Source: Adrian Day for Streetwise Reports 01/18/2018
Adrian Day of Adrian Day Asset Management provides updates on three resource companies with recent developments, one of which he deems a good buy now.
Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE, 21.90) has agreed to a revised stream arrangement on the San Dimas mine, as the near-bankrupt operator, Primero Mining Corp. (P:TSX; PPP:NYSE), is acquired by First Majestic Silver Corp. (FR:TSX; AG:NYSE; FMV:FSE). Wheaton will now receive a lower stream (25% of the gold and silver) with a higher ongoing payment; it received $151 million worth of First Majestic shares in compensation for the reduced stream.
The deal is positive for Wheaton, since it allows the company to continue receiving a stream and avoiding a potentially long shutdown in a bankruptcy. The mine goes from 8% of NAV to 5%, however.
Next hurdle: Tax dispute
Having got that problem out of the way, the next major hurdle for Wheaton is the ongoing tax dispute with the Canada tax authorities. Canada Revenue is seeking $267 million in back taxes over Wheaton’s offshore streams, prior to 2010. The window for a settlement is closing as the dispute moves to court. If Wheaton were to lose, the Revenue would then audit very carefully all offshore deals post 2010. Many observers believe that Wheaton has tightened its process in recent years and would not be subject to back taxes on all of its offshore deals. Wheaton, therefore, has an incentive to settle if any agreement can include post-2010 deals. Absent a settlement, the case may not be ruled on until next year. If Wheaton were to lose completely on pre-2010 deals, this would be a blow but far from fatal, and is already discounted in the share price.
New projects soon
After nearly two years without any new deals, the pipeline is moving forward, with expansions at two of its large streams (Salabo and Pensaquito), plus the restart of another mine this year. In addition, progress by Barrick Gold Corp. (ABX:TSX; ABX:NYSE) toward a limited underground mine at Pascua Lama, which would obviate the environmental objections, will generate strong cash flow for Wheaton.
Resolution of the Canadian tax dispute as well as a sharp move in silver—Wheaton is more sensitive to the silver price than its peers—could see the stock move sharply higher.
It is certainly undervalued relative to the other large royalty companies and the stock price has lagged over the past year.
Progress on two fronts
Nevsun Resources Ltd. (NSU:TSX; NSU:NYSE.MKT; US$2.39) has released news on both its operating mine in Eritrea and its development project in Serbia. At Bisha, mining is transitioning. Going forward, the mine is zinc-dominant, and will have to move more material to meet production, given the increased strip ratio. The quarter just finished was successful in that regard. In addition, the recoveries seem to have stabilized.
At Timok, …read more
Source: The Critical Investor for Streetwise Reports 01/17/2018
The Critical Investor profiles a base metal developer with a project in British Columbia that recently signed a major funding agreement with Wheaton Precious Metals.
Very rarely I come across a junior that simply seems to tick almost all boxes, and it looks like new sponsor Kutcho Copper Corp. (KC:TSX.V) is doing just that. From project profitability to management, from financials to geology, from location to metal prices, it comes across as a genuine display of quality and excellence. CEO Vince Sorace certainly made the most of Capstone Mining’s strategy change a few years ago not to develop relatively smaller, non-core assets, and now looking to divest assets to clean up their troubled balance sheet.
In an impressive stream/convertible debt/equity deal with Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) to the tune of C$120M, Sorace managed to buy the Kutcho Copper Project outright in C$28.8M all cash plus an equity interest in the new to be formed company from Capstone, when Kutcho Copper still was predecessor Desert Star Resources, with a market cap of only C$10M at the time. As a consequence, the company is also fully financed to the FS under the current mine plan. I can’t recall (I’m in this industry since 2010) ever having seen deals being done that are so much bigger than the involved junior itself, and are so well structured, with such a quality asset, so as far as I am concerned this should be a prime candidate for deal of the year for 2017.
Although Sorace would certainly deserve all the acclaim for this deal he could possibly get, the main purpose of this article is of course providing an outlook on upside potential for investors. When management would decide to just advance the project, which already boasts an excellent 2017 Pre-Feasibility Study (PFS), to Feasibility Study (FS) stage and having it fully permitted, there is already realistic potential for a double at current strong (and expected to go higher) base metal prices. But there is more. The company has several possibilities to include considerably more resources into the mine plan, which could increase the Net Present Value (NPV) of Kutcho Copper significantly. In this analysis I will discuss this potential, compare the company with peers, and indicate valuation upside.
All presented tables are my own material, unless stated otherwise.
All pictures are company material, unless stated otherwise.
All currencies are in US Dollars, unless stated otherwise.
Kutcho Copper Corp. is a Canadian resource development company focused on expanding and developing the Kutcho high grade copper-zinc VMS project in northern British Columbia. The project is located nearby the richly mineralized Golden Triangle Zone, in hilly/moderately mountainous terrain. As can be seen below by the number of projects and mines, British Columbia is a familiar mining jurisdiction, and has a solid ranking on …read more
Source: Michael J. Ballanger for Streetwise Reports 01/17/2018
Michael Ballanger discusses why he believes the U.S. stock market is defying gravity with a record-breaking nine years without a significant correction.
Before I launch into one of my classic, bitter, vitriolic diatribes against all forms of modern-day interventionalist-type, fraudulent excuses for what use to be “free markets,” have a gander at the chart below. Pay particular attention to the smiles on all of those beaming faces. . .
Alan Greenspan, Ben Bernanke, sidekick Hank Paulson, “Rescue Queen” Janet Yellen, and finally Donald “the Swamp Filler” Trump have all conspired and colluded to ensure that the world has perennially rising stock prices but the man that really set the table for a feast of fiat largesse was Greenspan.
His arrogance in front of the U.S. Congress will go down in history as a training manual for future Fed chairs and in fact served as a mentor to the finest actor to ever hit the Beltway stage in the form of Hank “Mr. Bailout” Paulson. It was Paulson’s plea back on September 26, 2008, who, while down on bended knee, begged Congress to approve his Emergency Stabilization Act, which saved only the banks from annihilation. The actions of the U.S. Fed to rescue the financial institutions that had collectively self-destructed under a mountain of greed-infected leverage was quickly seized upon by their European and Asian counterparts such that the largest publicly reported buyers of stocks since then have been the Bank of Japan and the Swiss National Bank.
It is instructive to know that when I first joined the securities industry back in 1977, ownership of common stocks was considered by the old, blueblood Toronto money as “gambling,” while buying corporate bonds was considered “intelligent speculation” and buying government bonds was “investing.” In fact, government bonds with less than a 10-year duration were considered “conservative investments” one notch down ladder of risk from “savings” (cash). They also considered gold ownership as “insurance” and while it was rarely a big percentage of their allocations, they viewed gold in the same manner as they viewed cash. It was a necessary evil to hold not unlike household or car insurance.
The reason I am writing this missive is that I am growing increasingly annoyed with the media coverage of this so-called “Trump Rally” or “Reflation Trade” or “Tax Deal Repricing” or whatever narrative is required to explain why “It’s different this time.” As I written every month of every year since I began writing about markets, the global economies are NOT booming due to the growth of productivity or population or profits; the global economies are simply responding to a torrent of newly recycled credit, massive liquidity excesses, and unbridled government stimuli.
I was taught by the Jesuits years ago that what creates inflation is rapidly escalating growth in money velocity, a far more potent inflation barometer than the growth of …read more
Source: Streetwise Reports 01/16/2018
A small-cap miner moving forward on its prospects in Argentina has caught the attention of several industry watchers.
Golden Arrow Resources Corp. (GRG:TSX.V; GAC:FSE; GARWF:OTCQB), operating the Chinchillas gold/zinc/lead deposit and the Pinquitas silver/zinc mine in Argentina, released significant news toward the end of 2017. In November, the company announced it was initiating a $1 million “exploration program at its 100% owned Pescado Gold Project” in San Juan, Argentina. “The exploration program will include additional geophysics and surface work to refine drill targets, with up to 1,800 metres of drilling budgeted,” according to the press release. “Work permits have been granted by the provincial mining authorities, and the technical team is now commencing exploration at the Yanso target area.”
In December, Golden Arrow announced Puna Operations Inc., “a joint venture comprised of the Pirquitas property and the Chinchillas property, owned 25% by Golden Arrow,” had secured “approval of the Environmental Impact Assessment from the Argentine regulatory authorities in Jujuy Province, Argentina, and therefore is now permitted for exploitation.”
For Brien Lundin, writing in the December-January issue of the Gold Newsletter, “Golden Arrow fits the mold of near-term production stories that I think will perform well in the new year, assuming the precious metals markets play out like I expect.”
Lundin noted that among the “vast footprint” of the company’s holdings in Argentina, “the key holding in its portfolio is its 25% interest in Puna Operations, a joint venture with long-time Gold Newsletter constituent SSR Mining, the updated moniker for Silver Standard Resources.”
This joint venture “includes current production from stockpile mining at [the] Pirquitas mine,” as well as “a plan to extend the mine life at Pirquitas by trucking ore from the companies’ now-shared Chinchillas silver-lead-zinc project,” Lundin wrote.
“Golden Arrow plans to use the funds from operations at Pirquitas and Chinchillas to make additional property acquisitions in Argentina. It also plans to spin out its large exploration portfolio into a separate company in early 2018, so shareholders who buy in before this event will get to participate in that portfolio’s considerable upside,” Lundin added.
GSA-Silver also reacted favorably to news from Golden Arrow, adding the company to its GSA Silver Fave 5 Portfolio. In its analysis, GSA pointed out that “Golden Arrow has history of exploration success.” The company possesses “many potential upside opportunities,” including a “possible spinout of exploration assets [that] could create additional value” and the possibility that “UG mine expansion focused on small scale, high grade feed at Pirquitas could boost already strong Puna [production] and economics.”
In an article published on Seeking Alpha, writer Steven Goldman noted that “the Puna JV with SSR Mining will be a cash-generating operation anticipated to begin in H2 2018 generating annual revenues for Golden Arrow equal to about 2 million oz of Silver Eq.”
Goldman noted that, “for those willing to take on some risk at its current share price, trading …read more
Source: Jack Chan for Streetwise Reports 01/15/2018
Technical analyst Jack Chan charts the latest movements in the gold and silver markets, and says that a falling dollar is supportive for metal prices.
Our proprietary cycle indicator is up.
Gold sector is on a long-term buy signal.
Long-term signals can last for months and years and are more suitable for investors holding for long term.
Gold sector is on a short-term buy signal.
Short-term signals can last for days and weeks, and are more suitable for traders.
Speculation is in bull market values.
USD: the big trend is down, which is supportive for higher metal prices.
Silver is on a long-term buy signal.
SLV is on a short-term buy signal, and short-term signals can last for days to weeks, more suitable for traders.
Speculative longs are bouncing back sharply from the lowest level in years.
Precious metals sector is on major buy signal.
Cycle is up, suggesting that the multi-month correction is now complete.
COT data is supportive for overall higher metal prices.
We are holding gold related ETFs for long-term gain.
Jack Chan is the editor of simply profits at www.simplyprofits.org, established in 2006. Chan bought his first mining stock, Hoko Exploration, in 1979, and has been active in the markets for the past 37 years. Technical analysis has helped him filter out the noise and focus on the when, and leave the why to the fundamental analysts. His proprietary trading models have enabled him to identify the NASDAQ top in 2000, the new gold bull market in 2001, the stock market top in 2007, and the U.S. dollar bottom in 2011.
Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.
1) Statements and opinions expressed are the opinions of Jack Chan and not of Streetwise Reports or its officers. Jack Chan is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation or editing so the author could speak independently about the sector. The author was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) Jack Chan: We do not offer predictions or forecasts for the markets. What you see here is our simple trading model, which provides us the signals and set-ups to be either long, short, or in cash at any given time. Entry points and stops are provided in real time to subscribers, therefore, this update may not reflect our current positions in the markets. Trade at your own discretion. We also provide coverage to the major indexes and oil sector.
3) This article does not constitute investment …read more
Source: Bob Moriarty for Streetwise Reports 01/15/2018
With shares of Novo Resources on a rollercoaster since the summer, Bob Moriarty of 321 Gold discusses the company’s latest moves.
Novo Resources Corp. (NVO:TSX.V; NSRPF:OTCQX) shareholders have been on a wild rollercoaster ride since early July when the stock snoozed at about $0.80 a share. A video posted on YouTube of prospectors locating gold nuggets at surface at Purdy’s Reward acted as a catalyst to propel Novo higher to $8.83 in the first week of October for a 1000% increase in just over three months.
While the price of shares skyrocketing brought a lot of attention to Novo, there has been more disinformation, misinformation, absurd conspiracy theories and simply stupid comments posted on chat boards than any stock I have ever followed.
One industry “expert” estimated on the basis of a single sample that Novo might have something ten times bigger than the entire Witwatersrand. In November when Novo announced that the large diameter drilling wouldn’t work and later released an additional two assay results, the same “guru” changed his tune to suggest that he couldn’t possibly come up with an idea of the economics of the project.
I was dumbfounded at both statements. There have only been about 6 billion ounces of gold ever produced so saying that a project could be 20 billion ounces is akin to suggesting that the moon “might” be made of green cheese. And given that the Vits grade is estimated at between 8 and 15 g/t and Vits thickness is under half a meter, you don’t have to understand very much to be able to say that if they can mine at a profit in South Africa at a depth of 15,000 feet or almost 4 km, you ought to be able to make money mining higher grade, same thickness but at surface. For months we had almost daily reports on Novo from this writer but hopefully he’s now gone quiet.
Novo has released only five assays total from four samples. In early August the company reported results from a single bulk sample that they split so there are two results but from only one sample. One split showed 87.76 g/t or 2.82 ounces a ton and the other showed 46.14 g/t or 1.48 ounces. Those results should have been a red flashing light to investors. If you split one sample into two batches and one shows a grade almost twice as high as the other, you know you are going to have a giant problem getting an accurate measure of grade due to the nugget effect.
Quinton Hennigh made it clear that he wanted to try the large diameter reverse circulation drill but that it was only a test. No one knew if it would work or not. And in November he reported that it did not work but they were happy with trenching to determine grade and …read more
Source: Streetwise Reports 01/11/2018
It’s been full speed ahead for this TSX.V-listed gold explorer in Bulgaria, and the drill bit is showing results.
Velocity Minerals Ltd. (VLC:TSX.V) began drilling its Rozino gold project in southeastern Bulgaria in August, and has now drilled more than 7,000 meters. The company’s most recently released drill results show diamond drill hole RDD-040 returning “144.7m grading 1.52g/t gold, including 24.0m grading 4.05 g/t gold.”
“This is the thickest continuous drill intersection ever returned from the property averaging greater than 1.0g/t gold,” the company noted. Assay results have expanded the near-surface mineralization beyond the Main Zone to the East and North Zones.
“Velocity’s shares look set to turn higher soon.” – Clive Maund
Keith Henderson, Velocity’s president and CEO, stated, “Exploration at East Zone has been particularly successful with hole RDD-040 intersecting continuous high-grade gold mineralization from surface over a 144-meter drill intersection. The most recently completed drilling at Rozino has stepped beyond Main Zone, seeking to define additional zones of near-surface mineralization at North Zone and East Zone.”
Henderson also noted that “since closing the acquisition of Bulgarian assets in late July 2017, Velocity has rapidly advanced the project and based on positive results added a second rig in October to complete more than 7,000m in total. Our stated aim has been to define potentially open-pittable epithermal gold mineralization and the program has clearly met that objective.”
The Rozino project is located about 20 kilometers from Ada Tepa, which Dundee Precious Metals is developing.
“With 7,000m of drilling completed, we anticipate conducting another 7,000 to 10,000m of drilling, which will enable us to release a preliminary economic assessment (PEA). Our option agreement grants us 70% of the project upon delivery of the PEA, which we hope to complete by late summer,” Henderson told Streetwise Reports.
“Velocity closed a successful financing at the end of September.” – Clive Maund
“We are delivering on what we’ve said we were going to do,” Henderson said. “We’ve drilled and have gotten really good results. The results at Rozino point to near-surface gold mineralization, which makes the project potentially open-pittable. We will continue to release drill results as we receive them.”
Technical analyst Clive Maund charted Velocity Minerals on CliveMaund.com on Jan. 10 and noted “the stock looks cheap here, as it looks set to reverse to the upside soon.” Another positive factor to take into consideration, Maund stated, “is that the company closed a successful financing at the end of September, making it less likely that there will be another one soon.”
Maund concluded that “Velocity Minerals is close to a cyclical low and looks set to turn higher soon.” The stock, he said, is ‘completely ‘off the radar’ so the emphasis is on quiet accumulation without the expectation that it will go roaring up 2 days after we buy it. Nevertheless, once the trend reverses it could make good percentage gains from here.”
Want to read more Gold Report articles …read more
Source: Streetwise Reports 01/11/2018
Euro Pacific Capital reviewed the new estimated resource released by this company for its Peruvian mine.
In a Dec. 21 research note, Euro Pacific Capital analyst Bhakti Pavani reported that Great Panther Silver Limited (GPR:TSX; GPL:NYSE.MKT) released an updated mineral resource estimate for its Coricancha mine, which it had acquired from Nyrstar in June 2017. “We believe the overall mineral resource update at Coricancha is positive,” Pavani commented.
In the updated version, the Measured and Indicated (M&I) resource totals 752,759 tons. The M&I silver equivalent is higher, having increased to 24.2 million ounces from 21.96, Pavani highlighted. However, Inferred silver equivalent are lower, having decreased to ~0.9 million tons from 4.9, primarily due to the difference in methodologies used to calculate the resource.
Most noteworthy about the estimate, Pavani noted, is the metal grades “are comparatively higher than” those in the previous estimate. Comparison of the grades in the newly calculated resource to those initially determined showed 200 versus 174.6 grams per ton (200 vs. 174.6 g/t) gold, 5.8 vs. 5.04 g/t silver, 2.06 vs. 1.97% lead, 3.26 vs. 3.11% zinc and 0.53 vs. 0.42% copper, respectively.
For the resource update, Great Panther used the results from its own drilling of 33 diamond holes, (~6,000 meters) on the property along with the data Nyrstar had amassed and used in the historical resource in 2012.
The miner aims to complete and announce the results of optimization and technical studies on Coricancha by Q2/18, Pavani reported, with production likely starting there sometime in 2020. Euro Pacific believes Great Panther has sufficient cash to advance the project to that point.
Euro Pacific has increased its valuation on Coricancha to $85 million from $74 million based on the updated, NI-43-101-compliant resource estimate and “assuming the recovery of 80% of the M&I resource and 64% of the Inferred resource,” Pavani explained.
Regarding an update at the company’s Topia mine, Pavani indicated that in a “significantly positive development,” Great Panther now holds all of the required permits to build and run the new phase 2 tailings storage facility there, and plans to start construction immediately. The analyst added that the company has “sufficient capacity remaining at phase 1 to allow uninterrupted mining operations at the Topia mine and expects a seamless transition to deposition at [the] phase 2 tailings storage facility.”
Euro Pacific has a Buy rating and a CA$2.90 per share target price on Great Panther Silver, whose stock is currently trading at around CA$1.70 per share.
Read what other experts are saying about:
Great Panther Silver Limited
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Source: Fincom Investment Partners for Streetwise Reports 01/11/2018
While miners have bounced off their December lows, what is in store for 2018? Fincom Investment Partners profiles a handful of companies it believes have an opportunity to double in 2018.
December’s annual tax ritual provided a number of opportunities. While miners have bounced off the December lows, the year is just getting started, so now what? Going forward, we prefer shares offering fundamental value improvement, which may increase share price in both a rising gold environment, and, if it so happens, another flat or soft year. These stocks have an opportunity to double in 2018 even if the mining sector remains flat.
Silvercorp Metals Inc. (SVM:TSX; SVM:NYSE). Bet you did not know that in the last (available) quarter (Q317), Silvercorp earned more money than Helca, Coeur Mining, First Majestic Silver, SSR (formerly Silver Standard), Tahoe, Endeavour Silver and Klondex COMBINED. A Canadian company, its high-grade silver mines in China produce a strong zinc/lead by-product, thus earnings have been excellent. We have the company at about an 8X current year PE. With $100 million in cash and no debt, SVM’s $438 million market cap easily makes it the best value in silver mining.
In terms of China operations, by now, all skeptical doubts are finished. We believe there is less risk as a tax-paying operator in China, than about anywhere in Latin America, Africa, etc. Following the company for several years now, we have found management solid and conservative. We cannot say the shares are this cheap entirely because of poor investor communication, as there is almost no investor communication. We have also spoken with a former, highly experienced and well-regarded senior mining exec who visited the properties in depth and offered a highly favorable opinion, calling it “one of the best properties I’ve ever seen.” In addition, Silvercorp now owns 32% of New Pacific Metals; already with nearly a billion ounces, this Bolivian silver developer has company-maker potential.
Marathon Gold Corp. (MOZ:TSX; MGDPF:OTC.MKTS) did not have much of a tax loss season as shares were up 125% in 2017, although consolidating for the past 11 months. We think that is a “tell” and great set-up; as shares outperforming the indexes, combined with heavy insider buying, confirms our view that this Newfoundland project is not only going to be a very profitable gold mine, but still a relative value. Already at nearly 3 million gold ounces, ongoing drilling is hitting consistently; initial PEA underway for Q2. Proven, serious and highly skilled management team has done it before, from grass roots exploration to ultimate sale. Well financed, without over-issuing warrants. Something we like. The good news is that management does very little to promote the shares, so you are not buying a lot of fluff. The bad news is there isn’t much of any promotion; you may have to sit with shares during consolidation …read more
Source: The Critical Investor for Streetwise Reports 01/09/2018
As zinc continues to rise, The Critical Investor profiles an explorer consolidating claims in southeastern British Columbia.
Kootenay Arc; Jersey Emerald Project
Every now and then certain junior mining companies succeed in consolidating a large group of claims or even multiple projects on very favorable terms, often creating very interesting continuous land packages with ongoing areas of exploration potential, greenfield and/or brownfield. This kind of transactions are usually out of the realm of larger, well-known parties, as prices shoot up the second their involvement becomes apparent.
One of these junior mining companies is Margaux Resources Ltd. (MRL:TSX.V), a relatively new player on the zinc front. The company consolidated a lot of land and historic mines in an area called the Kootenay Arc, and set out to look not only for zinc, but also for tungsten and gold. This year has already seen quite a bit of exploration activities on various projects, so it is time to discuss the current status of the company and its projects.
All presented tables are my own material, unless stated otherwise.
All pictures are company material, unless stated otherwise.
All currencies are in U.S. dollars, unless stated otherwise.
2. The Company
Margaux Resources is a mineral acquisition and exploration company focused on zinc, gold and tungsten resources in the richly mineralized Kootenay Arc region of southeastern British Columbia (B.C.), Canada. The company has quietly consolidated a portfolio of previously producing properties in the last three years with excellent exploration potential, five projects containing 24,635 hectares in total claims, that include the Jersey-Emerald mine, which at one point was the second largest historic zinc-lead mine in B.C. and the second largest tungsten mine in North America.
The projects are located in the richly mineralized zinc/lead/silver Kootenay Arc belt in the southern part of B.C. which extends over 300km, in hilly/moderately mountainous terrain. British Columbia is a very familiar mining jurisdiction, and has a solid ranking on the Policy Perception Index according to the last Fraser Survey of Mining Companies, coming in at #41 out of 104 jurisdictions worldwide.
Kootenay Arc; projects
The infrastructure is excellent as the area is a mining hotspot, with power dams nearby, and the company also identified a few nearby opportunities to eventually mill and process ore in the future. These are the Kettle River gold mill owned by Kinross in Washington, the Pend Oreille Mill belonging to Teck in the same state, and Teck’s Trial smelter complex in B.C., one of the world’s largest fully integrated zinc and lead smelting and refining complexes.
Margaux Resources has laid out a clear strategy from the get-go: it wanted to identify high-yield, past-producing and long-time inactive mines; it wants to apply modern geoscience and technology in order to research current potential at low cost, and identify economic potential previously discarded due to old mining/processing technology. It seems that they acquired …read more
Source: Streetwise Reports 01/09/2018
As this gold explorer continues to test its Australian property, an updated preliminary feasibility study is expected this quarter.
Vista Gold Corp.’s (VGZ:NYSE.MKT; VGZ:TSX) principal asset is the Mt. Todd gold project in Australia’s Northern Territory, where the company is undertaking metallurgical testing. At the end of November, Vista Gold announced that its test work has led to improved gold recoveries; automated sorting and a two-stage grinding circuit would “enable the project to achieve a finer grind size, higher gold recoveries/higher gold production, and lower processing costs with no material increase in project capital.”
Heiko Ihle, an analyst with H.C. Wainwright & Co., noted in a Nov. 28 update on Vista Gold that his firm expects “a reduction in grinding, leaching, and tailings handling costs due to lower volume of material processed, and reiterate[s] the potential for these changes to reduce the above costs by around 10%.”
“We expect the improvement in recoveries to translate to greater production and profitability at Mt Todd,” Ihle wrote.
The company is now updating the preliminary feasibility study (PFS), which it plans to release this quarter. “We continue to expect an updated PFS for Mt Todd to be completed in 1Q18 and expect the study to reflect a project that can provide value to shareholders at the current gold price, rather than a potentially higher price in the future,” Ihle noted.
Fund manager Adrian Day of Adrian Day Asset Management, wrote in Global Analyst on Nov. 20 that “the updated study should be strong, with CEO Fred Earnest telling investors ‘to expect improved recovery, sorting, power savings, and an improved currency exchange rate,’ which will combine to produce ‘a compelling rate of return at today’s gold price.'”
“This is significant,” Day noted, “because Mt Todd has a reputation as a deposit that requires a higher gold price to be economic. Earnest said Vista is ‘no longer just a call option on the price of gold, but owners of a large-scale, economically viable gold project.’ Indeed, Mt Todd is the largest undeveloped gold project in Australia and the third-largest reserve package in that country. It could be among the top five producing mines in Australia, with costs in the lowest quartile.”
Adrian Day included Vista Gold in his short list of Best Buys on Dec. 19.
Analyst Ihle also discussed the Vista’s valuation: “We view the current share price as a buying opportunity and believe that recent metallurgical testing should meaningfully improve the economics of the project. In our opinion, the Vista Gold share price thus far has not reflected these improvements.”
“We continue to expect an updated PFS for Mt Todd to be completed in 1Q18 and expect the study to reflect a project that can provide value to shareholders at the current gold price, rather than a potentially higher price in the future,” Ihle concluded.
Adrian Day shared the sentiment in his Nov. 20 report. “Despite the progress and very …read more
Source: Rudi Fronk and Jim Anthony for Streetwise Reports 01/08/2018
Rudi Fronk and Jim Anthony, cofounders of Seabridge Gold, discuss gold’s recent moves and potential signs of a bull market.
Gold is up nine of the last 12 Januaries with an average gain of over 4%, and the trend has continued in 2018 with gold reaching an intraday high of $1,327 so far this year. From December 19 of last year, gold rose 10 trading days in a row. Is this another rally destined to disappoint investors or the resumption of the gold bull market?
To make a reliable bullish case, gold must first break decisively over $1,360 (the 2017 high) and then $1,375 (the 2016 high). So, the question can’t be answered yet. But there are some encouraging signs. Gold posted a 14% gain in 2017, its best annual increase since 2010. In mid-December 2015, gold bottomed at $1,051 per ounce. In mid-December 2016, it bottomed at $1,128 per ounce. For 2017, the bottom was on January 3 at $1,162. That’s a trend of “higher lows,” which is a solid indicator of a turn in the market.
Breaking out above the July 2016 high of about $1,370 per ounce would generate a “higher high,” a strong sign to us that gold is in a new long-term uptrend.
Gold’s long-term moving averages are in bullish alignment for the first time since 2012. The last time the alignment structure flipped to bullish was in 2002, which confirmed the beginning of a major gold bull market.
Gold’s net speculative position of 33% as measured by the CME’s latest COT report is not low but it’s far from an extreme. The 2012 and 2016 price tops in gold corresponded to speculative peaks of 55%.
Furthermore, the U.S. dollar is rolling over. A falling dollar, especially against the yen, has been good for gold most of the time. As the dollar has weakened, commodities have strengthened, usually another good correlation with a rising gold price.
One thing that can’t be argued: Gold is at an all-time low against the stock market and gold stocks are near all-time low against equities generally. The balance of risks would now appear to favor gold stocks as never before.
Here are some charts to illustrate:
Gold appears to be breaking out of a major 11-year wedge:
Gold has moved above its 50 and 200 week moving averages:
The Bloomberg Commodity Index has pushed above its 50 week moving average (black line), supporting gold (red line):
Gold is at all-time lows against its most important investment competitor:
And gold stocks are near all-time lows against equities:
This article is the collaboration of Rudi Fronk and Jim Anthony, cofounders of Seabridge Gold, and reflects the thinking that has helped make them successful gold investors. Rudi is the current Chairman and CEO of Seabridge and Jim is one of its largest shareholders. Disclaimer: The authors are not registered or accredited as investment …read more