Thursday, November 15, 2007

Bank of Canada injects liquidity



Bank of Canada injects liquidity

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HEATHER SCOFFIELD
Thursday, November 15, 2007

OTTAWAThe Bank of Canada has moved twice Thursday to inject liquidity into money markets, issuing a total of $1.6-billion in “specials” so far.

It's the first time this month that the central bank has intervened, and is the highest liquidity injections since the credit crunch boiled over in August, and the biggest injection since January, 2000.

The central bank did not provide any official explanation of why it had to intervene so aggressively, except to say it was defending its key interest rate.

The U.S. Federal Reserve Board also injected significant liquidity on Thursday, leading analysts to believe the money market's liquidity problems in Canada are part of a global problem.

The Fed injected $47.25-billion (U.S.), the biggest injection since 2001, according to Bloomberg. However, about $40-billion of that was a renewal of a previous special operation that was expiring.

“It's global. Credit concerns seem to be pushing up the [inter-bank lending] rates,” said Ted Carmichael, chief economist for J.P. Morgan Canada.

If securities in Canada's overnight money market start trading at rates above the central bank's target rate of 4.5 per cent, the higher rate flags a liquidity problem to the Bank of Canada. The central bank routinely responds by making extra credit available at the target rate, thereby dragging the market rate back to target.

The Bank of Canada, like other central banks around the world, intervened heavily in August when the credit crunch was in full swing, and banks – concerned about the risk of counterparties' exposure to investments linked to subprime mortgages – scaled back their lending to each other.

Little intervention has been needed since then, however. The Bank of Canada had a couple of weeks of heavy intervention at the end of October, but other central banks have scaled back.

But inter-bank lending rates have risen above normal levels recently, said Mr. Carmichael, which suggests that banks are growing reluctant to lend to each other again.

“It's not clear that this is a one-day problem or the first sign of something that could get worse going into year-end,” he said.

He said he did not sense any panic on the part of the Bank of Canada about credit conditions. But he said the need for the central bank and the Fed to intervene suggests that the credit crunch is far from over.

“They [the liquidity injections] do indicate that there's real caution among banks about lending to one another,” he said. “And if they're cautious about lending to one another, then they'll be cautious about lending to businesses and consumers. They're protecting their balance sheets and are defensive.”

Canadian banks have announced a string of writedowns this week because of exposure to subprime loans in the United States. And there are signs that lending conditions are growing tighter in Canada.

Still, the Bank of Canada says overall, the tighter lending conditions are about the equivalent of a central bank hike of a quarter of a percentage point, no more.

© Copyright The Globe and Mail



TSX financials weighing on market

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Thursday, November 15, 2007

A recent selloff of TSX financial stocks has sent the composite index to a session low of 13,511, down 263 points, at around 2:45 p.m. EST.

The financial group is down 1.9 per cent, led by CIBC’s 3.5 per cent drop and Scotiabank’s 2.8 per cent loss and Royal Bank’s 2.5 per cent drop.

Only consumer discretionary and health care stocks are in the black.

© Copyright The Globe andMail




Virginia Mines, Breakwater drill 30.45 m of 9.31% Zn

2007-11-14 10:00 ET - News Release

See News Release (C-VGQ) Virginia Mines Inc

Mr. Andre Gaumond of Virginia reports

COULON JV PROJECT LENS 44 YIELDS 9.31% ZN, 1.67% PB, 0.88% CU AND 69.18 G/T AG OVER 30.45M

Virginia Mines Inc. has provided new results from its current exploration program on Coulon, a joint venture property with Breakwater Resources Ltd., located 15 kilometres north of the Fontanges airport, Quebec middle-north. As Breakwater Resources fulfilled all its payment obligations totalling $180,000 and $7.5-million in exploration work, it now owns a 50-per-cent interest in the Coulon JV property.

Current exploration includes prospecting and geological mapping, diamond drilling, a VTEM heliborne survey as well as borehole InfiniTEM surveys. The 18 new holes announced tested lenses 44 (seven holes), 43 (three holes) and 8 (one hole), and the area of the Spirit showing (seven holes).

Lens 44 yields 9.31 per cent zinc, 1.67 per cent lead, 0.88 per cent copper and 69.18 grams per tonne silver over 30.45 metres

Seven new holes tested lens 44 at vertical depths of 430 m to 600 m (longitudinal Section 44/08). Hole CN-07-92 intercepted to a vertical depth of 460 m a thick massive sulphide zone that graded 9.31 per cent Zn, 0.88 per cent Cu, 1.67 per cent Pb and 69.18 g/t Ag over 30.45 m, including two intervals that returned 10.64 per cent Zn, 2.14 per cent Cu, 1.46 per cent Pb and 89.64 g/t Ag over 8.05 m (589.1 to 597.15 m), and 12.51 per cent Zn, 0.48 per cent Cu, 2.19 per cent Pb and 74.06 g/t Ag over 15.7 m (603.85 to 619.55 m). Located 35 m farther north, hole CN-07-105 intersected two main zones of massive sulphides that returned 7.4 per cent Zn, 0.9 per cent Cu, 1.33 per cent Pb and 81.3 g/t Ag over 15.3 m (474.45 to 489.75 m), and 9.26 per cent Zn, 1.31 per cent Cu, 33.81 g/t Ag over 14.95 m (534.15 to 549.1 m). These intersections are at vertical depths of 430 and 450 m, respectively. Some other thinner massive sulphide lenses are also present in hole CN-07-105. The mineralized intersections of holes CN-07-92 and CN-07-105 represent the north extension of large mineralized zones previously announced in holes CN-07-85 and CN-07-85B, thus confirming the presence, at this depth, of a thick, high-grade zone within lens 44.

Furthermore, two of the new holes testing lens 44 confirmed the continuity of the mineralization at vertical depths of over 500 m. Hole CN-07-106 intercepted, to a vertical depth of 530 m, a massive sulphide zone grading 8.21 per cent Zn, 0.72 per cent Cu and 61.82 g/t Ag over 3.75 m. Hole CN-07-103 intersected to a vertical depth of 575 m a massive sulphide zone grading 6.39 per cent Zn, 0.6 per cent Cu and 13.47 g/t Ag over 3.5 m. This intersection is the deepest one obtained to date in lens 44.

The three other holes testing lens 44 did not return economic intersections. Hole CN-07-95 crosscut at a vertical depth of 460 m a semi-massive sulphide zone composed mainly of pyrite and pyrrhotite, which graded 0.36 per cent Zn, 0.73 per cent Cu and 8.5 g/t Ag over 8.6 m. This sulphide zone is followed in the hole by a large alteration zone of nearly 100 m thick. The presence of a pegmatite intrusion of approximately 40 m in thickness in the core of this alteration zone might explain the absence of other mineralized intersections in hole CN-07-95. Finally, holes CN-07-100 and CN-07-109 intercepted alteration zones of 10 to 30 m in thickness with disseminated sulphides locally, at vertical depths of 580 m and 600 m, respectively. All these holes will be the object of borehole InfiniTEM surveys this fall.

Lens 44 is north-south oriented and is dipping vertically to steeply to the west. It is now confirmed over a lateral distance of 300 m and at a vertical depth of 575 m. Lens 44 remains totally open at depth. It is now without any doubt the most important mineralized lens on the Coulon JV project and is currently the focus of additional drilling.

The continuity of lens 43 once more confirmed by three holes

Three new holes tested lens 43 and have once again proved the good continuity of this lens with three significant mineralized intersections (longitudinal Section 43). Holes CN-07-99 intercepted at a vertical depth of 300 m a massive sulphide zone that yielded 8.9 per cent Zn, 1.95 per cent Cu and 31.49 g/t Ag over 2.7 m. This intersection extends the mineralization by 80 m from holes CN-07-84 and CN-07-98 previously announced. Holes CN-07-104 and CN-07-104B confirmed the continuity of the mineralization at 70 m over and under hole CN-07-79 (already published) respectively. Hole CN-07-104 intercepted at a vertical depth of 290 m a disseminated to semi-massive sulphide zone that yielded 0.64 per cent Zn, 0.9 per cent Cu and 9.15 g/t Ag over 10 m, including an interval grading 0.86 per cent Zn, 1.23 per cent Cu and 10.55 g/t Ag over 5.45 m. As for hole CN-07-104B, it intersected a semi-massive to massive sulphide zone that yielded 4.06 per cent Zn, 1.36 per cent Cu and 13.93 g/t Ag over 1.75 m at a vertical depth of 430 m. This intersection is the deepest one obtained to date in lens 43.

Lens 43 is northeast-southwest oriented and seems to present a variable dip toward the northwest. The mineralization is confirmed over a lateral distance of 340 m and at a vertical depth of 430 m. It remains open in all directions and additional drilling is planned to pursue the evaluation of this very significant mineralized lens.

Lens 8

Only one hole tested lens 8 during the recent period (longitudinal 44/08). Hole CN-07-108 intercepted an alteration zone of several tens of metres in thickness, including many intervals with disseminated sulphides reaching up to 20 per cent pyrite, 10 per cent pyrrhotite and 1 per cent chalcopyrite locally. This intersection is located at a vertical depth of 275 m at the south border of lens 8.

Lens 8 is developed at the same stratigraphic level as lens 44 but is located 300 m farther north. It is north-south oriented and has a variable, but generally subvertical, dip. Lens 8 is now confirmed over a lateral distance of 250 m and to a vertical depth of 410 m, and remains open at depth. It will be the object of additional drilling.

Spirit showing area

Three new short holes tested the lateral extensions of the Spirit showing at 50 m on both sides of the discovery. Holes CN-07-101A and 101B, on a section 50 m south of the showing, and hole CN-07-102, on a section 50 m north of the showing, intercepted favourable volcanics but did not intersect mineralization.

However, hole CN-07-94A, testing a weak Maxmin conductor located 330 m southwest of the Spirit showing, intercepted a disseminated to semi-massive sulphide zone that returned 4.11 per cent Zn, 2.32 per cent Cu and 62.08 g/t Ag over 6.15 m. Hole CN-07-94B, drilled directly under this intersection, intercepted a thin disseminated sulphide zone that yielded 1.09 per cent Zn, 0.58 per cent Cu and 17.5 g/t Ag over one m. These two intersections are located at vertical depths of 30 and 40 m, respectively. Additional drilling will be needed to test the lateral extensions of this new mineralized zone and to evaluate its relation with the mineralization of the Spirit showing, located over 300 m to the northwest.

Finally, holes CN-07-96 and CN-07-97, testing other Maxmin conductors located over 500 m to the west of the Spirit showing, intercepted barren mineralized zones (pyrite-pyrrhotite-graphite).

The Spirit showing area remains very promising with a new economic-type intersection associated with a Maxmin conductor. Many other airborne electromagnetic conductors have not yet been confirmed by ground surveys because of the presence of many small lakes in the area. The area will be covered during the winter of 2008 with a surface InfiniTEM survey and will be the object of additional drilling.

VTEM heliborne survey

A VTEM heliborne geophysical survey has recently commenced on the Coulon JV project. This survey will total more than 6,000 linear kilometres over a vast territory of more than 1,000 square kilometres covering the possible extensions of the fertile Coulon volcanic belt. This additional property was acquired following the identification of the Spirit showing in the summer of 2007. The survey should be completed by the end of November, 2007.

All samples have been analyzed at the certified laboratory ALS Chemex in Val d'Or.

Work is carried out by the personnel of Virginia Mines, under the supervision of Paul Archer, geological engineer. Mr. Archer is a qualified person (as defined by National Instrument 43-101) and has more than 25 years of experience in exploration. Mr. Archer reviewed and approved the content of this press release.

We seek Safe Harbor.


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