Midas Letter Gold Stock Pick Gold Canyon Resources Up 100% in 3 Months

Feb 02, 2011 (ACCESSWIRE via COMTEX News Network) --

By James West

MidasLetter.com

February 2, 2011

TORONTO - Midas Letter's selection of Gold Canyon Resources (TSX.V:GCU)as one of its top gold stocks in November of 2010 turned out to be quite prescient, as subscribers to Midas Letter's Premium version know. The stock, trading at $1.19 the day it was first featured, today touched a high of $2.54 - a 108% return for Midas Letter Premium Subscribers.

The reason isn't hard to understand.

On December 15th, the company announced an astounding 353 metre intercept that graded 1.17 grams per tonne gold at the company's 100% controlled Springpole project in Canada's Red Lake Mining District.

According to the company's press release, there was within that intersection higher grade intercepts including 66 metres grading 2.38 grams per tonne gold, 3 metres grading 16.08 grams per tonne gold, and a metre of over an ounce per tonne of gold. The true width of the intercept is believed to be about 250 metres.

The company recently started drilling again with three diamond core drilling rigs, and expects to drill 10,000 metres by early April.

"Our objectives this winter are really two-fold; infill, and exploration," comments Dr. Quinton Hennigh, technical advisor to Gold Canyon. "We are intent on bringing at least one kilometer of strike on the Portage Zone into a resource. Most of the deeper drilling, to around 300 meters true depth, was completed last year. Now, we must drill some shallow holes from the ice to show continuity of this zone to surface."

"While two rigs undertake infill drilling, we are going to set one rig loose on exploration," continues Hennigh. "We feel quite confident that we can demonstrate an extension of the Portage Zone to the southeast."

GMP Securities issued research on Gold Canyon last week that place a target of $3.90 on the company's shares.

According to the research note,

"To set our mineralization target of 4.4mmoz, we are only using the currently defined 950m of strike, 300m of depth and 150m of width. We are using the upper limit of the apparent thickness range as areas of thicker mineralization both in the south-east margin and in the north-east will likely bring the average width towards the upper end of the range. We see significant upside in all three dimensions:

• Strike extent could exceed of 2km: 1km of potential extension to the southeast is indicated by the recessive nature of the mineralized porphyry and to the northwest at least 3 historic drill holes have extended the mineralized porphyry below the Main zone mineralization with drilling returning mineralized porphyry but poor recoveries.

• Width may locally exceed 250 metres depending on the dip of the mineralization. Two wider areas in holes 22 and 24 in the southeast and hole 26 in the northwest may range in true thickness from 150-250+m.

• Depth of the mineralization remains open with no deep holes failing to hit mineralized material.

While historical resources exist at the Main, East Extension and SPROG zones we

are not at this point including them in our analysis as they appear to be significantly

smaller than the Portage zone, potentially not readily amenable to large scale mining

and lastly are unlikely to be a driver for the market in the near-term. We will continue

to monitor results to see how these other zones can be included into potential Portage

development scenarios."

Probably one of the best indicators of the company's prospects is gleaned by reading the insider trading reports at SEDI.ca . One of the most enthusiastic buyers of the stock has been both Sheldon Inwentash personally as well as his Pinetree Capital Corp. (TSX.V:PNP), who together control more than 12 million shares. And he's not just a participant in private placements - he's building this position mostly by buying it on the market.

And then on the 18th of January, the company announced the rest of its outstanding silver assays. The follwoing is excerpted from that press release:

"Silver assays from holes SP10-019, -022, -024, -025, -026, -028 and -029, all of which drilled across various parts of the Portage Zone, continue to demonstrate that appreciable silver accompanies gold in this large porphyry system.

- A summary of results includes:

SP10-019: 307 meters at 1.44 grams per tonne gold and 5.48 grams per

tonne silver

SP10-022: 223 meters at 1.45 grams per tonne gold and 5.03 grams per

tonne silver

SP10-024: 225 meters at 1.48 grams per tonne gold and 4.73 grams per

tonne silver

SP10-025: 38 meters at 1.53 grams per tonne gold and 2.55 grams per

tonne silver

SP10-026: 353 meters at 1.17 grams per tonne gold and 3.86 grams per

tonne silver

SP10-028: 108 meters at 1.75 grams per tonne gold and 9.30 grams per

tonne silver

SP10-029: 132 meters at 2.30 grams per tonne gold and 10.80 grams per

tonne silver

- All intercepts drilled across various parts of the Portage Zone display

appreciable silver with gold (see table below). Silver-to-gold ratios

range from 1.1 : 1 to 10.8 : 1 and average about 4.4 : 1. Consistent

gold and silver values in the Portage Zone reflect the disseminated and

stockwork nature of mineralization in this large porphyry body, and

although gold and silver values vary somewhat from place to place, no

clear metal zonation has yet been recognized within the porphyry.

- Interestingly, silver values appear to be much lower in veins that are

part of the Main Zone (note two intercepts from hole SP10-025 in table

below) and situated peripheral to the porphyry body. For example, a one

meter vein intercept that assayed 45 grams per tonne gold bears less

than 0.3 grams per tonne silver. It is believed that this contrast,

significant silver in the porphyry and little in adjacent veins,

reflects either 1) a primary zonation associated with the original

porphyry mineralizing event, or 2) that adjoining gold veins formed

through late remobilization and deposition of gold during deformation

and alteration but the fluids responsible did not carry appreciable

silver.

- The table below summarizes drill intercepts from the Portage Zone from

the 2010 Diamond Drill Program. Note that this table includes newly

reported intervals from some earlier reported holes using a lower cut-

off grade of 0.2 grams per tonne gold and internal dilution not

exceeding core lengths of 12 meters.

- Presently, the strike length of the northwesterly-striking Portage Zone

stands at approximately 950 meters. This zone remains open at depths in

excess of 300 meters along its entire length. True widths of the zone

generally range from 90 to 150 meters, but locally widen to as much as

250 meters. The zone remains open at depth, to the southeast and

northwest where it appears to plunge underneath the Main Zone.

- The winter drill program is in progress. Two diamond core rigs are

operating and a third is expected to start within a few days. Two holes

testing shallow portions of the Portage Zone have been completed. Cold

weather has settled in making conditions favourable for building up ice

and making drill pads on the lake. "

I think Gold Canyon is going to be one of the big winners in the Midas Letter Premium portfolio in 2011. I wouldn't be surprised if a major mining company stepped up and tried to buy it too.