BVG: Rising from the Ashes

Gold Newsletter (05/25/2010)
"Bravo finally released its long-awaited updated resource estimate for the Homestake Ridge project and, frankly, I would have had no problem waiting a bit longer for the news.

It seems that Scott Wilson Roscoe Postle Associates, the independent engineering company performing the resource estimate, concluded that Homestake Ridge could not be developed under any open pit scenario, and had to be considered as an underground-only mine. Thus, the economic cut-off grades had to be much higher under this higher-cost scenario, and raising the grade resulted in a much smaller resource, even after considering the last two years of drilling. As one would expect, Bravo's share price fell precipitously on the news.

. . .Frankly, given the precipitous fall in share price, the company is probably fairly valued considering the high-quality ounces it currently has, and considering the C$6 million, 12,000-meter drill program about to begin. Some may even consider it undervalued.

My conclusion is that Bravo is much more likely to rise from current levels than it is to fall further, thus I'll make it a hold for those who already own it, and a speculative buy for those who don't."

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