Bottom Is In

I don’t normally do this but I’m calling a bottom at 0.08. Why you ask? Looking at shares placed to Sprott’s affiliates we see sufficient volume traded of over 100 million shares since the 7th of july, the last top 20 announcement.

Sprotts global resource investments still holds every share they purchased, however it appears affiliates are all sold out. As you can see from the Top 20 list, the only movement that has occurred has been the reduction of all shares from these affiliates, while many other top 20 holders have topped up, and many close to entering the top 20 have also bought up the surplus, (such as myself). As a result of this selling pressure share price has declined for little fundamental reason. Remember back to the viper announcement in august and you’ll see when we rose to 1.3, the strong buying was capped with selling. The majority of volume since July has been selling by these affiliates and has little to do with smaller players and other top 20’s on HotCopper.

We can all speculate why these affiliates have sold out, perhaps to cap the price? Maybe as gold sentiment has turned sour over the year they want out? Perhaps they wanted to totally de-risk their position while retaining options? I suspect Sprott couldn’t purchase from these individuals because of the conflict of interest between his firm and affiliates?( Not a legal expert here).

Point is, the 87.8 million has well and truly been cleared out, the volumes show that, as do the latest top 20 announcement in the annual report. Now that these affiliates have been cleared out we do not have the overhang. I do believe the SP will be supported heavily as the fundamentals for BGS are better than ever. Drilling of viper and other prospects are around the corner.

Had these affiliates not put such selling pressure on, there’s no doubt in my mind the surplus of 87.8 million shares being held off market would have seen us trading well into the 1.8 range.

This drilling season is going to be vital for BGS, and now thankfully (at the cost of ST price movements) much of the share structure is in strong hands.