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10/9/18

Cartier Resources (ECR.v) and the perils of announcing good news

I normally don't like writing up in a positive light on my own long positions on the blog like this, but this exception proves the rule because circumstances are different. Two things:

1) I do own shares in Cartier Resources (ECR.v), but it really is a small position and even if it triples it's not going to change my life much (unless I add more in the meantime). My ECR is strictly smalltime, toe-in-water stuff and that needs to be clear.

2) This post isn't about my portfolio, nor is it about exhorting you into share ownership of ECR. It's about the shape and climate for exploreco stocks at the moment. Because the atmosphere out there continues to be pure rank horrid, no matter that Barrick and Randgold are now a melded U$20Bn superminer.

What happened to Cartier Resources (ECR.v) today is a great example of the current market for junior explorecos. It had news out this morning pre-bell on its current drill program at the flagship Chimo project near Val D'Or and while there's plenty of technical information to chew over, what matters is the hit you see in this segment of one of the NR visuals:


Now, you really need to have studied ECR for a bit of time to be able to come to even a sketched-out conclusion on what they announced today, because ultimately these people aren't trying to wow the retail audience. Their target market is Agnico (AEM) or any other Tier 1 or Tier 2 company that is looking to get a foothold in this part of the world. Because of that, ECR doesn't do much dirty crazy sexy flashy promo script or fancy photos. This NR is geologists talking geology to geologists.

All the same, anyone who has taken an interest in ECR.v and its Chimo project would have known that the 5.6g over 3m next to the 5.5g over 4.7m they cut was a serious and strong piece of news, especially considering where they cut it from. ECR's theory is that there's a whole separate structure of gold-bearing mineralization running parallel to the known (and previously mined) vein at Chimo, so if they can find it and hit it, while expanding the known vein at depth, it means that the deposit gets immediately more interesting due to the way in which upper levels, previously considered dead and mined out, become sources of cheap and accessible feed. Meanwhile, that parallel vein continues down and makes what they've been finding at depth that much more succulent...more ounces, more fun. Anyway, to cut a long story short today's NR was positive and the guys most likely to buy Chimo, AEM, know that too. So would anyone else who studies the Val D'Or environs closely in order to trade (and there are many of those), but what happened to the stock price today was this:


A bounce scoring 0.1 on the Crap-O-Meter. And this is my point; even in a more-or-less market, a NR like the one delivered by ECR today would have shot the stock higher because those equipped with the smarts and understanding would have piled in (then sold to us as they explained how good it all was). Not today folks, because the market is flatter than a donut under a CAT 797 and even though AEM will love what they see, the equity does nothing at all.

Am I frustrated with this? No, not really. Well yes a bit, but only because I'm not a re-buyer of ECR until it starts to move up and today's news in a different year would have been enough to put it in play. But it's not frustration about failing to make a fabbo profit, that is a by-product and will come and go. The other frustration is to see things happen to ECR and others that only happen when the world does not give a flying sexual intercourse about junior explorecos. It's not that it will change either, because I can guarantee on all that's sacred that it will. Sentiment will improve and good times will be had by all, just don't ask me when because I don't have a freakin' clue. 

In the meantime, stocks like ECR will fill the market bandwidth with good news and be totally ignored for their efforts. Right up to the moment when they're not.