Wednesday, March 23, 2011

Foundation Minerals: A Left-Behind (Updated)

There were more than a few exploration stocks that shot up last fall when gold went on its record-breaking run. Foundation Resources was not one of them.

In a way, this was unusual because it had a spectacular run last spring. Foundation optioned a property with a historical resource base from Alto Ventures Ltd., a holder of several properties that tries to option them off to more active explorers. That property, Coldstream, is Foundation's flagship project. Trading thinly at or below 15 cents while sinking the first drill hole on the property, Foundation ended up reporting a drill-core interval of 27.3 metres containing 4.88 g of gold per tonne. As a result, the stock shot up to 90 cents before interest cooled and it began to sink down. Later drill results were creditable, but not as good. The stock, except for a brief period fueled by speculation, sunk down to 30-40 cents.

It's still drilling up at Coldstream, and is on its way to preparing a resource estimate of how much gold is in the Sanders zone where the big drill result was scored. Despite that continuing effort, investors lost interest and the stock sunk down into the high 20s. Today, as it faces further lack of interest, the stock fell to the mid-20s. It's a sad case of a stock, white-hot almost ten months ago, fading into the woodwork.

To see what I mean, have a look at Foundation's one-year chart from

The Moral Of The Story: If you're lucky enough to own a stock like this that become white-hot after a great news item, it's often best to sell and run. Someone who bought in around 15 cents and sold at 70 cents in early April, when the ardent ardor started to cool off, would have done a lot better than someone who hung on. Granted that this rule leaves the seller with only half a profit (or less) sometimes, but a bird in the hand is still spendable.

Disclosure: None.


Update: Foundation is still working on Coldstream, and produced a really good if spotty result. Yesterday, it drilled three holes in a new target area, the Iris Lake zone, on the same Coldstream property. All the holes hit gold, but two didn't show good values. The third showed 26 m of core with 3.68 g/t of gold, near the surface. It's only one hole out of three, but it does show potential for a near-surface deposit. Such deposits can have as little as 0.5 g/t gold to be viable. The other two holes' values showed about 100 m underground, well below the surface.

The three holes' record was mixed, so that explains why the stock did nothing on the news. I note, though, that there's next to no starry eyes buying excitedly on the potential of the new zone. There were lots of them a year ago when the original Coldstream hole was announced. Nowadays, the market yawns: Foundation stock only closed up a penny on the news, with thin volume compared to last year's jumps. It's still where it was when I posted two months ago.

Updated chart, also from

Disclosure: None, again.

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