Stock to Watch

I recently learned about a deal in a company called Gold bag soon to be renamed Focus Gold (GBGI OTCBB) . The company has properties in both Mexico and the Timmins district. The company recently released a Technical Report (the "Report"),pursuant to National Instrument 43-101, on the company’s recently acquired Huicicila Project in Nayarit state, Mexico. The report was prepared for Focus Gold by consulting geologist William Feyerabend (the "Geologist").

The report describes the project as an "economic to bonanza grade goldsilver deposit" with the identification of "multiple veins with high gold analysis and gold demonstrated over 200 vertical meters." The report also points to the potential of discovering "more ore shoots of roughly the dimensions and grades of the SARCO historical reserves." Because of the high gold values shown in multiple veins, the reports states that "a focused exploration program could thus discover 500,000 ounces of  gold" and that, "no social or environmental issues were discovered."

  

The company has also announce the renewal of the Mining Leases for the Watabeag and Russell Creek properties has been approved by Ontario’s Ministry of Northern Development, Mines and Forestry. On October 10, 2010, Focus Gold announced an option agreement with Victoria Gold Corp to acquire the properties located in the Timmins Mining District in Ontario, Canada, one of the world’s most prolific gold mining areas. Under the terms of the Option Agreement, Focus Gold will acquire 100% ownership of the Properties upon issuance of 250,000 shares of common stock and the expenditure of $2,000,000 for cumulative Exploration and Maintenance on the properties, to be completed on or before the third anniversary of the date of the Agreement. Renewal of the Mining Leases will allow Focus Gold to commence exploration and maintenance on the properties.

Therefore, the company is position on both  Mexico and Timmins two of the most mining friendly districts in the world. I expect aggressive drilling in the Huicicila project going forward.  Therefore, this is the type of deal I like in that it has the potential to create a small resource then aggressively drill to expand on that resource. I bought a financing in the deal and I expect it to move higher going forward.

There has been a big seller in the stock over the past few days with over 1 million shares traded in the past few days. However, the stocks seems to absorbed a lot of this selling. Therefore, if this individual continues to sell you still might be able to get some cheap stock going forward. Once the stocks works through this selling it might move significantly higher.

Remember as before, this is a secular trend (higher gold and silver) so there is no need to rush in and take big positions, there are always pullbacks but at the 150 here, is a good spot to open a 50% position and add as desired.