Canadian Company Spotlight

Q-Gold is a Canadian-based mineral exploration company currently exploring for precious and base metals on its 26,000 acres of Ontario holdings in the historic Gold Camp at Mine Centre, including 5 historic gold mines. In addition, the Corporation holds options on historic gold and silver mines in the historic Arizona gold camp of Crown King, and copper prospects in eastern and western Arizona.

Profile

Metal prices haven’t exactly kicked off the New Year with a bang, but this was to be expected. Huge technical moves, such as that of silver, gold and copper, are going to experience a retrace. It’s just the nature of the beast. An experienced trader is aware of this fact and looks to find bargains during the retrace. After all, most serious traders are still banking on gold in the long run and making sure that a portion of their portfolio contains metals as demand, and subsequently, pricing is not expected to stay down in the overall scheme of things.

What are the experts saying about the future of gold? One of the world’s largest bullion banks, HSBC Holdings PLC HSBC.L, raised its 2011 gold price forecast to $1,450 an ounce in a note on January 4, 2011, citing expectations that investors will continue to turn to gold as a haven from risk. The bank stated that it expects gold to average $1,300 an ounce for 2011; up from the $1,275 it have previously forecast.

While silver is retracing a bit from its 30-year highs, most analysts are forecasting continued strength in the white metal. HSBC also lifted its silver price forecast to $26 an ounce for 2011 from $20, and stated that it expects the second precious metal to average $20 an ounce next year, up from $17.50. In general, despite a pull-back metals are expected to stay strong for the foreseeable future as demand stays strong, banks continue to be buyers and supply and demand continues to teeter as new deposits need to be mined.

With unemployment still sky high and economic struggles still unresolved globally, the United States Federal Reserve is expected to continue with its quantitative easing measures throughout 2011. Let investors not forget that QE2 was often referred to as “the next round” with no real guidance given if it would be “the last round.” Inflation and deflation are common terms thrown around daily as they are primary concerns. As developing countries continue to grow rapidly, inflation fears are strong and providing the other side of the coin as the U.S. is internally afraid of deflation, thus more quantitative easing may very well be in the future.

A retrace in metals, to the savvy investor, is a gold mine of its own. For those interested in adding gold, silver or copper to a portfolio, the opportunity to buy at lower prices is presenting itself. It also provides a shift in focus to retail buying of stocks as many of the metal miners will see a decrease in share price. This sends traders scattering for solid deals on companies both large and small.

Understanding the correlation is pretty simple. When metal pricing are running and the market is unstable, investors flock to metals as what is always referred to as a “safe haven.” When metals start to retract, investors will pull profits from the metals, leaving in a bulk for future rises, and invest part of the proceeds into companies that can then allow for some further developments to happen before the next rise in metal prices. It creates a lower risk and also increases possible gains at the same time.

Finding the developmental miner that is poised to make a move is the key to success. Investors look to miners with diversified properties, financing and the management team to make it happen not only in the near future, but for many years down the road to maximize potential gains.

Q-Gold Resources Ltd (TSX-Venture:QGR) is a company that fits the profile. Based in Flagstaff, Arizona, Q-Gold controls a large and diversified portfolio of highly prospective gold, silver and copper properties, all of which are located in the politically stable and geologically desirable venues of Ontario, Canada and Arizona, USA. The Company holds rights to two past producing gold mining camps including the historical Foley gold mine located near Mine Centre, Ontario. Q-Gold has also acquired options on seven historic gold and seven silver mines located near Crown King, Arizona, one of Arizona’s richest historical gold and silver producing districts. It also has options on three copper exploration properties in Arizona, including a property adjacent to ASARCO's massive Ray copper mine.

Q-Gold’s Mine Centre project is part of the extensive Granite/ Greenstone Belt gold zone in Ontario; the largest gold-producing area in the province. In 2006, the province produced 57.4 metric tonnes, which represented 55% of total Canadian gold production. The properties encompass over 26,000 acres of mining claims, leases, patents and options that include the historic Foley and Golden Star gold mines, as well as three other gold mines that were never produced. As a result of strategic acquisitions, Q-Gold controls nearly all of the prospective gold lands in the Mine Centre area, where over 100 quartz veins have proven to be gold-bearing. In addition to the gold zones, base metals mineralization has also been identified in a number of locations on the properties.

The Foley and Gold Star mines produced an “official” total of 16,025 ounces of gold during the late 1800’s and early 1900’s, but the actual total is subject to debate as it was not uncommon for totals to be incorrect during those times. The mine is well-developed and was scheduled for ever further development until interrupted by the Great Depression in the 1920’s. Even still, approximately 800 tons of additional ore was mined from the South Foley Shaft between 1933 and 1934, producing 855 ounces gold and 149 ounces silver, at an average gold grade of 1.07 ounces per ton.

The Company’s 2009 successful extension of the historic McKenzie Gray gold/ silver deposit at Mine Centre has been the subject of a recent geophysical survey and two successful diamond drill programs. Thirty holes totaling 3,843 metres have considerably extended the gold/ silver zone along strike and at depth at McKenzie Gray. Additional drilling is planned for 2011.

In addition to its Canadian properties, Q-Gold also controls valuable property in Arizona believed to contain significant amounts of gold, copper and silver. The Agreement in Crown King, Arizona enables the Company to acquire a 100% interest in mining and surface rights to twenty-three (Federal) patented mining claims and twenty-three (Bureau of Land Management, U.S. Department of the Interior) mining claims in the historic Tiger Mining District located in the Southern Bradshaw Mountains in Yavapai County. Again, the mines are historic, having been explored a century ago, but data shows enormous potential of large reserves.

Also in Arizona lies the Company’s primary copper properties located near the ASARCO Ray copper mines. Operations on this open-pit mine consist of 250,000 tonnes of copper ore production per day with a 30,000 tonnes per day concentrator, a 103 million pound per year solvent extraction-electrowinning operation, and associated maintenance, warehouse and administrative facilities. All required resources including a local railroad are nearby for this project.

Clearly Q-Gold has the properties. The management team is led by John Campbell who has over a decade of experience in the exploration, development and production of natural resources.

The finances are intact with a $600,000 flow-through placement occurring in November to add to nearly a quarter of a million available in cash on hand. With a very tight share structure of only 27 million shares issued and outstanding, Q-Gold is in a position to move forward with a corporate structure that will facilitate expansion, growth and development of it properties and corporation.

Technically speaking, the chart for QGR warrants close attention as it looks poised to make a move. The price per share is making higher lows since last August when it was at $0.095. The price per share (pps) is holding over both the 50 and 200 day moving averages (dma) as the 50 is breaking up towards the 200 dma and prepared to make a “Golden Cross,” which is very bullish in the long term. A clear static support level is established at 16 cents with dynamic support from both the 50 and 200 dma’s reiterating that support. The indicators have reset themselves after the climb from 12 to 20 cents as the stock price has held more than 50 percent of those gains in a classic consolidation. At this point, the indicators are starting to turn back north and giving signs that the consolidation may be over and the chart is ready to turn back bullish.

While the indicators and pps are giving hints that the chart may be ready for another climb, the most important parts of this chart are the patterns that are being made by the candles. In the long-term, the chart is in a symmetrical triangle pattern where the price per share is both rising and pulling back at equal angles. The trendlines on the top and bottom are clearly defined and a breakout to the upside through $0.19 could lead to a much stronger move as strong price resistance will not come into the picture again until $0.25. In addition to the triangle, the chart has formed a “cup and handle” pattern, which is well-regarded as one of the strongest patterns amongst technical traders. The slide from $0.22 to make a rounded bottom at $0.12 and subsequent rise to $0.20 made the cup while the recent consolidation back to $0.16 has made the handle. A breakout of the handle, which ties in with the breakout of the triangle, puts a target above the resistance at $0.25. For a technical trader, the combination of these patterns deserves attention as to the sheer magnitude of the technical potential of the stock chart. As always, we encourage all investors to do their own due diligence in any Company they invest in, and always consult with a financial advisor prior to making any investment decisions.  This analysis of the QGR technical chart is merely AllPennyStocks.com's interpretation, and proper due diligence is always recommended.

Even though the technicals look poised for possible upward movement, the Company further added fuel to the fire by announcing significant news after the bell today. The Company announced the results of the first 6 drill holes of its diamond core drilling program on its 93% owned McKenzie Gray gold/silver discovery near Mine Centre, Ontario, and they were good. Highlights from the first six drill holes of the 2010 drilling program on McKenzie Gray included 9.25 metres of 179.79 g/t silver, including 5.4 metres of 293.93 g/t silver (QMG10-03) and 2.9 metres of 152.72 g/t silver (QMG10-04). The CEO of the Company, John Campbell stated. "We are very pleased with the results of Phase II drilling thus far. This year’s drilling on McKenzie Gray not only encountered high grade gold mineralization, but especially high grade silver mineralization over significant lengths. We look forward to further exploration and the possible extension of this high-grade gold and silver system in Phase III.”  Corporate news has a way to move investor sentiment really quickly, so investors are strongly suggested to watch developments unfolding rapidly for V.QGR.

Investing in the stock market can be a tricky endeavor to truly understand. Analysts may seem to be playing both sides of the fence and it is not necessarily that they aren’t. Investors looking to lower risk factors and also increase the chance of gains at the same time learn how to survey the overall picture of the market and look for opportunities to capitalize on many different levels. Mining and metal investments can prove to be extremely lucrative if the proper discretion is used and the timing is right. Much like metal prices, the share price of Q-Gold is in a bit of a retrace and will be garnering a much closer look from investors before the trend shifts north again. It is for this reason as well as the qualities mentioned above that we at AllPennyStocks.com have decided to turn our next Canadian spotlight on Q-Gold Resources Ltd (TSX-Venture:QGR) and encourage investors to do their own due diligence on the Company and add it to their watch lists.

J. Bruce Carruthers II, B.A., M.S. - Chairman of the Board and Chief Operating Officer and Director

Mr. Carruthers has over 40 years of experience in the exploration, development and production of natural resources (mining and petroleum). In 1992, as Operator for Inco, Mr. Carruthers directed the exploration program responsible for the $500 million Loma Blanca Borate discovery in Argentina. He was also responsible for the reactivation of the Tasna gold and bismuth mine in Bolivia, which was subsequently sold, along with eight other South American properties, to Corriente Resources. Previously, Mr. Carruthers worked for 16 years in management with Occidental Petroleum Corp., and seven years with Texaco (New
York) and Mobil Oil in Tripoli, Libya.

Robert Gardner, Q.C. - President and Director

Mr. Gardner is also the proprietor and senior partner of the law firm Gardner & Associates. He is a barrister called to the Honorable Society of Inner Temple (United Kingdom) in 1965 and a barrister and solicitor (Queen's Counsel) called to the Law Society of the Province of British Columbia in 1966. Mr. Gardner is involved with numerous reporting issuers and is currently the chairman of Stealth Energy Inc., an oil and gas company listed on the CNSX. He is also the chairman and a director of Viridis Energy Inc. and a director of First Star Resources Inc., both companies are listed on the TSX Venture Exchange.

John Campbell, B.A. - Chief Executive Officer and Director

Mr. Campbell is an experienced fundraiser for junior resources companies and is currently CEO and a director of Stealth Energy Inc., an oil and gas company listed on the CNXS. He is also a director of Viridis Energy Inc. and First Star Resources Inc., both companies listed on the TSX Venture Exchange.

Bill Majcher - Director

Mr. Majcher is presently a Managing Director of the Baron Group, a Hong Kong-based merchant bank and a director of China Investment Fund (HKSE) and Evolving Gold Corp. He is also on the Advisory Board of the FMS Group, a Singapore-based institutional investor group and fund manager.

Brian R.D. Smith, Q.C. - Director

Mr. Smith is a practicing lawyer with Gowlings, Lefleur, Henderson, LLP of Toronto. He is the past Minister of Energy and Mines, past Education Minister and past Attorney General of the Province of British Columbia. He is also past Chairman of BC Hydro and past Chairman of Canadian National Railways.

Eric A. Gavin, B.S. - Chief Financial Officer and Vice President Finance and Administration

Mr. Gavin is an experienced is focused in managing the accounting and administrative duties for various public and private natural resource exploration companies, including the past ten years for Q-Gold and its predecessor company.

Head Office:

c/o Mineral Creek Resources, Inc.
Bank of America Building
121 East Birch Avenue, Suite 508
Flagstaff, Arizona 86001

Phone: (928) 779-0166
Toll-Free: 888-779-0166
Fax: (928) 779-0107

Investor Relations:

J. Bruce Carruthers II, President
Phone: (888) 779-0166 or (928) 779-0166
Email: info@qgoldresources.com

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