0.35, unchanged from Q1 2011
• Adjusted Earnings per Share (non-GAAP) amounted to $0.26 after removing an unrealized loss on silver futures
• Gross Revenue of $57.8 million showing a 5% increase from Q1 2011
• Net Earnings after Taxes amounted to $26.4 million, a 10% increase from Q1 2011
• Mine Operating Earnings totaling $35.7 million
• Total Production Cost per Tonne was $29.24, a decrease of 3% from Q1 2011
• Total Cash Cost was $8.96 per ounce, up 8% compared to Q1 2011
• Silver ounces produced increased by 3% to 1,826,803 compared to 1,769,208 ounces in Q1 2011
• Cash and Cash Equivalents now stand at $85.3 million and Working Capital of $108.3 million
• In addition to Cash, First Majestic was carrying 596,520 PSLV (Sprott Physical Silver Trust) units at quarter end

2012 FIRST QUARTER HIGHLIGHTS TABLE

(1) Payable Silver Ounces Produced is equivalent to Silver Ounces Produced less metal deductions from smelters and refineries.
(2) The Company reports non-GAAP measures which include Total Cash Costs per Ounce, Total Production Cost per Tonne, Average Revenue per Payable Equivalent Ounces Sold and Cash Flow Per Share Before Movements in Working Capital. These measures are widely used in the mining industry as a benchmark for performance, but do not have a standardized meaning and may differ from methods used by other companies with similar descriptions. See Reconciliation to IFRS on pages 13 and 14.

Keith Neumeyer, President & CEO of First Majestic, stated, “The first quarter was another successful period for the Company as it continues its growth objective. Our strong financial position ensures the timely construction of our Del Toro mine with the goal of initial production scheduled in the fourth quarter of this year. Also, an updated NI 43-101 and Preliminary Economic Assessment (PEA) on Del Toro is scheduled to be released in the coming weeks.”

“While cost inflation continues to be a strong headwind for the mining industry, First Majestic’s operational team has done an exceptional job maintaining costs. On a year-over-year basis, total production costs have been reduced by 3% to an industry-leading $29.24 per tonne while many of our peers have experienced cost increases ranging between 25% to 50% per tonne. First Majestic remains on track to meet its production guidance for 2012 and management plans to provide further guidance regarding the Silvermex acquisition once the deal closes over the coming months.”

FINANCIAL HIGHLIGHTS

• The Company generated revenues of $57.8 million for the quarter ended March 31, 2012, an increase of $2.5 million or 5% compared to $55.3 million in the first quarter of 2011 based on higher production totals compared with the first quarter 2011.
• Recognized mine operating earnings of $35.7 million, which was consistent with $35.6 million in the first quarter of 2011.
• Net earnings after taxes for the three months ended March 31, 2012 were $26.4 million compared to $23.9 million in the first quarter of 2011, an increase of 10%.
• Earnings per share (“EPS”) for the three months ended March 31, 2012 was $0.25, an increase of 5% compared to $0.24 for the three months ended March 31, 2011.
• During the quarter, the Company converted the unrealized loss of $4.2 million related to the prior quarter’s one million silver ounce long position into gains of $5.475 million. At the end of the first quarter, the Company was long 500,000 ounces at an average price of $34.063 per ounce which was marked to market at $32.484 at March 31, 2012 resulting in an unrealized loss of $0.8 million.
• Net earnings for the quarter ended March 31, 2012 reflects the unrealized loss on silver futures of $0.8 million. Adjusted EPS (a non-GAAP measure) after removing the unrealized loss on silver futures was $0.26 for the quarter.
• In January 2012, the Company purchased 757,500 trust units of Sprott Physical Silver Trust (PSLV) at $13.20 per unit for a total cost of $9,999,000. During Q1 2012, the Company also sold 160,980 trust units at an average price of $15.45 per unit for total proceeds of $2.5 million and realized a $362,677 gain on the sale. At March 31, 2012, there was an unrealized gain of $255,601 recognized related to the remaining 596,520 trust units, revalued at $13.63 per unit.
• Cash flows from operations before movements in non-cash working capital and income taxes in the first quarter of 2012 increased by 6% to $37.1 million ($0.35 per share) compared to $35.0 million ($0.35 per share) in first quarter of 2011.
• Cash cost per ounce (a non-GAAP measure) for the first quarter of 2012 was $8.96, an increase of 8% compared to $8.26 in the first quarter of 2011. Cash cost was higher primarily due to lower grades and recoveries at the La Encantada mine in the first quarter. Since installing a new ball mill in mid-April, recoveries have been improving due to a higher proportion of fresh ore being processed.
• Production costs per tonne decreased 3% to $29.24 per tonne compared to $30.04 per tonne in the first quarter of 2011, reflecting production cost decreases at the La Parrilla mine associated with its increased scale of production.
• The new 1,000 tpd cyanidation circuit at the La Parrilla Silver Mine was commissioned effective March 1, 2012. The new parallel 1,000 tpd flotation and 1,000 tpd cyanidation circuits (2,000 tpd combined), which replaced the old 850 tpd mill, are now fully operational and were operating at an average throughput of 1,850 tpd in the month of March 2012.

IN SUMMARY

First Majestic has experienced another solid quarter of earnings and cash flow due in part to an increase in total production to 2,007,219 silver equivalent ounces, an increase of 10% compared to 1,825,366 silver equivalent ounces produced in the first quarter of 2011. Silver production remained robust during the first quarter with 1,826,803 ounces of silver being produced, representing an increase of 3% compared to 1,769,208 ounces of silver produced in the first quarter of 2011.

At the La Parrilla Silver Mine, the recently expanded 1,000 tpd oxide circuit was commissioned on March 1, 2012 allowing for increases in production of silver doré bars. The second quarter of 2012 will mark the first full quarter of commercial operation for both expanded production circuits (1,000 tpd flotation + 1,000 tpd cyanidation). As a result, cash costs per ounce at La Parrilla are expected to decrease due to the increased scale of production to 2,000 tpd, and a higher portion of silver doré which has a lower refining cost compared to concentrates.

At the La Encantada Silver Mine, the recent installation of the third ball mill is showing a positive effect on silver recoveries. The third ball mill became operational on April 19, 2012 with the objective of increasing recoveries and average head grades by enabling increases in the rate of production of fresh mine ore. Due to ore stockpiling over the past few months and successful developments in the mine, management has decided to bring the fresh ore production component to 1,800 tpd compared with the previous guidance of 1,500 tpd. In addition, the metallurgical testing continues with final assessment of economics. The mill construction progress at the Company’s exciting Del Toro Silver Mine remains on track for initial production in the fourth quarter of 2012.

First Majestic is a producing silver company focused on silver production in México and is aggressively pursuing its business plan of becoming a senior silver producer through the development of its existing mineral property assets and the pursuit through acquisition of additional mineral assets which contribute to the Company achieving its aggressive corporate growth objectives.

FOR FURTHER INFORMATION contact info@firstmajestic.com, visit our website at www.firstmajestic.com or call our toll free number 1.866.529.2807.

FIRST MAJESTIC SILVER CORP.

“signed”
Keith Neumeyer, President & CEO

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This news release includes certain “Forward-Looking Statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. When used in this news release, the words “anticipate”, “believe”, “estimate”, “expect”, “target”, “plan”, “forecast”, “may”, “schedule” and similar words or expressions, identify forward-looking statements or information. These forward-looking statements or information relate to, among other things: the price of silver and other metals; the accuracy of mineral reserve and resource estimates and estimates of future production and costs of production at our properties; estimated production rates for silver and other payable metals produced by us, the estimated cost of development of our development projects; the effects of laws, regulations and government policies on our operations, including, without limitation, the laws in Mexico which currently have significant restrictions related to mining; obtaining or maintaining necessary permits, licences and approvals from government authorities; and continued access to necessary infrastructure, including, without limitation, access to power, land, water and roads to carry on activities as planned.

Investors are cautioned against attributing undue certainty to forward-looking statements or information. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update these forward-looking statements or information to reflect changes in assumptions or changes in circumstances or any other events affecting such statements or information, other than as required by applicable law.

Drilling in 2011 tested the extent of Atlanta Fault zone mineralization and also discovered porphyry-hosted gold mineralization to the west of the historic Atlanta open pit.  The porphyry-hosted mineralization is distinctly different from the gold-silver mineralization within the jasperoid breccias of the Atlanta Fault previously mined.  After the discovery was made, drilling was redirected to explore the extent of the porphyry intrusive and determine the continuity of gold mineralization north of the discovery hole.

Assay results from two of the remaining holes were significant.  Hole DHRC-11-RCN04 tested the central portion of the Atlanta porphyry.  Previous assay results have indicated that gold mineralization occurs within both the northern and southern portions of the intrusive.  This is one of several holes drilled to test the continuity of the mineralization.

Hole DHRC-11-011R is the southernmost drill hole to intersect gold mineralization within the Atlanta shear zone.  This hole was drilled due south at an inclination of -60 degrees.  The true thickness of the mineralized intercept has not been determined.

Robert Dinning, CEO commented, “Now that we have received all of the remaining assays from the 2011 program, we can turn our focus to our plans for 2012.  These include our next rounds of definition and exploration drilling as well creating a new NI 43-101 compliant resource estimate.” Table showing new significant intercepts from 2011 Atlanta drill program. The Company considers these results highly significant but also cautions that they are preliminary in nature and not conclusive evidence of the likelihood of the occurrence of an economic mineral deposit.  Insufficient information is available to determine the true width of these drill intercepts.

The QA/QC program employed for this drill program includes monitoring the results of blind duplicate samples inserted into the sample stream at a frequency of 2%, certified standard reference samples inserted at a frequency of 1% to 5%, and blank samples inserted at a frequency of at least 1%.  Geochemical analyses were done at the ALS Minerals laboratory in Elko Nevada, which is an independent certified laboratory (ISO 9001:2008).  Gold was determined by fire assay with a gravimetric finish.

Drill hole location maps, cross sections and tables of results are also available on the Meadow Bay Gold website atwww.meadowbaygold.com.  Full details of the Atlanta project and the 2011 drill program are given in the last Technical Report filed at www.sedar.com.

Dr. Matt Ball, P.Geo., a Qualified Person as defined by National Instrument 43-101 and independent consultant to the Company, has reviewed the technical aspects of this press release.

Meadow Bay Gold is focused on developing the former producing Atlanta Gold Mine in Nevada, USA. For further information please contact: Meadow Bay Gold Corporation
Robert Dinning, Chairman and CEO

Charles William Reed, Director
604-641-4450

Danny Gravelle, Investor Relations
Goal Capital
949-481-5396

  ]]> http://thedailygold.com/meadow-bay-drills-21-34-m-of-2-77-gt-au-at-atlanta-2/feed/ 0 http://thedailygold.com/argonaut-gold-provides-exploration-update-on-san-antonio-and-la-colorada/ http://thedailygold.com/argonaut-gold-provides-exploration-update-on-san-antonio-and-la-colorada/#comments Tue, 08 May 2012 16:38:30 +0000 Jordan Roy-Byrne, CMT http://thedailygold.com/?p=15254 Argonaut Gold Inc. (TSX:AR) (“Argonaut” or the “Company”) is pleased to report on exploration results at its San Antonio project in Baja California Sur, Mexico and the La Colorada project in Sonora, Mexico.

2012 Exploration Update:

• La Colorada
  • 35,962 meters for 244 holes completed since the last update in October of 2011
• San Antonio
  • 20,600 meters for 130 holes completed since the last update in May of 2011
• El Castillo
  • Minimum 1,000 meter Core Drill Program is estimated to be completed in early May with mineralized sulfide intervals shipped to Kappas, Cassiday & Associates (“KCA”) in Reno for metallurgical testing.

See the Full Release Here

The results from the underground sampling program will be used in conjunction with previously released surface drill results in planning mine development and preparing an updated NI-43-101 compliant resource estimate. The Company expects to commence an underground drilling program in the near future for further exploration and definition of vein structures below level 2.

The following tables are the underground chip sampling results from the Level 2 Drift and Raises on the Treasure Mountain Mine.  The samples were taken at 5m intervals throughout the drift and raises.  Each set of three samples (i.e. P2C1-1, P2C1-2, P2C1-3) represent one sample location at each 5m interval. Each sample location includes footwall rock, vein and hangingwall rock.

• Vein sample assays were up to 4242 g/tonne Ag (123.7 OZ/ton Ag), 2.15%Pb, 10.47% Zn,  and 6.09% Mn over .6m in sample P2C49-2 on Level 2.
• Vein sample assays were up to 8739 g/tonne Ag (254.8 OZ/ton Ag), 44.32%Pb, 19.67%Zn, 1.34% Mn over .34m in sample P2SR-1-2 and 8496 g/tonne Ag (247.7 OZ/ton Ag), 42.78% Pb, 11.58%Zn, 1.96%Mn over .26m in sample P2SR-5-2 in the sub-drift.

The sub-drift is approximately 22m below the level 1 drift where current mining operations are underway. The sub-drift was driven in 1988 during the mine development to explore for parallel structures between Levels 1 and 2. The samples are approximately 5m into the footwall of the Raise.

Click here to view sample results

All samples are delivered by truck to Acme Analytical Laboratories’ facility in Vancouver, BC, where the sample is crushed, split and pulverized to -200 mesh. A 0.5 gram portion of the pulp is then digested in hot aqua regia and analyzed for 31 elements by ICP MS method. Over limits for Ag are by fire assay with gravimetric finish, and over limits for Pb, Zn and Mn are by multi-acid digestion and ICP ES finish.

Technical information in this news release has been reviewed and approved by Jim Cuttle P.Geo a Qualified Person as defined in NI 43-101. For more information see the Company’s technical report entitled “Technical Report, Project Update, Treasure Mountain Property” dated June 15, 2011, available on SEDAR at www.sedar.com.

About Huldra

Huldra is currently working on plans to put its Treasure Mountain Project, located 3 hours east of Vancouver, BC, into development, subject to permitting and financing utilizing an offsite mill being constructed at the Company’s property outside of Merritt, BC. The Company is also actively assessing other opportunities for acquisition and development.

On behalf of the Board of Directors

“Ryan Sharp”
Ryan Sharp, MBA
President, CEO & Director

For additional information contact:
Ryan Sharp at 604-647-0142
ryan@huldrasilver.com
IR@huldrasilver.com

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE.

Disclaimer for Forward-Looking Information

In the chart below we plot the S&P 500 and the Nasdaq with the Nasdaq/S&P ratio in the middle. Both markets made marginal highs several years after the 1987 crash and both markets corrected significantly in 1990. The Nasdaq’s correction was much deeper but it soon would begin a period of strong outperformance that lasted for nine years.

Presently, we some similarities. Commodities made a marginal high in 2011, several years after the 2008 crash. Now, Commodities are correcting. Will Commodities retrace most of their recovery (ala the Nasdaq) or will they endure something closer to the S&P?

The CCI has corrected 22% over 13 months. This has been enough to bring the Stochastics to a major low in-line with 2001 and 2008. The RSI indicator is at 45 which is very close to the 2008 low at 40.

In looking at price supports, we see a confluence of retracements close to 500. We should also note that the 38% retracement at which the S&P bottomed in 1990 is also near 500. The 40-month moving average, which provided resistance in 2009 and support in 2010 is currently at 529 and 3% below current levels. The 80-Month moving average which provided resistance in 2000 and support at 2008, is at 476 which is 12% below current levels.

Sentiment indicators also suggest that commodities are near a major bottom. Below we show SentimenTrader.com’s Master COT Indicator. This indicator is an aggregate of speculative/commercial positions. Essentially, the higher the indicator the greater amount of speculative long positions. Currently, the Master COT is well below its 2008 and 2011 highs. From a contrarian standpoint, the Master COT is supportive of the bullish case. However, we’d note that the indicator would have to fall further to reach a true bearish extreme.

Our work leads us to believe that commodities are on the cusp of a major low. We personally see another 5-10% downside before the major low is reached. Our technical analysis and sentiment indicators support this view. Fundamentally, Europe is headed for recession while the US is certainly slowing down. Economic data is coming in worse than expected. A continuance of that combined with more problems in the Euro zone, while painful in the short-term will induce more action from the various central banks. This is what the Gold and commodity markets are waiting for and what will be the next trigger for the next cyclical bull market in the resource sector. Learn more about our premium service here.

Jordan Roy-Byrne, CMT
The Daily Gold

Consider the average recommended gold market exposure among a subset of the shortest-term gold market timers tracked by the Hulbert Financial Digest (as measured by the Hulbert Gold Newsletter Sentiment Index, or HGNSI).

When I wrote about gold sentiment two months ago, this average stood at 16.7%. Today, in contrast, it is at minus 14.8%, which means that the average gold timer is now allocating about a seventh of his gold-oriented portfolio to shorting the market.

That’s a relatively aggressive bet on lower gold prices.

In fact, except for a couple of days in late March when the HGNSI dropped marginally lower to minus 15.7%, its current level is the lowest it’s been since March 2009, more than three years ago.

And that’s really quite amazing, given that gold at that time was trading only slightly above $900 an ounce.

In other words, gold traders today are just as pessimistic about gold’s prospects as they were when gold was trading for more than $700 less. No wonder contrarians are impressed by the wall of worry that exists in the gold arena these days.

How long must traders wait for gold to begin to respond to these positive sentiment conditions? Assuming the market responds the way it typically has done in the past, the wait could be as much as several more weeks.

I say that because of econometric tests I have run on the HGNSI over the last three decades. Its greatest explanatory power in predicting the market’s subsequent direction existed at the three-month horizon.

First, the sector had a terrific run that would have to be corrected. From late 2008 until the end of 2010, GDX advanced more than 4-fold from $15 to $64. Silver stocks, juniors and mid-tiers had a larger run that lasted nearly 30 months. It takes not months but quarters to correct that type of move. Moreover, GDX has yet to reach the 50% retracement at $41. A 38% or 50% retracement is routine. Furthermore, we’ve shown in recent writings that the current correction in percentage terms is in-line with corrections in past years.

A second reason for poor performance from gold stocks is the strong stock market, which provides competition. If conventional investments perform well then there is less mainstream demand for Gold and gold stocks. After the announcement of QE 2 in August 2010, the large gold stocks advanced for only four months before reaching a peak. Since the announcement, the S&P 500 is up more than 30%. The S&P 500 has had a great run in the past seven months while gold stocks have really struggled. The best general market environment for gold stocks is not one of extreme strength or weakness but one of slight strength or neutrality.

Third, mining is a difficult business in which operational difficulties are not random. Sure, energy costs and overall costs are higher but margins for the able producers are at record highs. The great companies are performing well in this environment, as they should be. The struggles of so many companies within a highly profitable environment is a testament to the overall difficulty of the mining business.

Lastly, we believe the lack of performance can also be attributed to the wall of worry phase of a bull market. Current valuations are a reflection of the wall of worry phase. There are three phases in a bull market. Valuations increase at the start (stealth phase) and at the end (participation phase) but not during the middle, wall of worry phase. Presently, the gold stocks remain in the wall of worry phase. In the previous bull market, the wall of worry phase lasted five years.

Below we plot the Barron’s Gold Mining Index (blue) and the current HUI Gold Bugs Index (HUI). We’ve touched on this in previous writings, but there are noticeable similarities. The HUI had a sharper initial correction but rebounded to marginal new highs. The HUI now appears on its way to forming its first major bottom since 2008. When the BGMI bottomed in late 1971 it had effectively made no progress in six years. The BGMI is currently only marginally above its peak in 2006.

This chart is not to imply that the HUI will follow the exact same path. More so, it is to illustrate the similarities between both markets as they endured the wall of worry period. In previous writings we showed how other bull markets (Nasdaq, Japan) endured their own wall of worry periods before exploding to new highs and then higher highs. From its low in 1971, the BGMI would rise roughly 12 fold in the last nine years of its bull market.

With the current low valuations and extreme negative sentiment combined with the strengthening real price of Gold (implies future margin increases), we have little worry that this sector will explode in the coming years. The last six months have been a difficult period but it is closer to the end than the start of said period. With all of this in mind, it is wise to develop a game plan and a stock list. Scaling into positions (near support levels) over the next several months would be a wise move. For subscribers, we have updated our watch lists and prepared support levels to watch for a potential major bottom. If you’d be interested in professional guidance then we invite you to learn more about our service.  

Good Luck!

Jordan Roy-Byrne, CMT
Jordan@TheDailyGold.com

The real price of Gold has begun to turn up. From top to bottom we plot: Gold/Oil, Gold/Steel, Gold/Silver and Gold/S&P. Gold has already turned up against Commodities and it may have already bottomed relative to stocks.