With the GSR only just threatening to break down, I am buying back a couple miners I had profit-taken on, and I am buying them for right around where I sold them. Not going to be caught zigging when the whole sector may zag and catch everyone off guard.
Meanwhile, here is PEZ.to, which was highlighted a couple weeks ago in NFTRH98 when it was at 1.18. I have not sold a single share. This is the chart that was included, although it has obviously updated but good since it was highlighted.
If I get confirmation that we are entering a certain stage of the macro proceedings, NFTRH will do more stock highlights on things it considers of quality.
In short, NFTRH perceives risk in not being long the gold sector, which is the general
reason it has held a healthy contingent of core items despite what the analysis might say
for any given short-term period. As such, let’s take a look at PEZ.to, which has been
beaten down into what I believe have been nice buying opportunities of late. NFTRH
bought ‘too soon’ before the final decline at the end of June, then added at the lows in
July and then again Friday, on the downside re-test. The stock could decline further to
the 1.00 to 1.10 range as part of this test.
You would not believe how often I begin an analysis feeling one way and end it feeling
quite another. Well, I am a bottom feeder and I believe PEZ to be a quality gold
explorer. But after actually doing up the chart, I am left to wonder it if may have
downside to the channel bottom in the low .90’s.
First the technical concerns; RSI is trying to nudge through support and needs to reverse
upward. MACD is trigger down from somewhat over bought. Finally, the SMA 50 is
crossed below the 200. Okay fine. What about the bull case?
Slower TRIX confirms MACD by going zero plus (and no downward trigger), MACD is
now well above zero and price support can be expected at the noted lateral cluster if not
the SMA 50. Finally, downside volume is dwarfed by upside volume.
Speaking strictly as a bottom feeder experienced at buying what others have come to
despise, the balance of the technicals lean bullish for me personally. But I suppose I can
deal with a washout to the low .90’s if it should materialize (there is risk of something
negative in everything we do as speculators or investors my friends, everything).
So now we are left with the fundamentals of the company [Insert here the usual
boilerplate that I am not a fundamental stock analyst nor do I aspire to ever be such a
specialized creature]. So let’s look at the basics:
Per the Preliminary Assessment (complete PDF file attached for review) for the San
Antonio Project in Baja California Sur, Mexico:
• The project is located in an area with good infrastructure and labor resources
• The project is minable by heap leaching technology
• Mine life is projected at 9 years
• Exploration potential remains open with additional targets identified
• “Robust” financial returns at a gold price of $900
As with most mine development situations, there are risks of delays or problems with
land rights, environmental and other permits, etc. As a former investor in the former
Metallica Resources (MRB) and later, the company it was rolled into, New Gold (NGD),
I can attest to this personally. Importantly, the independent authors of this NI 43-101
Technical Report view the local populations as generally supportive of mine
Finally, I will note that friend and colleague Otto at IKN has determined the results of
this “preliminary” assessment to be favorable, perhaps putting a floor under the stock
price during any turbulence that may be experienced going forward. Among the caveats
noted however, are the $71m Cap/Ex number vs. current working capital of $10.5m (at
6/30/10). This is the exploration sector; there is risk, and there is reward. NFTRH adds
to this bottom feeder play and hopes for a reward one day.