Gold Standard Suspended while Gold at Razor's Edge


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TSX.V:GSV / NYSE:GSV / TSX.V:TQY
08/13/2014 [ACCESSWIRE]

LONDON, ENGLAND / ACCESSWIRE / August 13, 2014 / The gold price currently trades at the razor's edge: should it manage to rise above the red resistance at approximately $1,320 we anticipate the start of a new and strong upward trend, which has the goal to appreciate above the formerly marked, resistive high between $1,800 and $1,900, and to transform this price level into support. On the other hand, the following chart indicates that a strong sell-signal is generated when breaching the green support:

Link to live chart (15 min. delayed): http://scharts.co/1AOFPY9

With the following chart it becomes clear that a first sell-signal is generated when breaching the light-green support currently at $1,280, whereas a strong-signal is active when falling below the green and green-dotted supports at around $1,180 and $1,080. As soon as the red resistance at $1,320 is broken, we expect a relatively fast increase to the green-dotted trendline at around $1,440, whereas the superior trend will have the goal to rise above the $1,800 level:

Link to live chart (15 min. delayed): http://scharts.co/1AOFNj6

Gold Standard Ventures Corp. recently completed the phase-1 drill program on its newly acquired Pinion Property in the southern part of the prolific Carlin Trend in Nevada, USA. Yesterday, its stock was suspended from trading as material news are to follow. As the company recently reported, a maiden NI43-101 resource estimate for Pinion will be disclosed shortly after the completion of the phase-1 drill program. Hence, the reason for the trading halt could be the publication of this eagerly awaited resource estimate.

Another reason could be a take-over bid from a senior mining company, which would not surprise us because a take-over could be very lucrative especially before the publication of such a resource estimate as the market may not understand the significance of such a calculation yet. On the other hand, there exist numerous investment funds and institutional investors that are allowed to only invest in resource stocks if a NI43-101-compliant resource estimate exists; which means that a potential acquirer may want to place a take-over bid before such a resource estimate is disclosed as it expects an institutional run on the stock thereafter.

Furthermore it should be noted that Gold Standard recently announced a quite large equity financing, which could indicate that the company may want to protect itself from unfriendly take-over attempts. Thus, a take-over may be attempted before the closing of this financing enabling to take the company over easier.

In this context it is interesting to note that the results of the phase-1 drill program clearly showed that the initial resource estimate is likely to be in the area of around 1 million ounces gold (at an average mineralization of around 0.9 g/t gold directly at surface and thus in strongly oxidized nature). The neigboring Emigrant Mine from Newmont started mining in 2012, whereas it has remarkable similarities to Pinion: Emigrant's gold resources had 1 million ounces in 2012 as well as an average mineralization of around 0.9 g/t gold. Since then, Emigrant's resources was expanded to around 2.5 million ounces.

As explained in our initiating coverage, update #1 and update #2, we expect Pinion to grow to at least 2 million ounces gold with the phase-2 drill program that is to start shortly after the release of the initial resource estimate. Emigrant is operating with production costs of less than $700/ounce, which low number has become rare these days. Such low production costs are only possible thanks to mining oxidized ore directly at surface, which is much cheaper to treat than sulfidic ore. These kinds of gold oxide deposits are extremely scarce in today's world, because these typically occur right at surface and thus are likely to be discovered already (it is much easier to discover a deposit at surface than at depth).

Another reason for the trading halt could be the planned split-off of the non-core projects in Gold Standard's portfolio into Tanqueray Exploration Ltd., which company has been halted since late June as Gold Standard announced its plans to become a controlling shareholder. Such a split-off of non-core projects could also play a role if the company expected a hostile take-over attempt, which would result in not losing these non-core projects.

Whatever the reason for the halt may be, we expect positive news with an appropriate positive effect on its stock. We eagerly await the initial NI43-101-compliant resource estimate for Pinion, which event should attract new investors (especially institutional) as well.

Link to live chart (15 min. delayed): http://scharts.co/1nOhZlm

The chart since 2013 shows that the share price consolidated for a long time within the blue triangle and that a breakout was achieved in June, which is a bullish signal. After the breakout, a typical pullback to the upper (blue) triangle leg at around $0.70 followed – in order to test and confirm this formerly resistive trendline as new support. As this support held successfully, we are optimistic that the final movement of this triangle formation, a so-called thrust, will start any day now, and which has the goal of transforming the resistive high of the triangle ($1) into new support in order for a new upward trend to start thereafter. Relatively to the HUI gold mining index, Gold Standard's stock also consolidated within a blue triangle, whereas the triangle's apex was reached lately – which means that a trend decision is about to unfold. We are positive that Gold Standard will outperform the HUI from now on as we expect an appreciation – no matter where the gold price and the general gold stock market may head to.

Link to live chart (15 min. delayed): http://scharts.co/1mb2bvf

Disclaimer:

The author holds shares Gold Standard Ventures Corp. and would profit from an increase in share price, whereas he may sell those any time without notice. Neither Rockstone Research Ltd. nor the author was remunerated to produce or publish this content. Please read the full disclaimer at rockstone-research.com as none of this content is to be construed as an "investment advice." All statements in this report other than statements of historical fact should be considered forward-looking statements. Much of this report is comprised of statements of projection. 

SOURCE: ROCKSTONE RESEARCH LTD.

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