Less than four months into 2019 shares of Westhaven Ventures (TSX-V:WHN) have already had two ~50% declines. The first 50% decline (from the January 2nd high of $1.41 to the January 21st low at $.69) was followed by a 75% rally over the next two months. We will have to see if a similar steady rebound rally occurs this time around.
After reading this morning’s NR shortly after the market open I expected some early weakness simply due to the fact that Westhaven didn’t deliver any eye-popping 20+ g/t gold intercepts like we’ve become accustomed to. Overall the news was fine and if these sorts of results had been announced by a smaller market cap junior with lower expectations they would have probably been well received by the market. However, due to high expectations for hole SN19-02 this morning’s results fell short of market expectations.
At this point I’ll say that I think Westhaven shares are probably fairly valued somewhere between C$.75 and C$1.00. Which means that today’s close is just below the lower end of my fair value range, not entirely unreasonable particularly considering just how shitty the tape has been for junior gold mining shares in the last few weeks.
The catalysts for Westhaven going forward are pretty straightforward:
- Hole SN19-06 has been in the lab since last week and the company made a point to state that SN19-06 “…managed to intersect the Main/first vein zone roughly 40m’s along strike from hole SN18-15.” and the company is “waiting with bated breath” for assays for SN19-06. Westhaven also posted a pic of the core box for SN19-06 on its Twitter account, and the company stated that 19-06 intercepted the first vein zone, which means that it has extended the strike length beyond SN18-15:
Looks like the sort of gray quartz with ginguro banding that we are looking to see at Shovelnose. No accident this core is from around the 180 meter mark which has consistently delivered the highest grades.
- SN19-07 is currently being drilled and if this hole intersects the first vein zone it would also extend the strike length to the southeast.
- Holes SN19-07 and SN19-08 will help Westhaven to better understand the faulting that was encountered at the end of last year in hole SN18-19. Hole SN19-08 (collared 200 meters northeast of SN18-19) will be especially important in helping to determine whether higher grade portions of vein zone 1 were simply shifted to the northeast, potentially still leaving the main zone open to the southeast.
While the market was disappointed that SN19-02 results didn’t live up to its lofty expectations I think it’s important to put Westhaven’s results from the last seven months into perspective – these are the best holes that Westhaven has drilled at the Shovelnose South Zone since last October (in order of highest gram-meters to lowest):
- Hole SN19-01: 12.66 meters of 39.31 g/t gold (Au) and 133.11 g/t silver (Ag)
- Hole SN18-15: 46.20 meters of 8.95 g/t gold (Au) and 65.47 g/t silver (Ag)
- Hole SN18-14: 17.77 meters of 24.50 g/t gold (Au) and 107.92 g/t silver (Ag)
- Hole SN18-12: 1.65 meters of 175.00 g/t gold (Au) and 249.55 g/t silver (Ag)
- Hole SN18-21: 12.90 meters of 12.11 g/t gold (Au) and 94.31 g/t silver (Ag)
- Hole SN19-05: 28.72 meters of 2.97 g/t gold (Au) and 13.68 g/t silver (Ag)
- Hole SN19-02: 17.89 meters of 3.70 g/t gold (Au) and 32.64 g/t silver (Ag)
- Hole SN18-18: 13.67 meters of 4.29 g/t gold (Au) and 21.87 g/t silver (Ag)
These results are phenomenal and I think it’s important to emphasize that all of this has happened in just the last seven months. It is still early days at the South Zone at Shovelnose and Westhaven is fully funded to drill at least another 15,000 meters this summer. The company will move up to two drill rigs when drilling resumes in June (Westhaven will take a break for a few weeks after completing SN19-08), and assay results are likely to be both steady and numerous during the 2nd half of this year.
Technically speaking Westhaven shares closed right at important support and the rising 200-day moving average:
I find it notable that price made a lower low on significantly lighter volume today (at $.60) compared to the January low ($.69). There are some signs of selling exhaustion in Westhaven and today’s late-session rebound formed a bullish hammer reversal candlestick. An up day on above average volume tomorrow would add a lot of weight to the theory that today marked a capitulation bottom in WHN.
I added to an already overweight Westhaven position this morning and I look forward to writing a more complete update once we have assays for holes SN19-06, 19-07, and 19-08.
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