Ever since Argentina has revamped its protection mining laws eight years ago, gold production has increased exponentially. The country produced less than 50,000 ounces during that year, but has blossomed into an industry with much more substance since; producing approximately 1.7 million ounces in 2009 with forecasts predicting in excess of two million ounces having been unearthed in 2010.
As the industry continues to mature, more and more mining companies are heading to the South American country to harvest the riches hidden in the lands.
Toronto-based Malbex Resources Inc. (TSX-Venture:MBG), a gold exploration company led by experienced management and directors, holds an indirect 100% interest in three exploration projects in Argentina's El Indio Gold Belt, which hosts over 35 million ounces of gold in past production and current reserves, including Barrick's Veladero and Pascua-Lama gold deposits.
Today, the Company released news detailing additional higher-grade mineralization at its Rojo Grande target on the Company's Del Carmen gold-silver project in San Juan province, Argentina that got a firm reaction from the mining investment community.
Significantly high intercepts in the three drill holes were highlighted by Hole DDHC-11-046 intercepting 46 metres at 3.31 g/t gold and 25.2 g/t silver and 132.65 metres at 2.10 g/t gold and 10.8 g/t silver, including 23 metres at 5.51 g/t gold and 20.4 g/t silver and also including 34 metres at 3.32 g/t gold and 17.6 g/t silver.
Investors received the news with welcome arms as the stock, which had been on a slide for the last month skyrocketed upward at the bell and reached points as high as 85 cents during the day’s trading. While the share price did give back a portion of the intraday gains and closed right where it gapped-up to at the bell at 73 cents, the rise still netted profits of 23.73 percent for the day above yesterday’s closing price.
This is good news for fans of technical analysis as the shares were already holding over the 200-day simple moving average, which is widely regarded as bullish on its own. Further adding to the contention that the price per share had found a two-month bottom when it touched 46 cents just a few short weeks ago is the fact that today’s movement put the value of a share back over top of the 50-day simple moving average as well.
A gap like that that is supported by strong volume (V.MGB traded 3.5 million shares today) typically referred to as a game changer that should assist the chart reversing courses from the recent downtrend.
Whether the chart will hold or not is certainly impossible to ascertain from any perspective, but when fundamentals and technical start to combine forces, the odds are greatly increased for continued upper movement.
Many technicians will argue that the gap still has to be filled and this may indeed be the case, but a commonality is that, if that happens, buying pressure will follow as traders of the chart will see the support level in that area that has been established and many times seize the opportunity as a valued chance for a stock trying to begin a new uptrend. As always, due diligence on this junior miner, as well as any public company, is encouraged.
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