Wednesday 19 August 2020

The Best Gold Explorer In Canada Right Now

QMX Gold Corporation (QMXGF)(QMX.V)
Current Price (Canada): $0.30
Target Price: $1.00
Upside Potential: 233%
Market Cap: $114 million
Shares Outstanding: 381 million

Over the weekend, we called a strong buy on D-BOX Technologies Inc. (DBOXF) (DBO.TO) at $0.07 after news of its partnership with Ubisoft. It quadrupled to as high as $0.28 on Wednesday before pulling back to $0.17. We are optimistic that our next pick in Canada will also provide a very lucrative return in the near term, QMX Gold Corporation (QMXGF) (QMX.V). We rarely do resource plays but this one is just too easy to understand and too great of an opportunity to pass up. QMX pulled back on Tuesday after a brutal day for gold but it’s only a matter of time before it catches up to Freegold Ventures Limited (FGOVF) (FVL.V), which currently has a $375 million market cap. Eric Sprott has been heavily involved in FVL which has been part of the reason for its rise. He has also been deeply invested in QMX and will very likely get involved again. We are up to 914 followers despite not giving out a lot of alerts, a fact that we think is indicative of a successful, diligent and prudent stock picking history. If you like our picks you can follow our blog by clicking the follow button on the top of the left hand panel as well as follow our Small Caps, Big Gains blog for more of our Canadian picks. You can also follow us on Twitter @StockTradePicks which has over 4,600 followers.

Why do we think that QMX will catch up to and eventually surpass FVL in market cap? Simple. Both companies have exploded on the gold assay results of one hole. QMX's is very clearly better than FVL's. 

QMX's announced the following drill hole result:

Table 1: Results from DDH 121 - Bonnefond Deposit

Hole NumberAzimuth
(°)		Dip
(°)		Hole
Length		From
(metre)		To
(metre)		Length*
(metre)		Au**
(g/t)		Remark
         
17315-20-1218-70117969.41179.01109.61.48Tonalite
   Incl.85.087.42.46.09 
   Incl.97.5103.45.92.31 
   Incl.120.7126.05.312.65 
   Incl.150.7223.973.26.48 
   Incl.238.4243.55.13.75 
   Incl.268.9270.31.411.51 
   Incl.302.1318.816.72.57 
   Incl.372.0375.43.43.87 
   Incl.387.8399.211.41.81 
   Incl.502.4508.46.03.39 
   Incl.563.8573.39.52.49 
   Incl.587.0598.211.26.37 
   Incl.612.0624.012.03.14 
   Incl.649.5652.22.73.86 
   Incl.672.7682.49.74.50 
   Incl.751.7759.57.82.10 
   Incl.1047.81051.84.035.56 
   Incl.1068.61069.61.06.39 
   Incl.1082.01084.02.03.10 
         

* Reported length measured along the hole.

Compare this to the one announced by FVL back in May:

Significant results are reported below:

Hole Number

Dip

Azimuth

Depth
(m)

From
(m)

To

(m)

Int.

(m)

Au 
g/t

GSDL2001

 -80°

 360°

548

290.6

548

257.4

2.94

including

365.2

367.2

2.0

169.5

including

360

548

188.0

3.69

including

528

548

20.0

9.87

GSDL2002

-70°

360°

165

156

165

9

2.4


Width refers to drill hole intercepts, true widths cannot be determined due to uncertain geometry of mineralization.


QMX discovered 1.48 grams per tonne of gold over 1,110 meters. FVL discovered 2.94 g/t over 257 meters. The QMX discovery may be at half the grade but it is over four times the length. That makes the QMX discovery twice as good as FVL's. What's more, the main body of QMX's discovery is a 6.48 g/t discovery over 73 meters that starts at 150 meters depth. This is shallower than FVL's 3.69 g/t discovery that runs from 360 meters to 548 meters. 

FVL has run largely on the investment of Eric Sprott since the announcement of its discovery. Sprott has also invested aggressively in QMX, including its most recent flow through financing at $0.18 that occurred well above market prices at the time. He will very likely invest again should the company decide to raise any cash in the near term. QMX has over $10 million in the bank and likely raised several million more through the exercise of warrants. There is a resource update and more pending drill holes to be released in the coming weeks. The stock will almost certainly move up on that hype. QMX has approximately 380 million shares outstanding or about 460 million fully diluted. A $1.00 stock price puts it in line with FVL's valuation which is justified based on the relative size of each company's most recent drill hole. 

Disclosure: We are long QMX.V

What's next for microcap stocks? TradeMiner identifies seasonal trends and market cycles, the Penny Stock Prophet and Microcap Millionaires finds the next big small cap plays in various industries while Addicted to Profits makes trades from a Canadian perspective.

There are also some good books available on microcap stocks and day trading such as:

Mastering Microcaps: Strategies, Trends, and Stock Selection (Bloomberg Professional Library)

The Little Black Book of Microcap Investing: Beat the Market with NASDAQ/AMEX Microcap Stocks, OTCBB Penny Stocks, and Pink Sheet Stocks

Microcap Magic: Why The Biggest Returns Are In Stocks You've Never Heard Of

How to Day Trade for a Living: A Beginner’s Guide to Trading Tools and Tactics, Money Management, Discipline and Trading Psychology

How to Day Trade: A Detailed Guide to Day Trading Strategies, Risk Management, and Trader Psychology

A Beginner's Guide to Day Trading Online (2nd edition)

Stock Investing for Beginners: Marijuana Stocks


Here are some other good stock market resources. This includes technical analysis and day trading, dividend stock investing, gold and commodities, sector rotation, options trading and microcap trading strategies:

The dividend stock report from dividendstocksonline.com

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