From the Coffin Bros., HARD ROCK ANALYST JOURNAL • VOLUME 10, NUMBER 07 • JULY 2010
Evolving Gold (EVG-V; $0.84) released results from its first step out from its Carlin high grade hole at the end of last month. Though it had several anomalous sections including 19 metres grading 2.09 g/t gold the numbers were not exciting enough to please the market. This does appear to be a substantial gold system but when drilling deep in Nevada you need the sort of grades EVG delivered in February to really get people excited. There are still many targets to test and the zone does remain open internally and on strike. We expect to see more holes from Carlin in due course.
EVG was fading badly entering July until the company made a surprise financing announcement. Evolving has completed an above market placement to Goldcorp (G-T, GG-NY). Goldcorp subscribed for 19 million shares at $0.82 (a 15% premium to market at the time) with no warrants or fees attached. “Goldcorp” is clearly the magic word for many resource traders. EVG has moved up 20% on 5 million shares of trading volume in the three sessions since the announcement.
In our experience Goldcorp does not do placements of this magnitude unless there is some sort of agenda, even if it’s not immediately apparent. We assume Goldcorp is viewing the placement as an entrée into a couple of areas where it has no current presence, particularly Nevada. We think this is good news. The sort of deep exploration Evolving is undertaking at Carlin and Humboldt is expensive. It never hurts to have more cash, and Goldcorp could be a useful counterpoint (and counter weight) to discussions that are undoubtedly going on between EVG and Newmont concerning Evolving Gold’s Nevada holdings.
Meanwhile, in Wyoming, EVG is busy drilling at Rattlesnake with multiple rigs. This is a combination of infill and step out drilling and will include testing of several new target areas. Early results should begin to arrive in late July or early August. We know that there are many that also anticipate the release of a 43-101 resource estimate. As most of you know, we think many companies have started these studies too early in a project’s exploration cycle. Rattlesnake is probably another case of this. There are many areas at Rattlesnake that need a lot more holes before they are ready to have a calculation done. That’s a long winded way of saying an early stage resource estimate is not something we are either hoping for or waiting on. We’re more interested in the result of expansion and new target testing now underway.
EVG having a new friend with very deep pockets can help calm its market while more exploration results are awaited. That alone (plus a bank account now in the $30 million range) makes the stock a buy at these levels ahead of drill results from Wyoming and Nevada. http://www.evolvinggold.com
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