This was another holiday shortened week but a flurry of news was issued to start the new year off. A very significant new discovery appears to be underway in Northwestern British Columbia, as junior explorer Brixton Metals announced a high grade silver interval from early stage drilling work at its Thorn Project. The company reported a batch of drill holes that focused on epithermal veins and breccias targets. The highlight came from one drill core interval of 95 meters that averaged an astonishing 628.3 g/t silver, plus other metals. Within that interval a higher grade section of 9.25 meters averaged nearly 3000 g/t silver. The alteration started from surface, another promising factor in the discovery. This represents a bonanza drill hole and will attract a lot of attention to this story.

Several other drill holes within this target area also intersected polymetallic alteration with strong silver grades. Further drilling was completed at several vein targets along a mineralized corridor that has been identified on the property over a lateral extension of 6 kilometers. These drill holes also encountered chunky intervals of alteration, including 19.7 meters grading 1.02 g/t gold plus 35.5 g/t silver. Parallel vein structures have also been encountered.

This work has demonstrated that a robust system has been active across a large property area that has the potential to develop into a big deposit. One is reminded of the initial exploration success from ATAC Resources in the Yukon two years ago that kicked off the Yukon Gold Rush. Brixton Metals is going to follow up with a systematic program in the spring at Thorn. There are a number of intriguing elements to this story that have exciting potential, and many of the drill holes reported ended in mineralization but could not be extended due to the seasonal limitations on property access.

In Nevada, emerging producer Scorpio Gold also reported exploration results this week. The company is advancing development at the Mary Zone, located near the current open pit mining operation at Mineral Ridge. Definition drilling is underway at the Mary Zone as the company works to design a pit shell for the next phase of mining at the project. The results have been encouraging, with wide zones up to 50 meters encountered in several lenses of alteration. Gold grades for this deposit area average around 2 g/t, which is in line with the existing mine, but local enrichment is frequently encountered. The latest batch of drill holes reported was highlighted by one interval of 10.67 meters bearing 3.65 g/t gold. Scorpio has been gradually increasing the scope of its mining operation on the strength of improving cash flow generation and the company plans strong production growth as the new zone is developed.

Soldi Ventures announced high grade gold values from its Golden Bullet project in Newfoundland. Results were reported from the first seven drill cores, where multiple quartz vein intercepts were encountered with significant gold grades. The results included one interval of 2.15 meters bearing an impressive 17.36 g/t gold, and another of 3.15 meters grading 12.03 g/t gold. Assay results are pending from several other drill holes that have been completed, and geologists have noted the presence of visible gold from inspection of the cores, which is a promising aspect to the next round of results. This program follows up on historic drilling data from prior operators of the property as Soldi works to expand on the overall deposit area and gain a better understanding of the underlying geology.

SilverCrest Mines, an emerging producer in Mexico, reported the first resource estimate for its La Joya Property in Durango State. The company defined over 50 million ounces of silver plus 333,400 ounces of gold based on current and historical information. There is also a significant upside potential within the deposit area for copper, lead, and molybdenum resource leverage. Drilling work is ongoing across a wide mineralized trend extending more than 2.5 kilometers, which could increase the total resource for the project. SilverCrest also operates the Santa Elena open pit mine in Sonora.

I generally do not comment on news related to specific financing initiatives for the mining stocks; however it should be noted that quite a few private placements have closed in recent weeks. What is of interest is these deals typically account for relatively small amounts of money, below $2 million and in many cases, for just a few hundred thousand dollars. Also, the units of these placements usually are structured for very low share price values. What does this tell us about the weakness of the market? Recall that just one year ago there were many reports of equity offerings to raise $10 million dollars or more in the junior mining sector, and these deals were often fully subscribed immediately upon the announcement. Competition among investors was intense to gain a chunk of these deals amid a bullish environment overall.

In a sector where sentiment tends to swing rapidly between irrational extremes of bullish enthusiasm and bearish capitulation, the reluctance of market participants to buy into new equity offerings even when priced under attractive terms can be taken as yet another indication that a sector low is at hand. The last episode of this magnitude occurred in 2008 and the entire sector recorded strong gains following that bearish interval. Those on the buy side during those lows profited handsomely.

It didn’t take long for the trend in merger and acquisition activity to resume in the new year as PetroChina International, a state-owned energy conglomerate, announced an offer to buy the McKay River heavy oil project from its joint venture partner Athabasca Oil Sands. Through this transaction, China is making a very strong move to increase its leverage to secure, long term oil production in Canada. The move is perhaps of greater interest against the back drop of the failure of the current US Administration to approve the Keystone pipeline development. This has opened the door for foreign interests like China to step to the table with cash in hand. There are three state owned Chinese energy companies and all three have interests in the Canadian oil sands.

In a world where it is very likely that every barrel of future oil production will be in demand, can the US continue to play a game of brinkmanship, with security of domestic oil supply threatened by the outcome? The ‘dirty oil’ rhetoric may seem a like a good strategy to pander to the environmental movement in an election year but this nonsense has ruffled some feathers north of the border. The Obama administration may be about to discover that it cannot suck and blow at the same time, and either it will step to the plate and support development and oil sands investment, or risk losing access to this energy source as other nations seize the initiative.

Michael Kachanovsky