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Dear
Subscribers,
Louis
is back from NW Ontario, where he just visited Bayfield Ventures, even as they
were correcting their new 81-meter intercept from 2.7 to 5.1 g/t gold. As
promised, here are his notes and recommendations, with which we
concur.
NOTES
FROM THE FIELD: Bayfield Gets Real
Bayfield Ventures
(V.BYV, C$1.16, 40.3M SO, 58M FD, C$46.5M MCap, >http://www.bayfieldventures.com/">www.bayfieldventures.com)
HOLD (CASEY FREE
RIDE)—Marin
Katusa and I were just hopping off the float-plane onto the dock at Nestor
Falls, Ontario, when Bayfield’s CEO got the call that the grade reported for
their 81-meter intercept was wrong. But he was smiling, as well he should have
been with the intercept now at nearly double the grade. This only makes sense,
given that the same hole contained the spectacular 10-meter hit grading 35.9 g/t
(over an ounce per ton).
It
was, to say the least, an interesting trip.
I
don’t need to regale you with stories about the native culture and cuisine of
Ontario, nor
reassure you about the political climate, so I won’t. As you can see, BYV has
come a long way in a very short time, with their story changing from simply
having land the adjacent, multi-million-ounce Rainy River (T.RR) gold project
would need, to having a project with genuine merit of its own. The stock has
already shot up higher than I, for one, expected it to, based on the original
takeover speculation.
The
question now, after the company’s richly deserved meteoric rise, is whether BYV
will deliver value that will push the share price even
higher.
Of
course, I have no crystal ball, but I can usually tell when a company has a good
chance or almost no chance of delivering the value needed to justify its MCap –
or take it to the next level. And I would say that BYV has a very good chance of
going on up to the next level.
It’s
clear that the mineralization in RR’s ODM Zone does continue into BYV’s land,
and there’s no reason to believe that it stops with what BYV has already found.
Better yet, the high grade on the Rainy River side tends to come in discrete,
relatively narrow shoots, often with low-grade or even waste rock in between,
and that’s what BYV’s new high-grade zone looks
like.
This
zone could fall apart on infill drilling, but given the strength of the
mineralization found thus far, it may well hold together, given enough drilling
to figure out the geometry of the zone.
Speaking
of which, I have to confess to an error on my part. I understood from looking at
BYV’s maps that they were drilling on two parallel zones they projected
continuing into their land from the RR side of the property line. But that’s not
what they are looking for in the area of the current drill results; it’s the
same zone, just being tested closer to surface in the more northern holes, and
deeper (“down-dip”) in the southern holes.
The
good news is that this greatly increases the size potential of what BYV has
already drilled into. If the dots connect, it would be easy for this first zone
encountered to host a quarter of a million ounces. It could be twice as much if
they get lucky and it’s a wider, high-grade zone, and not just a narrow shoot.
And if there are more such zones… Well, it will not likely have to be considered
as a standalone project, but it could reach a size to make for a good one, with
or without any takeovers.
But,
of course, a takeover still makes too much sense to be ignored, and, in spite of
the stock chart going just about vertical, the entire value the market is giving
the company is not so great that a potential buyer couldn’t or wouldn’t happily
pay a lot more to consolidate the now known mineralization in the RR
district.
This
all sounds great, and it really is – management has delivered in spades – but
that doesn’t mean the stock can only go up from here. Just yesterday, after BYV
announced an almost doubling of the grade of its 81-meter intercept, the stock
actually closed down 6 cents for the day. It’s under further selling pressure as
we go to press today. That’s not because there’s anything wrong with the story
(higher grade is always good – and the stock actually did head even higher in
intraday trading yesterday, all the way up to C$1.38), but simply because the
stock had run so far so fast, some profit-taking was
inevitable.
Technically
more important is that narrow shoots of mineralization can vary in their
thickness and wander greatly from the straight lines we’d love to see them stick
to. That means it takes more drilling to nail them down – and there will be many
blank holes along the way, as the company’s geologists figure out what Mother
Nature, that often sadistic tease, has done with the rocks underground where we
can’t see them.
In
short, even a highly successful exploration effort from this point forward will
cost time and money, and will have many ups and downs. And that means the stock
price will remain highly volatile. The only thing that can prevent this is a
rapid takeover, which may or may not be in the
cards.
What
to do?
If
you’ve already taken profits, just hold. This is a great spec, with two clearly
visible paths to greater gains (takeover or more
discovery).
If
you weren’t able to take profits before September 1 and then held on, given the
previous excellent drill results we said were a game-changer, the extraordinary
volume of the last two days (around 20 million shares – about half of the
company’s float just changed hands!) is providing an excellent liquidity event
we think it would be foolish not to take advantage
of.
Even
if you bought after our intended-to-be-cautious September 1 recommendation in
the International
Speculator,
you’ve still had shots at doubles in the last two trading days and may well
again in the days ahead.
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