A brief comment on the substantial trading volume at Geologix Explorations. Since my initial comments on Geologix on January 17th, the company’s shares are up nearly 40% (from C$0.22 to $0.31) and have traded a staggering 57.0 million shares in 2 weeks, including one particularly active day as the TSX’s most active stock at almost 30.0 million shares in one day.

My comments on Geologix came on the heels of an encouraging news release regarding high-grade expansion drill results, and although it’s not unusual for trading volume to increase after a positive news release, it’s clear that recent developments at the company’s Tepal project in Mexico, and the pending news flow expected in the coming months, have attracted the attention of new investors who recognize the disconnect between the value of the project and the company’s market cap. This renewed investor interest has allowed a large portion of  shares to move from weak hands into stronger longer-term holders who see the bigger potential for the project and the company in the coming months.

A series of pending news items, including drill results, geophysical results, a new resource estimation, and completion of a pre-feasibility study are all expected in the coming weeks and months.

Many readers inquired how such big volume can take place without a perceived bigger move in the share price. First off, a 50% increase in the share price in a little over two weeks is big (it’s just like a $21 stock going to $31). Second, this stock had lots of high volume (note A on chart) and one can assume those folks are using liquidity to get out from a losing position (which is better now than later). Third, there’s now high frequency trading on the TSX and computers trading for half-cents and pennies (like down in the U.S) is now a way of life north of the border. The bigger the activity the more of those traders are attracted to the stock and it feeds on itself. But all in all, this was very good for GIX and is setting up the shares to be able to move higher and faster if and when good news arrives.

Technically, the stock is breaking above key downtrend lines while approaching key moving averages. The second chart shows you a classic saucer bottom that I believe is the foundation for the share price to return to much loftier levels on the heels of lots of news flow in the coming weeks and months. It’s been my opinion that their projects are worth a multiple of what the total market cap has been for several months. I’m not alone on my bullish assessment.

Springboard into production achieved through joint acquisition of Evander from Harmony

Wits Gold (the Company), the Johannesburg-based mining and exploration company, took a giant leap forward on Monday, 30 January 2012, when they announced their joint acquisition of 100% of Harmony’s interest in Evander Gold Mines Limited (‘Evander’), in a 50/50 joint venture with fellow South African gold junior, Pan African Resources, for a total transaction consideration of ZAR1.7 billion (less any distributions made by Evander to Harmony prior to the closing date of the Transaction).

The acquisition reinforces the Company’s strategic shift from pure exploration specialist to mid-tier gold producer. The new three-tiered strategy includes acquisition, fast-tracking the building of their own advanced flagship projects and continued exploration in the Witwatersrand Basin. The joint acquisition of Evander has apparently put them well on their way, giving them an immediate increase in attributable reserves and resources, with positive cash flows, effectively springboarding them into production overnight.

Located in South Africa’s Mpumalanga Province in a sub-basin outside the main Witwatersrand Basin, the Evander gold field has historically produced in excess of 48Moz of gold at an average grade of 7g/t. Well known to both management teams, the mine comprises, amongst others the operating 8 shaft, three development projects (Evander South, Rolspruit and Poplar), the Kinross metallurgical plant and the Libra surface tailings project. The mine was recently returned to profitability with production of 27,500 ounces at a cash cost of ZAR208,597/kg (US$909/oz) in the latest quarterly figures reported by Harmony.

The man responsible for implementing the new strategy is new CEO, Philip Kotze, a mining engineer with an extensive track record of bringing projects to account in the South African gold and platinum sectors. Kotze was appointed in August 2011 and has wasted little time in moving Wits Gold forward. He is understandably excited about the agreement: “The transaction allows us to become a producer immediately,” he says, “and the cash generated from this operation will be utilised to partly fund our development growth projects, thus mobilising the second leg of our strategy.

The partnership with Pan African has enabled both companies to make an offer for a good-quality operating asset with significant upside potential. We look forward to working together with our partners to provide the best value for all our shareholders”.

The agreement is particularly significant given the profile of South Africa’s mining industry, which contains a noticeable absence of genuine mid-tier producers in the gap between its three biggest companies and the country’s junior players. The joint venture is being described as a potential revival of the junior mining sector and a much needed growth story in the country’s mining landscape in general.

Wits Gold’s next step is expected to be to progress their flagship De Bron Merriespruit (DBM) Project, which has also undergone a significant resource estimate increase in the last month and now boasts Indicated Resource of 7.5Moz, with a high grade zone of 3.6Moz at an average grade of 8.1 g/t. DBM also features shallow mineralisation starting at just 480m below surface, allowing for safer, more efficient mechanised mining methods. Production is planned at 135 000oz/year with cash costs of $569/oz. A 25-year Life of Mine has been modeled and first production is targeted for 2016.

All aboard!

With almost 30 years in and around Wall Street, I feel I’ve developed a sixth sense with markets.  The Fed’s recent announcement of leaving the money spigot wide open, combined with the inability of the bears to take the market lower on supposed bad news, reeks of a market that still wants to go higher. I was never a hippee as a youth but their slogan of “make love, not war” is prudent and I continue not to fight the tape.

Gold has broken above a classic correction pattern (descending wedge) and should at least move back to the $1800 area before any meaningful consolidation. A new, all-time this year is quite possible.

I’m now in bond shorting mode again. Ideally, I would like to do it on the back of a new low  yield on the U.S. 10-year Treasury(around 1.70%) so stay tuned. It’s my opinion that bonds shall be the worse asset class to own over the next 10 years (next of course to signs declaring Nadler gold timer of the year).

I continue to have several uranium-related issues on my “Tracking List”