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April 26, 2012

NioGold Technically and Fundamentally Fit for Upward Movement

The Toronto Venture Exchange has gimped along over the last two months and is growing very close to reaching historic bounce points.  Since its recovery from the markets crash in late 2008, the TSX Venture has produced substantial bounces off the area of 1,350.  The recent general slide in the resource-heavy Canadian markets has brought down dually-listed major and junior miners alike, include household names like Barrick Gold Corp. (TSX: ABX, NYSE: ABX) and Goldcorp (TSX: G, NYSE: GG), but also lesser-known companies like NioGold Mining Corp. (TSX-Venture: NOX, OTCQX: NOXGF, PINK: NOXGF).  Experienced investors know that retracements are not a time to panic; they are a time to look for opportunities.

British Columbia, Canada-based NioGold is an especially interesting developmental company in that its chart paralleled many of its big board peers with a deep drop at the end of 2008, followed by a sharp rise in 2009.  Many junior explorers never regained the losses from 2008 as interest in many small caps softened and a great many haven’t held the gains if they were recovered.  In fact, a look at a three-year comparative chart of NioGold, Barrick and Goldcorp shows that NioGold has actually outstripped the majors by providing a 184.62% return as compared to Barrick’s 12.10% and Goldcorp’s 17.94% returns.

The chart also tells savvy traders to keep a close eye on NioGold as it historically pulls strong support around the 150% gain mark, which translates to a share value of 30 cents as shown below.  The second chart also shows that there is more static support at 35 cents as well as the long-term trend line further validating the support point.

That is, of course, the technical component of why NioGold appears to be presenting a value proposition at this time.  Fundamentally speaking, the company is very sound with a portfolio that not only positions them for strong growth, but undeniably aligns them as a potential acquisition target.  Sure, plenty of junior miners can be called targets, but a more succinct look at NioGold reflects why this is particularly true for them.

NioGold’s portfolio contains:  Marban Block (100% interest), Malartic Hygrade (100%), Malartic H (60%), Val-d’Or (100%), Héva (100%), Siscoe East (50:50 JV) properties and the newly-acquired Camflo West (85 % interest) property via the acquisition from Republic Goldfields Inc.  The Camflo West property consolidates the Malartic Hygrade property and encompasses past producing mines as well as the depth extent of Barrick’s former Camflo Mine which produced 1.7 million ounces of gold from 1965 to 1992.

All of these extensive land holdings (125 km2 in total) are in Northern Quebec’s most prominent gold mining region in the Abitibi Gold Belt adjacent to six (yes, six) producing gold mines that have 15 million ounces in gold reserves.  The adjoining Cadillac, Malartic and Val-d’Or camps have produced over 45 million ounces of gold since the 1930’s. Their Marban Block project holds NI 43-101 compliant (as of Jan 2010) indicated resources of 600,000 ounces gold in addition to inferred resources of 360,000 ounces gold.  NioGold’s aggressive drilling program is further adding to those resources which could push the property in excess of 1.5 million ounces Inferred and Indicated in the short-term.  The gold resources are defined along a three-kilometer segment of a regional gold mineralized fault zone, in and around the former Marban, Norlartic and Kierens gold mines, which collectively produced 600,000 ounces gold.

The Marban Block is currently being explored by Aurizon Mines Ltd. (TSX: ARZ, AMEX: AZK) through an option agreement with NioGold.  Aurizon is putting $20 million into exploration (about $11 million already spent) and will have to make a decision on buying a 50% interest in the property based upon the total Indicated and Inferred resources when the exploration criteria is met.  Even if they don’t add a single ounce to NioGold’s initial estimates (assays already have proved additional gold), the buy-in would add more than $17 million to NioGold’s bank account at current gold prices.  That’s just for 50% of the reserves on one on NioGold’s properties – and common sense says that the dollar figure should be much higher when the next NI 43-101 report is released.

Marban is prolific it seems, but only represents about 15 percent of the NioGold holdings which could draw substantial interest from other miners in the area.  As noted, Barrick already produced at Camflo.  Osisko Mining Corp. (TSX: OSK, OTCQX: OSKFF) just opened a mine literally across the street that contains 12.5 million ounces of gold.  It’s difficult to dismiss potential opportunities with billion dollar companies with familiarity to the land.

All of this from a company that has $6 million in cash on hand and a market cap of $36 million.  If valuation is any reflection of future potential, then NioGold’s is a good old-fashioned head-scratcher as it seems stunningly low.  As reserves are continually proved-up, it would be presumable that investors will be dialing in their sights on this junior with so many lucrative possibilities.

Please view the company’s website for more information.

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