• An Exploration Company Where the Geologist Is the Largest Shareholder and Banking on His Own Success

    An Exploration Company Where the Geologist Is the Largest Shareholder and Banking on His Own Success

    Source: Streetwise Reports 01/27/2020 The chief geologist believes the deposits are part of a large, emerging trend.Megastar Development Corp. (MDV:TSX.V; MSTXF:OTC; M5QN:FSE), a small-cap exploration company focused on the emerging Oaxaca Gold-Silver Belt in Mexico, has conducted fieldwork over two months that has revealed multiple targets for further exploration. The fieldwork is being overseen by David Jones, chief geologist and a director of Megastar, who over his 40-year career has had a number of high-profile discoveries and expansions under his belt. Those in Mexico include the 1995 discovery of the Los Filos deposit in what is now known as the Guerrero Gold Belt (GGB), leading the successful Teck bid for the Morelos Reserve in the GGB (now Torex Gold), principal geological consultant in the fundraising and start-up of Torex Gold, the targeting of Gold Resource Corporation's recent Switchback mine discovery, and participation as a director in the successful sale of Cayden Resources to Agnico Eagle. Jones was one of the early geologists to recognize the larger potential of the Guerrero Gold Belt, which over the past 25 years of his involvement has grown from less than 2 million ounces of gold to more than 30 million ounces. "The reason I tend to have more success than failure is that I focus on thinking about why mineralization is where it is and where I might find more, especially if there are no obvious indicators in the area. Los Filos was a blind discovery; there was nothing at the surface, and it was based on a geologic idea that paid off," Jones told Streetwise Reports. He says that similar thinking may be applied to the state of Oaxaca, Mexico. Jones has become interested in the regional structures that cross through southern Mexico. "In Oaxaca, there are super volcanoes—calderas—and every mineralized district that I know of along the central volcanic belt in the state, including Fortuna Silver's San Jose Mine and Gold Resource Corp.'s Arista-Switchback and Alta Gracia mines, is associated with Tertiary calderas and their related structures. The liquid magma that comes up fills the cracks and associated hydrothermal fluids make the ore body," Jones explained. Epithermal gold-silver deposits are known for their bonanza grades, "fabulous high grades, gold, silver, copper, lead, zinc, with gold upwards of 5 grams per tonne, silver in the kilo range and base metals in the multi-percentage range, all in the same vein," Jones said. Jones views the emerging Oaxaca Gold-Silver Belt as an "opportunity parallel to that of the early Guerrero Gold Belt" with the potential for significant discoveries. Fortuna Silver's San Jose Mine has produced 767,000 gold-equivalent ounces (gold and silver) since 2013; Gold Resource's Arista-Switchback and Alta Gracia mines have produced 465,000 ounces of gold since 2011. Acting on his working theory is what allowed him to target what became the Switchback mine discovery. Applying his knowledge on a more regional scale led Jones to secure ...read more
  • Malevolent Microbes

    Malevolent Microbes

    Source: Michael Ballanger for Streetwise Reports 01/27/2020 Sector expert Michael Ballanger examines the possible effects the emergence of the coronavirus in China may have on markets, and offers his observations on January's market performances. There is a local casino just "up the road" from where we reside that we visit (once in a blue moon), small sums of pocketed cash in hand, to play a few favored slot machines to see if we can defy the house odds and come home winners. Called The Great Blue Heron Casino, we have nicknamed it "The Blue Goose," in reference to how one usually feels upon departure. On occasion, we drive back "down the road" with smiling faces because we spat in faces of the Gambling Gods and actually came out ahead. However, the majority of the time, we limp home dejectedly, vowing never ever to return. Then, a month later, back "up the road" we go with yet another modest wad of the ultimate in "risk capital" to fire into the vice machines, forgetting all vows of abstinence and reformation. Now, being that it is the closest casino to the large Asian populations of the Greater Toronto Area, the Goose is frequented by busload after busload of (predominantly) gamblers of Chinese descent or origin, cash literally falling out of pockets, who dash immediately in the direction of the exclusive "high-roller" sections. I have observed from afar elderly Chinese women sitting at a slot machine for hours, reaching into well-guarded handbags for $100 bills, which they deposit with orderly precision and astonishing calm. The robotic nature in which they perform these functions are almost religious in nature but alas, this is not the point of the story. Last evening, I was about to sneak into the "Goose" for a fast $500 "cleansing" when I looked up to see one of those packed tour buses unloading passengers. What struck me as "odd" was that all of these (predominantly Chinese) people were wearing surgical masks. The last time I saw people wearing surgical masks outside of an operating theater was during the SARS epidemic, circa 2002, and in the category of "How Quickly We Forget," global markets were roiled by that frightening pandemic. So, with the arrival of a new strain of microbe known as the "coronavirus" now dominating the news cycles, it was as if a large bucket of ice water was dumped down my (and the market's) back. I recall reading John Naisbitt's 1982 bestseller Megatrends: Ten New Directions Transforming Our Lives, in which one of the major new directions was the "mutation of the microbe." The explosion of world travel, with emphasis on the mass immigration of Asians to every other continent on the planet, has made the transportation and incubation of harmful, if not deadly, strains of bacteria a definite problem. It was identified by Naisbitt forty years ago in his book, as was the ascension of ...read more
  • More Details on Private Placements

    More Details on Private Placements

    Source: Maurice Jackson for Streetwise Reports 01/27/2020 In part three of the series, "All About Private Placements," Maurice Jackson of Proven and Probable talks with Tekoa Da Silva, a financial adviser with Sprott USA, about details of private placements, including removing restrictive legends, exercising warrants, timing of private placement tranches, and understanding corporate share structures.Maurice Jackson: Thank you for joining us for the third part of a special four-part series entitled All About Private Placements. Joining us for conversation is Tekoa Da Silva. He's an accomplished licensed financial adviser for Sprott USA, the premier name in the natural resource space. Full disclosure, the following is not a Sprott USA endorsed product and it is for educational purposes only. Tekoa, we concluded the second part of this series with the question regarding legend removals. Now what if I have an online discount broker? Can I go to them and have my legend removed? Tekoa Da Silva: Looking at it from a North American context, a person may have a brokerage account with Charles Schwab, Fidelity, TD Ameritrade. The best place to get the answer that question is by calling them and asking the adviser that the person works with. And the answer that they get will probably result in you having to speak to three or four people at that firm to get a precise answer and it may be an imprecise answer at that. My impression is that many of the broker dealers, certainly in the U.S., are continuing to cut out the services that they used to offer because they're no longer considered core products and services, and the cost of offering those services is going through the roof in terms of compliance and legal. So why deal with it? From their standpoint, I think it makes much better sense to just simply let those services and those people go. But a person can always ask and they can always try. My observation and my discussions with a few people that have tried some of those discount online brokerage firms in the past was that it was a real run around, sort of like spending a week at the DMV. So if someone has some time to kill and they want to pursue that process, by all means. But my advice would be to vet out a couple firms that claim to be specialist, natural resource and private placement capable firms, and test them out and see how they go. But be careful with trying to do private placement activities with discount brokers. Maurice Jackson: I've gotten the legend removed and I now have the ability to sell my shares, but also the price has increased. Let's use this scenario that we discussed earlier with Novo Resources Corp. (NVO:TSX.V; NSRPF:OTCQX). I bought it at 66 cents. The warrant, I can exercise it for one year at 90 cents, and the stock price is now ...read more
  • Experts See Opportunity in Ratios of Gold to Silver and Platinum

    Experts See Opportunity in Ratios of Gold to Silver and Platinum

    Source: Maurice Jackson for Streetwise Reports 01/23/2020 Andy Schectman of Miles Franklin Precious Metals Investments and Maurice Jackson of Proven and Probable discuss investment strategies centered on precious metals ratios.Maurice Jackson: Joining us for a conversation is Andy Schectman, the president of Miles Franklin Precious Metals Investments. Always a pleasure to have you on the program to discuss the value proposition before us in precious metals. Today we will identify three exciting value propositions for your precious metals portfolio that are currently selling at a deep, deep discount. Mr. Schectman, you have a proven pedigree of success in the precious metals space. I want to discuss a methodology that has made you and the clients of Miles Franklin very handsome returns over the years, and that is your use of ratios. Sir, please explain why it is paramount for precious metals investors to have a thorough understanding on precious metals ratios. Andy Schectman: When we last spoke I shared that legendary investor Rick Rule is fond of saying, "the deal's in rhetoric," and he deals in arithmetic. I like to look at the world the exact same way, from the standpoint of arithmetic, and at least in terms of any precious metals investor, ratios are very, very, very important in mathematics. They are another way of saying the law of averages. As we look at ratios that fall out of historical average, they represent opportunities—in fact, distinct opportunities. I guess the easy way of saying that is the farther away you get from long-term established averages, the greater the magnetism that pulls you back to the average. I'm here in Minneapolis, where the high today may be 20–25 degrees. If I woke up this morning and it was 85 degrees in the middle of the winter, I wouldn't rush to pull out my lawn furniture and assume that spring has come early. It's an aberration, it's an anomaly. When I look back at what has made me successful over the years, in many respects the ability to identify and exploit price anomalies or averages or ratios has really been at the very forefront of my success. It's something that I'm keenly aware of and like to share as often as possible. Maurice Jackson: Speaking of opportunities and anomalies, let's discuss our first value proposition, and that is gold. Andy, please introduce the Dow-Gold ratio. Andy Schectman: Historically, when the Dow can be bought for five ounces of gold, we buy stocks and sell gold. When it takes over 15 ounces to buy the Dow, you sell stocks and buy gold. Bill Bonner, who's a very smart man, has a chart [and] he's been tracking this for the last hundred years. Had you followed that pattern over the last hundred years, there would have been six possible trades that you could have made and you would have won on every single one of them. I guess as a ...read more
  • Golden Arrow Resources Renegotiates Indiana Project Deal; Ready for Drilling and a Potential New Precious Metals Bull Market

    Golden Arrow Resources Renegotiates Indiana Project Deal; Ready for Drilling and a Potential New Precious Metals Bull Market

    Source: The Critical Investor for Streetwise Reports 01/23/2020 The Critical Investor provides an update on this explorer's Indiana project in Chile.Golden Arrow Resources Corp. (GRG:TSX.V; GARWF:OTCQB; G6A:FSE) recently came out with some pretty interesting news on its Indiana gold project in Chile. The company managed to amend the definitive agreement with the property owner, Mineria Activa (MSA), a Chilean private equity investment management firm focused on exploration to production-stage assets in mining. Golden Arrow now has the right to earn 100% of Indiana over a 74-month period, expiring in December 2024, and the total cost of US$15.1 million has not changed. However, the payment of US$1 million due to the end of 2019 was reduced to US$150,000, and the subsequent payment of US$2 million due in one year is reduced to US$200,000. Another great advantage is moving US$7 million of the total US$15 million payment obligation for the 25% MSA interest during production after a production decision, meaning that MSA will be bearing execution risk now. This is obviously a great advantage to have as hard dollar commitments have been scaled back significantly this way, and that money can be spent at exploration. I was interested in the fact that this agreement could be adjusted so considerably after a relatively short period of time, during what seems to be the first innings of a new precious bull market. After asking VP Exploration and Development Brian McEwen a number of questions about this, he had the following insights to share: "Indiana is a narrow vein project with very good potential for expansion of resources, and when you include the possibility of adding ounces from surrounding prospects of very interesting targets. The difficulty in projects like this the cost of proving up resources. It is very expensive to drill it off to the required spacing to meet 43-101 standards. Given this point we went back to Mineria Activa (the vendor) and said we are willing to honor our total commitment to pay $15 million for the project, but with a different strategy of initially drilling off enough to prove up a feasible operation and then making the payments out of cash flow. "At first they were not interested in this option as it means they need to accept some of the mining risk, which before they did not. We presented a staged plan with the possibility of obtaining a mining partner and said we would start right away with mobilizing a drill this month. Mineria Activa are reasonable partners and accepted the proposal. This is all very good for GRG as we now have two years to prove up a workable plan requiring minimal vendor payments. We also now earn 100% of the project, where before Mineria Activa had the option to maintain a 25% interest." On my follow up question of what really changed, as the needed dense grid spacing was probably apparent ...read more
  • Explorer 'On the Road to Production'

    Explorer 'On the Road to Production'

    Source: Streetwise Reports 01/21/2020 The next steps for the precious metals company are provided in a ROTH Capital Partners report.In a Jan. 17 research note, analyst Jake Sekelsky reported that ROTH Capital Partners raised its price target on SilverCrest Metals Inc. (SIL:TSX.V) to $7.75 per share from $7.25. The current share price is $6.85. "Our increased valuation is primarily a reflection of rolling our model forward to 2020, coupled with the inclusion of the company's financing announced in Q4/19," he added. Sekelsky noted that SilverCrest will be announcing in Q1/20 results from several hundred holes drilled at the Las Chispas property in 2019. It will include all results available through the end of Q1/20 into the upcoming feasibility study. After, it will likely shift focus "from infill drilling for the feasibility study to expansionary drilling at various targets across the company's land package," he added. The analyst highlighted that with C$124 million in its treasury, SilverCrest is well funded for both exploration and development work this year. Its financial position also portends a positive production decision, expected around mid-2020. Accordingly, production could begin as soon as late 2021 but more conservatively in Q1/22. Sekelsky commented, "2019 featured significant exploration success culminating in the establishment of what we view as a significant resource estimate at Las Chispas, which outlined over 100 million high-grade AgEq ounces. Despite this, we believe the surface has just been scratched as Las Chispas and expected 2020 to serve as a transformational year." ROTH has a Buy rating on SilverCrest. Sign up for our FREE newsletter at: www.streetwisereports.com/get-news Disclosure: 1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None. 2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. 3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. 4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise ...read more
  • Gold Company's 'Ramp-up to Commercial Production on Track for Q2/20'

    Gold Company's 'Ramp-up to Commercial Production on Track for Q2/20'

    Source: Streetwise Reports 01/21/2020 An update on the project and its production is provided in a Haywood report.In a Jan. 10 research note, Haywood analyst Kerry Smith reported that Lundin Gold Inc. (LUG:TSX) remains on track and on budget to achieve commercial production at its Fruta del Norte project in Ecuador in Q2/20. "Fruta del Norte is one of only a few new large mines being built," Smith highlighted. Lundin poured first gold from the gravity circuit at Fruta del Norte on Nov. 16, 2019, after which it went on to produce 28,678 ounces of gold in 2019. Of those, 3,411 ounces were made into doré form, and the remaining 25,267 ounces were produced as a concentrate. Of the 3,400 tons of concentrate produced, 2,676 tons were shipped to a smelter in Finland. Smith also reported on development progress of the mine and infrastructure. At year-end 2019, 13 kilometers of underground mine development were finished. Construction was 99.2% complete, and ore stockpiles amounted to 153,000 tons. Now, the water treatment plant is being commissioned. Boring of the south ventilation raise, in progress, is slated for completion in Q1/20. Lundin should get the paste plant and Zamora River bridge, which still need to be done, completed in Q2/20 and Q3/20, respectively. The analyst pointed out that Lundin revised its life of mine plan for Fruta del Norte. It raised the all-in sustaining cost (AISC) by about 6.5% to US$621 per ounce from US$583; the new figure is lower than Haywood's revised life of mine AISC of US$635 per ounce. An increase in the assumed gold price to US$1,400 per ounce from US$1,250 drove the new AISC, which boosted production taxes and royalties and lowered projected byproduct credits. "Gold prices are moving higher, and timing is looking good for this new producer," commented Smith. Lundin is expected to produce 290,000 ounces of gold at Fruta del Norte in 2020. Haywood has a Buy rating and a CA$9.25 per share target price on the company, whose stock is currently trading at around CA$9.42 per share. Sign up for our FREE newsletter at: www.streetwisereports.com/get-news Disclosure: 1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None. 2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. 3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. 4) The article does not constitute investment advice. Each reader is ...read more
  • Gold Update: May Retreat Before Next Upleg

    Gold Update: May Retreat Before Next Upleg

    Source: Clive Maund for Streetwise Reports 01/20/2020 Technical analyst Clive Maund looks at the charts and finds that gold may react back before continuing to climb.At first glance gold looks like it may be about to advance out of a bull Flag, but there are a number of factors in play that we will examine that suggest that any near-term advance won't get far before it turns and drops again, and that a longer period of consolidation and perhaps reaction is necessary before it makes significant further progress. On the 6-month chart we can see how gold stabbed into a zone of strong resistance on the Iran crisis around the time Iran's general was murdered, but after a couple of bearish looking candles with high upper shadows formed, it backed off into what many are taking to be a bull Flag. The 10-year chart makes it plain why gold is vulnerable here to reacting back over the short to medium term, because it has advanced deep into "enemy territory": the broad band of heavy resistance approaching the 2011 highs, with a zone of particularly strong resistance right where it is now. It would be healthier and increase gold's chances of breaking out to new highs if it now backed off into a trading range for a while to moderate what now looks like excessive bullishness. Thus it remains a cause for concern (or it should be for gold bulls) to see gold's latest COTs continuing to show high Commercial short and Large Spec long positions. Is it going to be different this time? The latest Hedgers' charts that we are now going to look at suggest not. Click on chart to pop-up a larger, clearer version. The COT chart only goes back a year. The Hedgers' charts shown below, which are a form of COT chart, go back many years, and frankly, they look pretty scary. We'll start by looking at the Hedgers' chart that goes back to before the 2011 sector peak. On it we see that current Hedgers positions are at extremes that way exceed even those at the peak of the 2012 sucker rally, which was followed by the bulk of the decline in the bear market that followed. Does this mean that we are going to see another bear market like that? No, it doesn't, but it does mean that these positions will probably need to moderate before we see significant further gains. Click on chart to pop-up a larger, clearer version. Chart courtesy of sentimentrader.com Looking at the Hedgers' chart going way back to before the year 2000, we see that the current readings are record readings by a significant margin and obviously increase the risks of a sizeable reaction. We can speculate about what the reasons for a decline might be, one possibility being the sector getting dragged down by a stock market crash after its blowoff ...read more
  • Palladium Miner Shows Promise

    Palladium Miner Shows Promise

    Source: Ron Struthers for Streetwise Reports 01/20/2020 Given current market conditions, the location and potential of its flagship project, and the strength of its management team, Ron Struthers of Struthers' Resource Stock Report believes this firm represents a solid investment.I have been looking for a very good junior palladium stock, and I believe this is the best one out there for potential enormous gains. But before I get to that, it is important to have a look at the palladium market, because this bull market is much different than the last one. The one from 1997 to 2000 was about three years' long, and then palladium dropped, giving up most of the gains in less than a year. There was a nice bump up from the 2008 crisis and then the price traded sideways for several years. The price bottomed at the end of 2015 with the severe bear market in precious metals. Since then the price has been going steadily higher, with a major break out in 2016. This bull market is not going to end anytime soon for the reasons I will show you in the next couple pages. Palladium is mostly used in the auto industry for pollution control with catalytic converters. Electric vehicles will be a long time coming to replace any significant amount of gasoline/diesel-driven vehicles. Meanwhile, pollution standards are being tightened that will keep demand high. China has been gobbling up palladium since their China 5 pollution standards took effect in 2013. China 6 will now be coming into effect, which will increase loads per vehicle of palladium. Many analysts have been commenting that China has been secretly stockpiling the metal and is driving prices. There is no doubt the demand will remain strong, but the real story is on the supply side and I have more detail. This next graphic illustrates the supply deficit since 2016. It is obvious to see the increase demand from China as pollution regulations are tightened. They are now moving to China 6. This next graphic of global mine production is very important because palladium supply is in very unstable regions. The Russia supply from Norilsk Nickel has always been quite stable and is of no concern, but as investors we cannot really participate there. South Africa is the other big producer and that country is becoming very unstable. More worrisome is that is where all the future reserves are. The world's largest platinum group metals (PGM) reserves are in South Africa, precisely in the Bushveld Complex (in the central-northern part of the country), which alone accounts for about 50% of the world's palladium resources. But overall South Africa has reserves of 63 million kilograms, which represent over 91% of the worldwide availability. South African (SA) mines have always been plagued with labor issues, strikes and high costs. To make matters worse the country is now facing an energy crisis, with rolling blackouts shutting down ...read more
  • The Only 'Bubble' That Counts

    The Only 'Bubble' That Counts

    Source: Michael Ballanger for Streetwise Reports 01/20/2020 Sector expert Michael Ballanger considers the last week in the stock and precious metals markets.Ever since Sept. 19, 2008, when Hammerin' Hank Paulson appeared in front of the U.S. Congress on bended knee and begged those clueless politicians for a bailout—which he did successfully—the spread of moral hazard throughout the world has been a contagion that makes the Bubonic plague appear as harmless as the common cold. That was, in fact, the day that shall go down in fiscal infamy as a most dangerous precedent was etched into the fabric and soul of the U.S. financial system. Not only did it set the behavioral course for the banker-politico alliance, it laid out as an insidious blueprint the operation manual for treasury departments and central banks around the world, the result being where we are today, a global economy teetering on an Mount Everest of debt with no solution on any horizon. This week the investor class has seen the continuation of an advance in that began with the first whispering of the phrase "repo operations" in September, the realization of which did not manifest itself until late October, when I penned the missive "Q4 Guesstimates." As I wrote in September, "I have the feeling that the PPT, with DJT at the helm, is going to go all-out in making damn sure that we have a booming stock market going into 2020, so that his re-election chances don't suffer from the 'It's the economy, stupid' misfortune suffered by George Bush in his re-election run against Bill Clinton." That was written on Oct. 20, 2019, with the S&P 500 at 2,986, and with investor sentiment completely undeterred by the Fed liquidity binge. Fast forward a paltry ninety days and $400 billion in repo injections, and here we sit now, at 3,316. Upon reflection, the only words that come to mind are "mission accomplished", a phrase used all too lightly by our leaders these days. I was sitting in the big bay window overlooking the frozen expanse that is now Lake Scugog last night and was immediately reminded of just how much difference a year can make. This time last year, there were dozens of fishing huts standing all over the lake as temperatures were well below freezing for three solid weeks. This year, the lake is vacant of all fishing, snowmobiling and walking, but quite amenable to swimming should you be brave enough to venture out. ...read more