It's the start of a new week, a new month, and I'm looking forward to seeing what will happen with GEL's shareprice. There's a conference coming up in NZ, which will give them some press. Not to mention their WKP results due "soon".
I read this in Equedia this morning - compare GEL-OGC or GEL-NEM/NMC.
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Many seem to think that once we reach an agreement on the debt ceiling, gold and silver will pull back some of its gains. While this may be true, I don't think the impact will be enough to justify worrying about a major decline in gold prices. Even with gold prices anywhere above $1500, or even $1400, there is a lot of money to be made. That's because even at those levels, the miners are extremely profitable.
Of course, there is still a major disconnect between gold prices and the price of gold miners. This is one question that I get asked a lot.
People don't understand gold miners. While it is riskier to own a gold mining stock than to own gold itself, the leverage far outweighs the risk in my opinion - especially at current valuations.
The real price of gold has risen dramatically which also means the profits of the major mining companies are rising very dramatically. While I like the big producers and own them in my portfolio, I am still much more bullish on the juniors or the new producing gold and silver mining companies.
Let me tell you why. The guys at the top, the Barricks, the Goldcorps and the Kinross' are having a hard time replacing the gold they produce every year. In order to keep shareholders happy and attract new investors, they're now having to pay out dividends for the first time. That's the problem with the majors. All shareholders care about is the next quarter. All they care about is increasing production. But when you increase production, you wear out your mine life and quickly need to find other sources to replace it. As a result, they have to go down the food chain and look for smaller companies to takeover.
That's where the new producers and juniors have an advantage.
The new producers and the juniors are the ones that are finding lots of new gold in the ground. That's where I think the real money is going to be made because the senior mining companies have to pay through their nose to add to their reserves. They have to pay five, six, and sometimes eight hundred dollars an ounce in the ground to buy out some of these companies. When you factor in the costs of the acquisition and the costs to take that gold out of the ground, there really isn't a lot of profits left for the big guys.
When you consider that many of the juniors are currently being valued at less than $50/oz of gold in the ground, the potential for gains can be astronomical. Even at a $500/oz buyout price, that's ten times your return on investment with $50/oz valuations. But that doesn't mean every company with gold in the ground is going to be bought out.
The companies that will be bought out are those with great projects in mine-friendly jurisdictions. They are the companies that are near, or along strike, of other current producing mines and deposits. They are the ones with large unproduced resources. Even if they don't get bought out, the possible fact that they could be considered as a takeover target could send shares through the roof.
The CHF promotional outfit has provided an article on GEL in June, posted to their site. These special mentions don't come up often, and some of the other data there is out of date. I've only just remembered to have a look there. It's yet another place where you can find a bit of news about GEL.
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Science-Driven Exploration Leads Glass Earth Gold to Major Discovery at WKP West
A field trip to New Zealand has confirmed that one of Glass Earth Gold Limited's (TSXV, NZAX: GEL) projects has the potential to deliver the goods for investors, CHF's Director of Operation, Jeanny So said this week. A detailed review of the WKP West project in Waihi with Glass Earth Gold's joint venture partner Newmont verified the enormous potential of this previously understated project.
The WKP prospect is a 2 km mineralised alteration zone hosted in scrubland and regenerated bush 10 km north of Newmont's own Martha and Favona mines (10 million oz gold production to date) and 5 km northeast of the Golden Cross mine (634,000 oz gold production in the 1990s). Newmont has a 65:35% joint venture with Glass Earth and on the drill core table Jeanny So was shown the results from the WKP 27 drill hole. The several hundred metres of hard-silicified core sample is further evidence of broad widths of gold mineralised rock, potentially hosting more than one million tons of gold.
This is not just an isolated drill hole, but follows up from four previous drill holes in the area, each returning broad widths of potentially economic mineralisation (consistently greater than 150 metres with narrow high-grade zones in the 1 oz to 2 oz range).
WKP 27 was a 200 m step-out to the southwest, and provided promising confirmation of these significant intersections with results of 1.4 m @ 30.7 g/t Au and 77.7 g/t Ag, within 152.4 m @ 1.16 g/t Au and 2.22 g/t Ag. With WKP 27 indicating strike continuity of 600 m, and results from further step-out holes pending, the programme continues to suggest open-along-strike potential for several kms southwest.
Results from a completed fifth drill hole are now being analysed and a sixth hole drilling into a new adjacent system is nearing completion.
CSAMT geophysical survey is working well and is generating many more drill targets. An additional three CSAMT lines will help target the next round of drilling. The WKP West discovery is a direct result of Glass Earth Gold's targeting process, and significantly validates this scientific approach to gold exploration.
With results from drill holes WKP 28 and 29 eagerly anticipated and regional exploration on several other high ranking targets continuing, Glass Earth Gold is enjoying a positive and proactive joint venture in the Hauraki region. This is underpinning the Company's wider ambitions and activity throughout New Zealand and investors should look out for more news to come in the near future.
I think GEL are trying to say (or imply) in their news releases, that WKP and the Golden Cross Mine might be interlinked with mineralisation. Golden Cross is to the South-West of WKP, also tucked away up in the hills.
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Drill hole geochemistry at Wharekirauponga, Golden Cross and Ohakuri epithermal gold prospects, New Zealand
Anthony Christie 1, Richard Carver2, Joel Thomas1, Al McOnie3
1GNS Science, New Zealand, 2GC Xplore, Australia, 3Consulting Geologist, New Zealand
Exploration drill hole geochemistry has been compiled in Leapfrog 3D databases for three epithermal Au-Ag prospects in the North Island of New Zealand: Wharekirauponga (WKP) and Golden Cross in the Hauraki Goldfield, and Ohakuri in the Taupo Volcanic Zone. Host rocks are predominantly rhyolite for WKP, andesite and dacite for Golden Cross and rhyolitic ignimbrite for Ohakuri. All three exhibit anomalous As and Sb associated with the Au-Ag mineralisation, but concentrations of Cu, Pb and Zn are generally at background levels. Gold to silver ratios average 0.22 at WKP and 0.25 at Golden Cross, but are much lower at 0.05 at Ohakuri. The Au:Ag ratio generally increases with increasing Au grade. This effect is most pronounced at WKP, less so at Golden Cross, and very mild at Ohakuri. Gold concentrations peak in specific depth ranges: between RL 30 m and 130 m at WKP, between RL 125 m and 200 m at Golden Cross, and between RL 220 m and 260 m at Ohakuri, defining vertical Au zones. Antimony and As peak above and below the Au zones at WKP and Golden Cross, but at the top of the gold zone at Ohakuri.
http://www.glassearthgold.com/i/pdf/...2011_FINAL.pdf
http://www.nzpam.govt.nz/cms/news/20...archterm=glass