?? How Far You Can Go With A Paper Currency?
CEO.CA Presents the Chairman's Briefing - May 11,?2023
?“Nobody knows how far you can go with a paper currency before it gets out of control, particularly if you are the world's reserve currency”
- Warren Buffett
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Metals/Crypto Prices
The chop around the low to mid $2k level continues as the precious metal stubbornly holds onto its hard-fought gains. Should it be trading significantly higher amidst all this economic and geopolitical uncertainty? Some analysts think 'yeah... f*ck yeah'—Gold price should be at $2,200 right now, U.S. dollar is overvalued by 20%, says BCA Research?(we hear ya BCA, you're preaching to the choir).
BCA Research's chief FX strategist Chester Ntonifor: "If you were to model central banks buying gold at current levels, and you look over the next five to ten years, then you would see gold over that timeframe at $2,600."
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Au and Ag Equities
The Senior stocks have been putting on a show in the wake of this positive trajectory, but as we highlighted in?a recent briefing, there's a deep disconnect between the equities and the metal—a disconnect that has been in place for more than a decade. The stocks need to at least double from current levels to align with their historical average.
The following is a 5-year chart of the GDX. $44 n change represents a multi-year high for this ETF.
When you factor in the metal's recent flirtation with all-time highs, and with the GDX currently hovering around the $35 level, it's clear the equities need to play some serious catch-up to challenge their 2020 highs—a move that would still leave it far short of historical norms. This disconnect may represent an opportunity (perhaps a glorious one if the metal corrects back down to the low 1990s (a distinct possibility)).
For now, all eyes are fixed on the Bureau of Labor Statistics when it trots out the latest CPI digits later this morning (May 10).
Further Down the (PM Equity) Food Chain
The mid-tier producers are also catching a bid. SSRM—a mid-tier producer with four operating assets + another four being pushed along the development curve—recently delivered Q1 results that fell in line with expectations, putting the company on track to meet full-year consolidated production and cost guidance. The market's reaction...
Torex Gold, another producer in the mid-tier camp, has been delighting shareholders with some of the steepest price chart trajectory in the sector. The catalyst for this positive price action: repeated success at its?Morelos Complex?(which includes the El Limón Guajes Mine Complex) along the prolific Guerrero Gold Belt in southwestern Mexico.
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Teck Turns to Juniors?
On May 8, American Eagle Gold (AE.V) dropped the following headline -?American Eagle Gold Announces C$2.96 Million Financing With New Strategic Shareholder.
Turns out the strategic shareholder is mining behemoth Teck Resources Limited.?
The Eagle's flagship asset in the Babine copper-gold district of west-central British Columbia - the?NAK Property?- is a road-accessible porphyry copper-gold target exhibiting the characteristics of a robust and large-scale system. Though vastly unexplored, historical drilling at NAK defined a near-surface Cu-Au system with a geological footprint greater than 1.5km x 1.5km.?
Mining giants like Teck are only interested in projects that carry the potential to host 'robust and large-scale systems' aka Tier-1 orebodies. Their involvement warrants a closer look at NAK. According to this May 8 press release, immediately following the closing of this raise,
"Teck will hold 14,400,000 common shares of American Eagle or approximately 15.0% of American Eagle's issued and outstanding common shares on a non-diluted basis."
PP highlights:?
The proceeds of this raise will fund a 6,000-metre drill program designed to test a number of high-priority targets at NAK.?
We're Now in a Market that Rewards Good Results.
While senior and mid-tier gold stocks have been blissing out savvy investors with fat profits in recent weeks, the same can't be said for those in the junior arena. The juniors have yet to benefit from the metal's strength to the degree that the Bigs have. But that is bound to change. And there are already indications that significant funds are spilling over.
Junior's Making the Grade
The following companies are bucking the flat-to-dispirited price action in junior land, rewarding early shareholders who believe we're on the cusp of a bull run that will prove epic in scale. The way we see it, the companies highlighted below telegraph leads of what's in store for the rest of the sector (for other well-run, resource-rich companies in mining-friendly jurisdictions).
(note that this list represents only a cross-section of the positive price action we're witnessing and is by no means a complete list)
Seabridge Gold (SEA.TO)
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Seabridge's total resource base in the prolific Golden Triangle of northwestern British Columbia is difficult to wrap one's mind around. The company's?Kerr-Sulphurets Mitchell (KSM) Project?boasts 154 million ounces of Au in all resource categories (plus significant Cu, Ag, and Mo credits).
In this buoyant precious metals environment, the market can no longer ignore this extraordinary mineral endowment, especially in a region that has seen $4.4 billion in M&A activity over the past few years.
Teuton (TUO.V), Tudor (TUD.V) and American Creek (AMK.V)
Tudor and its JV partners, Teuton and American Creek, hold the ground next door to Seabridge's KSM property—Treaty Creek. TC also ranks way up there on the gold resource food chain with 23.4 million AuEq ounces in the Indicated category and 7.4 million AuEq ounces Inferred.
The JV partners are currently in the midst of a (minimum) 25,000-meter drilling program that will target the north and northeast extensions of the Goldstorm Deposit where recent campaigns tagged the project's highest grades—2023 Exploration Drilling Program Commences at the Treaty Creek Project, Golden Triangle, Northwestern British Columbia.
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Collective Mining Ltd (CNL.V)
Collective Mining continues to drop extraordinary assay-related headlines from its?Guayabales Project?in Caldas, Colombia. The launch in late February was triggered by?a headline?highlighting an impressive 384.7 meters grading 2.46 g/t AuEq (including 109.8 meters at 4.14 g/t AuEq) from surface. That was followed by 359.15 meters grading 3.32 g/t AuEq in?a mid-March press release.
After exploration was accelerated in mid-April with the mobilization of a fourth rig, the company dropped another impressive headline—Collective Mining Discovers a New High-Grade Zone at the Breccia to Porphyry Contact by Drilling 104.8 Metres Grading 5.56 g/t Gold Equivalent from Surface at Apollo.
Delta Resources (DLTA.V)
Delta has recently attracted a following after reporting a series of drill hole-related headlines from its Delta-1 Gold project in the Thunder Bay region of Ontario. Said results include 4.23 g/t gold over 26.2 meters (including a 1.10-meter interval of 49.91 g/t Au) within a broader zone of 2.06 g/t Au over 65.8 meters, highlighted in?an April 12 press release.
On April 20?the company reported?broad zones of near-surface mineralization that included 1.29 g/t Au over 97.0 meters and 0.55 g/t Au over 238.5 meters.?On April 25, more thick zones of mineralization were tagged near-surface including 1.15 g/t Au over 89.7 meters and 0.86 g/t Gold over 109.0 meters. Additional drill hole assays from Delta-1 are pending.
Mayfair Gold (MFG.V)
Located in the prolific Timmins region of Northeast Ontario,?Fenn-Gib,?Mayfair's mothership asset, currently hosts an (updated) open-pit constrained Indicated resource of 3.06M ounces at a grade of 0.81 g/t Au and an Inferred resource of 310k ounces at a grade of 0.70 g/t Au. The company's positive price chart trajectory is due to a number of impressive drill hole values released in recent weeks.
A few examples:
On May 2, the company reported another broad interval of Au mineralization from an ongoing resource expansion and infill drill program—Mayfair Gold Reports 0.71 g/t Gold over 371.0m, Including 1.00 g/t Au over 71.0m and 0.91 g/t Au over 137.8m from Fenn-Gib Drill Program.
Nevada King Gold (NKG.V)
Nevada King is another company reporting broad intervals of gold mineralization from its flagship project. Its?Atlanta Gold Mine Project?(a historical producer) is located along the prolific Battle Mountain Trend in mining-friendly Nevada.
Recent results include:
After a substantial upsizing of a recently announced PP (twice upsized due to popular demand), the company accelerated exploration at its flagship—NEVADA KING ANNOUNCES DOUBLING OF DRILL PROGRAM TO 60,000M AT ITS ATLANTA GOLD MINE PROJECT, NEVADA.
Prime Mining (PRYM.V)
Prime's mothership asset—Los Reyes—is located in the mining-friendly district of Sinaloa, Mexico. Extremely well-run and with a successful track record of operating in the region, the company is aggressively pushing this district-scale, multiple-deposit project along the curve.
Recent catalysts include a May 2 press release announcing an updated mineral resource estimate for Los Reyes (1.47 million AuEq ounces Indicated, plus 730k inferred AuEq ounces Inferred)—Prime Mining Doubles High-Grade Los Reyes Gold-Silver Resource.
After successfully triggering the acceleration of 14 million warrants with a $2.00 strike, the company now boasts $45.5 mill-in-the-till.
CEO Daniel Kunz: “...?we are now positioned to increase our exploration activities at Los Reyes this year and next. We expect to increase the total planned drilling from 45,000 to 60,000 metres for 2023 and to undertake a similar-sized drill program in 2024. Our target in the coming years is to double the size of the high-grade gold-silver mineral resource estimate recently announced on May 2, 2023.”
Skeena Resources (SKE.TO)
Another company with a resource-rich chunk of terra firma in the prolific Golden Triangle of northwestern British Columbia, Skeena's?Eskay Creek Project?should see (first concentrate) production in Q1 of 2026.
A past producer of some 3.3 million ounces of gold and 160 million ounces of silver at average grades of 45 g/t Au and 2,224 g/t Ag, Eskay Creek was hailed THE highest-grade gold mine in the world in its day (from 1994 to 2008).
With proven and probable reserves of 3.85 million AuEq ounces, a September 2022 feasibility study highlights an after-tax NPV5% of C$1.4B, a 50% IRR, and a 1-year payback at US$1,700/oz Au and US$19/oz Ag. These robust economics were sufficient to attract royalty colossus Franco-Nevada to ink a deal valued at $27M—Skeena Closes Sale of Royalty on Eskay Creek for C$27 Million.
The Potential
Numerous companies in the junior arena with high-quality assets on their books are still mired at their 52-week lows waiting for the right catalyst to shake things up. NOW may be the time to run your due diligence and create a short list of potential buy candidates, if you haven't already done so. Chipping away at (resource-rich) stocks plumbing their lows is often a counterintuitive process. It should NOT feel 'right' buying weakness, but most serially successful investors will tell you that their biggest wins sprang from such actions (holding their noses while teeing em up on their trading platforms).
To Assist in your Due Diligence
The venerable Fraser Institute just released its?Annual Survey of Mining Jurisdictions, a survey that ranks provinces, states, and countries according to the extent that public policy factors encourage or discourage mining investment. This is a valuable resource. Ignore the insights at your peril.
The Top
The top jurisdiction in the world for investment based on the Investment Attractiveness Index is Nevada, which moved up from 3rd place in 2021. Western Australia, which topped the ranking last year, ranked 2nd this year. Saskatchewan continues to be on the podium, dropping slightly from a rank of 2nd in 2021 to 3rd this year. Rounding out the top 10 are Newfoundland & Labrador, Colorado, Northern Territory, Arizona, Quebec, South Australia, and Botswana. The United States, Canada and Australia each have three jurisdictions in this year’s top 10, followed by Africa.
The Bottom
When considering both policy and mineral potential in the Investment Attractiveness Index, Zimbabwe ranks as the least attractive jurisdiction in the world for investment followed by Mozambique, South Sudan, and Angola. Also, in the bottom 10 (beginning with the least attractive for investment) are Zambia, South Africa, China, the Democratic Republic of Congo, Papua New Guinea, and Tanzania. Africa is the region with the most jurisdictions (8) in the bottom 10. Asia and Oceania both have one jurisdiction each in the bottom 10.
Hits of the Week
A consortium led by Canadian mining veteran Pierre Lassonde has proposed to buy the company's coal operations, a deal that could thwart Glencore's hopes of acquiring the company -?Lassonde-led group seeking to buy Teck's coal business
Morgan Stanley believes lithium markets have hit a turning point following a brutal sell-off in the battery metal, as sentiment improves due to falling inventories and softer-than-expected supply growth -?Lithium markets at a ‘turning point’: Morgan Stanley
The Venezuelan government has deployed over 5,000 soldiers in the country’s national parks with the goal of evicting criminal groups leading illegal gold mining and drug trafficking operations -?Venezuela deploys 5,000 soldiers in national parks to deal with illegal gold mining, drug trafficking
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