Explor Resources Inc. (fka EXSFF)

[BennyJ]

EXS & EXSFF investors must read article

Please read the below article and share your comments.

Buy&hold for huge profits.

visible gold:
gold grading at 21.39 g/t and the other at the 782 level that graded 13.37 g/t over a 1.5 width.

http://thefundamentalview.blogspot.com/2010/03/explor-resources-update-progress-of.html

Explor Resources Update – PROGRESS OF BRISTOL TOWNSHIP DRILLING

I apologize in advance for any grammatical errors that might exist in this post. I am getting a flood of emails tonight asking me for my thoughts on today’s news release from Explor Resources. I have reviewed the news and have tried to put together my analysis and commentary as quickly as possible to try to answer some of the questions coming in.


Explor Resources came out with some news after the market today. (Full Release Here) I have had a chance to review it. Here are my findings. For starters, this is not an indication to buy or sell….you should always speak to your broker or financial advisor first after doing your own due diligence. I will analyze the release as easy as I can. This is how I view it.


Drilling commenced on the property to test the model that the company had alluded to back in their September 11, 2009 press release. That model, (found here) called for drilling in phase 1 targeted to test the model. According to the company press release, a series of 4 holes were designed to confirm/rebut the model. Of note is that the company had identified 5 mineralized zones. This phase of drilling only targeted 1 of those zones. This phase targeted what the company called zone A. There are 4 more zones to test and half the drill results still pending from this phase. I did not expect a mine to be made in the first 6 holes and it would have been ignorant and naive for anyone to think in that manner.


The initial thinking was that drilling needed to deeper than the 300-350m average depth of the Cameco drilling that had taken place years earlier. EXS therefore conducted drilling to test the existence of a mineralized structure beyond the initial drilled zone. As noted in the EXS press release of this afternoon,
“the mineralized structure has been confirmed for over 900 meters of strike length at a vertical depth of from 400 to 600 meters. It is currently open on strike and open at depth”.EXS had been trying to confirm that the model that Lakeshore Gold to the West helped get off the ground, also existed east. It would appear from the above noted statement that the model is clearly “in play” on the Bristol Twnp. claim block held by EXS.


Explor Resources provided some information about their drill holes to date. Consider that they are now 9 holes into their drill program and that so far holes reported to date in my view confirm the model. 9 holes into a program is still very early in any exploration story. I could care less about the day to day tick action of the stock. I’ve never been invested in this stock simply for 6 drill holes. With that said, here’s my simple review of the release.


Hole number 1 tested the zone and confirmed mineralization that conformed to the company’s model. That is, that mineralization does indeed occur deeper than the 350m mark. In fact, Gold was encountered down to the 804 metre mark. The grades weren’t significant nor were the widths but gold mineralization occurred beyond 800m and again is encouraging to the development of the model.


Hole number 2 encountered Gold down to the 800 m mark. Hole number 3 encountered mineralization from the 425m mark to the 762 m mark. Hole number 4 had some shallow gold mineralization encountering gold at the 110 m mark and as far down as 564m.


Hole number 5 was obviously deeper going down to at least 1200m and it too showed gold mineralization at multiple skinny levels starting at the 695m mark down to 1186m.


Hole number 6 encountered two sections of visible gold. The first, at the 742m mark encountered half a metre of visible gold grading at 21.39 g/t and the other at the 782 level that graded 13.37 g/t over a 1.5 width. Mineralization was again confirmed down to 1114m and appears to be consistent with the “deep” model as initially thought.


Assays are pending on Holes # 7, 8, and 9.


Of note I took special interest in the company’s advanced reporting of Hole #7 that was drilled approximately 300 meters behind Hole #3 to test the depth extension and grade of the structure intersected by Holes, #1, #2, #3 and #4. It is not like Explor Resources to make advanced comments on upcoming holes. I’ll leave that to the reader to evaluate.


As noted in the release;
Hole #7 has been drilled to 1700 meters in length to intersect the structure at a vertical depth of approximately 800 to 1000 meters. Some of the mineralization found in Hole #7 will be available for viewing at the PDAC. Results are note expected until after the PDAC or for at least another 3 weeks.
A 1700m hole, deep into the heart of the structure will, in my view, go a long way in trying to figure out where these multiple gold veins that the company has encountered are coming from and in which direction they are going. Remember that the Hollinger model was based on multiple stacked veins within one structure.


If you note my due diligence report on the Bristol property, I suspected that initial drilling by Cameco inferred that their exploration work was consistent with the Hollinger/McIntyre gold model but deeper drilling was required. That is, as I noted, a series of thin veins of gold, stacked on top of each other all leading to a massive deposit on a cumulative basis.


Initial drilling by neighbours to the west, Lakeshore Gold and the former West Timmins mining also found a similar array of multiple stacked veins of gold during their initial drilling and did not hit their “glory hole” until well over 80 holes into their program. Of further note, the Lakeshore Gold glory hole was a wedge off another hole in an attempt to test the structure.


How excited is the company about these results? I find it encouraging that they have increased their drilling commitment to 20,000 m vs. the 10,000 m phase 1 program. In exploration plays, any significant expansion of the drilling is encouraging. So far, EXS executives must feel that they have confirmed that there is a significant gold bearing structure present. However in fairness they still have yet to hit that monster high grade section. Then again, it is only phase 1, with 4 holes yet to be reported within this phase. Furthermore, the Dome Mine played out the same way in its initial phases and it wasn’t until the mine went underground that drifting encountered the massive grades. As I noted in my other due diligence reports, the Dome Mine would never have seen the light of National Instrument compliance if those rules existed back then.


I choose not to get into the geo-speak that follows the reporting of this news but I suggest that it confirms that the right rock types and the right model signature is present.


The stock market was obviously expecting more as seen recently in the extremely high volatility of the stock price. Running to $1.40 on expectations, coming back to .90 and then tearing through the old highs to establish a new high at 1.60 before selling off the last two days. Judging by the action it became apparent to me at least that the professional traders got a hold of the stock and played it as their “momentum stock of the week”. High volatility swings in junior exploration companies are not uncommon during potentially high yielding exploration phases. Newsletter writers also got wind of the story and were discussing the stock to their subscriber base and the stock caught fire with record volume and volatility.


As an owner of stock for 3 years and remembering thinly traded sessions with anaemic stock price movement I must admit that the action made me a little anxious. But my outlook of EXS has never been about one play. I never owned the stock for one deal but own it still for the value of their various land packages. As an INVESTOR I am pleased with the first 6 holes. If I were a trader, gambler or speculator, I might not be. Then again, I admittedly have a low enough average price where I am comfortable with my current portfolio. Readers should always continue to evaluate their own risk tolerances as these stocks can and will do quite a number ones stomach.


I chose not to get to caught up in the rumour mills of various holes that the internet chat room boards got to discussing and that some newsletter writers mentioned in their newsletters. I’ve always hated commenting on rumour instead choosing to let the news do the talking.


It got so crazy over the last few days so I simply shut my computer screen off, called my broker and asked him to manage my portfolio and to do what he felt was right. He knows my debt situation, my family’s needs and knows what I need to earn to pay my bills and put food on the table. Any responsible investor should always take note of their comfort level and make decisions not on what they expect but on what the financial situation and needs of their lifestyle and families require.


If that means you must sell stock then so be it. People need to evaluate their situation and act accordingly. I never have any sympathy for those that fail to take responsibility for their own financial well being. (Disclosure: I still own stock)


I will state too that I owned this stock long before the Bristol Exploration. I owned and continued to buy stock for their vast portfolio of properties. Is Explor better off today than it was a year ago as an exploration company? Absolutely. I don’t need to repeat myself on that front. Am I disappointed that they didn’t nail a massive high grade zone? Sure! But I am also not ignorant enough to know that rarely does this happen in the first 6 holes of any drill play so I had to be prepared for that. You continue to poke holes into the eggshell and you start to come up with some yolk….you find the walls of that yolk and you stab a hole right down the centre. That’s how gold at depth is found. You evaluate and determine your structure and at some point, if you’ve done your work right and you had enough nibbles at the yolk in your preliminary holes, you will nail that sweet spot. To many “gamblers” they expect that sweet spot to be hit immediately which is why I never say buy! I simply put out my research and leave it up to the reader to interpret. EXS has always been an investment for me and it continues to be as such.


Sure the stock might take a hit off this news…or did it already? The stock is off from its 1.60 intraday high of yesterday to close at .91 cents today. Now because most investors or “speculators” typically purchase shares of companies in exploration mode expect, perhaps naively, that every hole will produce a winner without any thought given to the fact that big deposits usually take dozens of holes to play out, you might see more selling.


The most important thing any investor can look for when analyzing initial drill hole results is whether or not the results have thus far conformed to the model. Also, whether or not the model has been deviated from, either negatively or positively. In my layman’s opinion, I think they are right on par with their model so far. (Their model can be viewed HERE).


So what about the stock? Well, I’m not a broker nor can I give advice. That is up to the individual investor here. As yourselves some hard questions…..Are you in this for one round of drilling or the potential of the company’s projects? Do you, like me, hold a variety of other instruments and strictly monitor your risk capital? Are you able to stomach swings in price? Those questions need to be on your list and you need to evaluate your situation with your financial advisor.


If I can give any piece of advice that would be to avoid internet chat rooms or stock forums where rumour and speculation rule the day. Learn how to make informed decisions on your own so that you can quickly cut through the nonsense. Look at the facts, check your information and never trade on rumour but instead wait for fact. Learn valuation metrics. I often said to myself that the stock was undervalued at .10, .20. even .40 or .50 cents based on their assets, their exploration results to date and the locations of their project. That did not mean that the company wasn’t overvalued at $1.60. Learn how to assign valuation and stick to those fundamentals.


The questions you need to ask yourself as an investor need to remain the same…throughout your holding period. You need to separate yourself from the frightening volatility of the stock market. To put it in simple terms, are you a buy and hold investor or a trader whose investment window is 2-24 hours? Determining who you are is how you are going to treat your buy and sell decisions.


Many expected high grade. Heck, I would be lying if I said I didn’t expect or at least hope for higher grade myself. This is why I would not comment on rumour and chose not to discuss what might have been floating around out there I chose to not comment on it. I trade and invest on fundamentals which means I need to see news. I think that I have provided those fundamentals to you as clearly as I can in this piece.


Do not be swayed by vindictive individuals who missed a great run on a stock that perhaps got a tad ahead of itself who don’t own any stock. At the same time, don’t be swayed by anyone telling you that we are moments away from the second coming of Hollinger. Evaluate phase by phase and let that determine how much risk you are prepared to handle.


As I noted, I still own stock. I owned it long before the company acquired Bristol and will continue to hold it.


Here's an assignment for you......
Review the Hollinger model.
The model is all about stacked layered echelon vein systems that start weak and intensify at depth.
EXS has encountered multiple zones that follow the model. Simply count the zones in all the holes.
Count the number of occurrences within the holes

I will state it again. In the Abitibi Greenstone Belt you drill for structure and drift for grade.


Consider too that the Dome Mine had 300m of strike while this phase of drilling has confirmed at least 900m of strike, So far, the model is right on track.

The smart money always buys (“panic”) capitulation selling on deals that are fundamentally sound. You, as a reader of this, must review your own positions and assess your reasons for owning the stock and act accordingly. I can not give you any advice but can only give you points to consider.