Juniors to Recover as Gold Moves Ahead

Source: Adrian Day for The Gold Report   03/23/2017

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Fund manager Adrian Day discusses several mining and energy companies in his portfolio that he believes should appreciate now that the recently released Canadian budget does not include a tax rate increase.

Many Canadian juniors had seen significant deterioration in prices in the last few weeks, even as gold and large mining companies rallied. This decline in juniors particularly affected stocks that had seen large capital appreciation in the recent past. This was the result of Canadian investors selling shares to lock in capital gains tax rates ahead of a widely anticipated increase in the tax rate. But in the budget just released, the government said there would be no rate increase. We expect, therefore, that there will be some buying back of shares sold in coming days and an overall firming in the Canadian junior market. Below are three stocks (LRA, AXY, MD), among others, that could benefit from such buying.

Strong assets, waiting for partners, court
Lara Exploration Ltd. (LRA:TSX.V, 1.01) continues to deal properties, acquiring new properties that is options out to others, but has hurdles on its two main assets. The Maravaia copper-gold deposit (part of the Curionopolis project in northern Brazil) is behind schedule. However, Tessarema is working towards commercial production at the mine, which is the hurdle is must meet to earn 100% of the project. At that point, Tessarema must pay Lara another US$750,000, which also retains a 2% royalty.

Meanwhile, Codelco (Lara’s joint venture partner) and Vale continue their court case over the Liberdade Copper project, also in Brazil. We remain optimistic on a resolution—if not the timing thereof—that would revolve to the benefit of Lara. Codelco has the right to earn into 75% of the project, but the value of Lara’s remaining 25% would exceed the current market cap. The company, with about CA$3.5 million in the bank, has sufficient cash for its programs.

Lara is a strong buy here for patient investors with a certain tolerance for risk.

Company continues to grow towards long-term goal
Alterra Power Corp. (AXY:TSX, 4.77) continues to make progress towards its goal of being a dividend-paying, diversified green-energy company. Last year was, in the words of founder and chairman Ross Beaty, a transition year. Power production is up 20%, with a new hydro project in British Columbia starting production, a new solar farm acquired, and the first full year from the Shannon wind farm. The company now has eight operating plants, in three countries, and has growth projects that could conservatively double production “in the next few years.” A modest dividend was introduced last year (yield of just over 1%), but the goal is to increase the dividend significantly once the company reaches a critical mass. Alterra is a buy for long-term investors.

There’s been no news from Reservoir Capital Corp. (REO:TSX.V, 0.03 x 0.04)—the last substantive press release announcing an interim CEO, was in August—but we expect some development in coming months. Because of the extreme low price we would not sell, but are not buying until the future course becomes clearer.

Another partner resumes activity
Midland Exploration Inc. (MD:TSX.V, 1.06) , no sooner than my last article with a recommendation on the stock was published, announced that partner Agnico Eagle would resume drilling on the Maritime-Cadillac property, contiguous to Agnico’s Lapa gold mine property. Though not unexpected, this is yet another drill program with a quality partner. Midland expects over 25,000 meters of drilling this year (not feet, as stated in last article). Buy Midland at this level.

Adrian Day, London-born and a graduate of the London School of Economics, heads the money management firm Adrian Day Asset Management, where he manages discretionary accounts in both global and resource areas. Day is also sub-adviser to the EuroPacific Gold Fund (EPGFX). His latest book is “Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks.”

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.

Disclosure:
1) Adrian Day: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Midland Exploration, Lara Exploration and Alterra Power. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management hold shares of the following companies mentioned in this article: Midland Exploration, Lara Exploration, Reservoir Capital and Alterra Power. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
4) This 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 Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview/article until after it publishes.

( Companies Mentioned: AXY:TSX,
LRA:TSX.V,
MD:TSX.V,
REO:TSX.V,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17352

Iskut Could Be as Important to Seabridge as KSM

Seabridge’s Iskut project has the potential to be another success story like its flagship, 100%-owned KSM project.

When Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT) closed the sale of its Castle-Blackrock claim block interest in Nevada to Columbus Gold in February, Seabridge Chairman and CEO Rudi Fronk noted that “the sale is part of a continuing program of divesting non-core assets in order to focus resources on core holdings, including the KSM and Iskut projects and the Snowstorm project.”

Iskut was acquired when Seabridge purchased SnipGold Corp. in June, 2016. According to Seabridge, the “2016 multi-pronged exploration program at Iskut achieved its primary objective: to identify a prospective new porphyry copper-gold system with a potentially intact epithermal precious metals zone at its top, for drill testing in 2017.”

One of the untested targets Seabridge will be focusing on, Quartz Rise, “has all the all the hallmarks of a porphyry lithocap, a geological feature found at the top of major porphyry systems throughout the world,” according to the company.

To understand the potential of Quartz Rise, Paradigm Capital Analyst Don MacLean Sr, in a Mar. 16 research report, quoted Dr. Jeffrey Hedenquist, considered to be the world’s leading epithermal and lithocap expert, as saying during a technical discussion with Seabridge, “All lithocaps have feeder structures, but not all feeders have lithocaps,” something that MacLean found to be “a positive endorsement for the epithermal potential below Quartz Rise.”

MacLean goes on to highlight that although “it is still early days for Iskut, we are excited about the prospects for a high-grade epithermal discovery at Quartz Rise. The Iskut property appears to represent a more intact porphyry-epithermal system compared to KSM, where the upper (epithermal) parts of the system have been eroded or faulted away, leaving behind only the massive Cu-Au porphyry bodies.”

The Paradigm analyst points out “given that it is relatively uncommon to find a fully preserved system (from porphyry to lithocap), we will be eagerly watching to see how the Quartz Rise target will play out.”

MacLean articulated Paradigm’s investment thesis on Seabridge: “We believe Seabridge provides investors with ownership in one of the most strategically compelling and prolific copper‐gold projects in the world, the KSM project in BC. Seabridge offers investors one of the lowest market caps per ounce, as well as exploration sizzle with the Iskut gold project.”

“Steady refinements at KSM, as encapsulated in the Oct. 6 2016 Preliminary Economic Assessment (PEA), as well as large new land acquisitions and exploration sizzle, make Seabridge a continuously improving takeover candidate for a senior miner or partnership. Investors can expect a busy drilling season at both KSM and Iskut,” concluded MacLean.

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.

Disclosure:
1) Melissa Farley compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Seabridge Gold Inc. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
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 Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.

Additional Disclosures for this Content

( Companies Mentioned: SEA:TSX; SA:NYSE.MKT,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17351

Dataram Set to Transform Itself with Acquisition of U.S. Gold Corp.

Dataram’s plans to acquire U.S. Gold Corp. to diversify its business would give it access to potentially high-growth mining projects in Nevada and Wyoming.

Dataram Corp. (DRAM:NASDAQ), which has been in the IT memory business, intends to acquire U.S. Gold Corp. as part of its strategy for business diversification and growth through acquisition. The company stated in its March 9 news release that the “natural resources segment represented a market opportunity that would diversify the Company’s business model and thereby potentially mitigate risk associated with focusing on one industry.”

U.S. Gold Corp. is advancing the Keystone project on the Cortez Trend in Nevada and the Copper King project in Wyoming. Last year exploration geologist Dave Mathewson joined U.S. Gold as vice president and head of exploration. Mathewson is credited with discovering the Tess, Northwest Rain, Saddle and South Emigrant deposits when he was head of Newmont Mining’s Nevada exploration team. His work also led to the consolidation of the Railroad-Pinion district and the North Bullion and Bald Mountain discoveries when he was at Gold Standard Ventures.

Dave Moylan, Dataram’s chairman and CEO, said of Mathewson, “Dave is a strong addition to the U.S. Gold team and brings more than 35 years of exploration experience in Nevada. He is a well-known and respected exploration geologist who is credited with many discoveries, and one of a handful of world-class geologists that historically finds new gold deposits.”

Dataram has called a special meeting of shareholders on March 30 to vote on the acquisition. The company also noted that Dataram to approve the merger and implement a reverse split of common stock. Dataram also noted that the “Board will also declare a special dividend for the shareholders of record as of no less than five (5) business days prior to closing. This means the Company shareholders of this record date will receive a special dividend from the net proceeds should the Board elect to divest the memory business within eighteen (18) months of the Closing Date of the U.S. Gold acquisition. While there is no current plan to divest, should this become a future consideration, the intent is to ensure the benefit is received by, and only by, the pre-close shareholders.”

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.

Disclosure:
1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
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 Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.

( Companies Mentioned: DRAM:NASDAQ,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17349

Columbus Discovered a Gold Mine

Bob Moriarty of 321 Gold looks at the bankable feasibility study that just came out on Columbus Gold’s Montagne d’Or gold project in French Guiana and concludes that it’s going to be a mine.

And Columbus Gold Corp. (CGT:TSX; CBGDF:OTCQX) proved that they discovered a gold mine with their press release of March 20th, 2017, covering the bankable feasibility study I said was coming by the end of March in the piece I wrote about them in January. Those numbers suggest the Montagne d’Or gold project in French Guiana is going to be a gold mine. And for an interesting snapshot of someone who is a believer in the mine take a gander at this short video.

The fellow in the blue hat cutting the core is Emmanuel Macron, the current Minister of Economy and Industry for France. While Marine Le Pen is favored to score highest on the first round of the French election scheduled for April 23rd, Macron is favored by most to win the French presidency in the runoff between the top two candidates taking place on May 7th. Is that a big deal, the upcoming President of France giving his stamp of approval on a gold mine in French Guiana? Well, all I can say is that if you ever see Trump tweeting about exceptional drill results coming from a company in Nevada, sell everything you own and buy that company’s shares.

I’ve been covering mining companies and projects for almost seventeen years now. One of the things I have realized and I wrote about it in my bestselling book, Nobody Knows Anything, is that everyone has a bias and everyone has an agenda. That’s not me commenting in any negative way about humans in general even though the majority of them are brain dead. But everyone is biased. Everyone has an agenda.

You get an email from one of our heroic soldiers in Syria over there training terrorists. He wants to share a trunk load of slightly used U.S. $100 bills with you. Well, you are probably biased and think that U.S. solders training terrorists is just a wonderful idea, no doubt. You are biased. After all, the NYT and WP have been supporting our brave soldiers off protecting the freedom of Americans by killing rag heads since the Carter administration. While this soldier doesn’t even know your name well enough to use it, he wants to share his fortune with you.

You need to ask yourself, “What’s his agenda?” Because if you spent $4 like thousands of other of my readers have, you would understand everyone has an agenda including him.

Yes, he has an agenda and it is not to give you money, it is to take your money. If you pass the reverse IQ test and respond to him, he goes into great deal of detail about how the bills are only slightly tarnished and it’s not 100% legal for him to send it to you but since he likes you a lot, he will. All you have to do is send him $100 as a sign of good faith.

Don’t snicker. It’s a scam. I know it’s a scam because of the 86 times I paid up, not a single guy sent me my money.

It’s a scam just like reading about how gold is manipulated and was the biggest financial fraud in world history. If you go down today and buy an American Eagle one-ounce coin for $1350, you have been stolen from because gold really should be $5000 an ounce. Now I can’t quite figure out just who stole from you when you walked out of the coin store but I’m told someone stole from you because the gold really should be $5000 an ounce. All financial markets are manipulated. It’s not a big deal.

If someone writes you from Nigeria and has this really great oil deal, send money, it’s a scam. If someone tells you about gold manipulation and wants your money, it’s a scam.

When someone does any sort of a mining deal each of the participants has an agenda. While it’s not important for the agenda to be identical it is vital that the agendas at least overlap.

For example if you ever see any sort of deal that calls for a giant cash payment in advance for a piece of moose pasture, it’s a scam. While the moose pasture may well contain the 85.3 mt of moose poop measuring 1.6 g/t ms, the agenda of the seller may well be to take the money up front and then queer the deal.

If you could really make money buying moose poop, the seller would take a NSR or payment down the road. But when the seller wants most of his money up front, his agenda is to take the buyer’s money now and he will immediately do everything in his power to make sure the buyer doesn’t get permitted or be allowed to go into production.

As projects advance, the interests of the parties involved should get closer and closer to alignment. Such is the case with Columbus Gold and their 55% partner in the Montagne d’Or gold project, Nordgold N.V. (NORD:LSE). One Russian shareholder owns Nordgold. The company runs nine gold mines. It may well be the agenda of Nordgold to put the project into production. It also may well be the agenda of Nordgold to simply sell out to a major and take the cash.

Columbus on the other hand is an exploration company. At some point they are going to want to cash out. Having the ability to outline nearly 4 million ounces of gold in French Guiana is not the same skill set as putting a big gold mine into production or to operate a big gold mine.

The feasibility study goes a long way to making the interests of Columbus Gold and Nordgold align in a good way. Nordgold has earned their 55.01% interest. The study reveals the project has an NPV of about $500 million CAD with a twelve-year mine life of almost 3 million ounces production. While the IRR of the project appears low at 18.7%, there is an additional 1 million ounces of gold in the inferred category within the existing pit that can be turned into reserves with more drilling.

This project was exceptional before the BFS. It’s better now. The numbers are only going to improve. If I use a figure of 4 million ounces of gold and $100 an ounce USD, Columbus Gold should be worth about $1.50 to $1.75 a share for their 45% of the Paul Isnard project.

One of three things will happen.

  1. Nordgold buys out Columbus Gold’s 45% interest and puts the project into production. If they do, it probably would be at $200 USD an ounce or better. While the Isnard project is the flagship project for Columbus Gold, it isn’t their sole pony. Columbus also owns the 1 million ounce Eastside project in Nevada. Columbus now has a fall back project and that’s a big deal for them. They are not a weak hand in any negotiation.
  1. Another major comes along and either buys out Columbus’ interest in Paul Isnard or buys out both Nordgold and Columbus. That could be as high as $200 USD to $300 USD per reserve ounce. I expect the partners to be tightly focused on increasing reserve ounces ASAP now that they both are interested in the highest price possible for their interest.
  1. A bidding war starts and either Nordgold or a major or two majors get into competition for the project. Reserve ounces could go for $400 an ounce.

Announcing the BFS allowed all the weak hands a liquidity event so they could bail out. The shares dropped 12% on what should have been taken as brilliant results. In my book I keep trying to say, buy cheep, sell deer. Columbus Gold just got really cheep.

Columbus Gold is an advertiser. While I don’t own shares, I am biased. Do your own due diligence.

Columbus Gold
CGT-T $0.87 (Mar 21, 2017)
CBGDF-OTCBB 152.7 million shares
Columbus Gold website

Bob and Barb Moriarty brought 321gold.com to the Internet almost 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.

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.

Disclosure:
1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. Columbus Gold Corp. is an advertiser on 321 Gold. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in the article are sponsors of Streetwise Reports: Columbus Gold Corp. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
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 Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview/article until after it publishes.

( Companies Mentioned: CGT:TSX; CBGDF:OTCQX,
NORD:LSE,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17347

Buy Gold Stocks Patiently

Money manager Adrian Day discusses three stocks in his portfolio that he sees as buys.

Midland Exploration Inc. (MD:TSX.V, 1.06 x 1.07) continues to explore aggressively on its joint-venture projects and (judiciously) on its own land. In all, for this year, the company plans 25,000 feet of drilling with a budget over $6 million. This includes a program just commenced on drilling close to Balmoral’s Bug Lake discovery with its partner Soquem, and a major program, to include drilling, on its 100%-owned La Peltrie, near the high-grade Lower Detour zone. Undertaking some low-cost but well-defined exploration work on its own properties can improve the chances of finding a partner and obtaining more favorable terms. Midland has also reactivated its base metals projects, given the renewed interested in such properties.

Midland has strong partners and continues to attract new partnerships, including most recently a joint venture with Altius in the James Bay region. Midland continues to be well funded, with $14.5 million cash, which enables it to advance properties to a point where more attractive options are possible.

Favorite exploration company, with management, money and properties
Midland remains a favorite exploration company for the breadth of projects, strong partners, solid balance sheet and disciplined management. Warrants at $1.15 put a lid on the share price for now, absent a significant development or discovery. Midland, with its extensive, well-located property package and aggressive program, is in as good a position as any to achieve a discovery. If exercised, the warrants would bring in another CA$23 million to the treasury, which would put the company in an unassailable position. So we would continue to build positions without aggressively paying up. This is a good price.

Well funded and advancing project
Vista Gold Corp. (VGZ:NYSE.MKT; VGZ:TSX, NY 1.03) continues to be well funded. Following a well-timed equity raise last August, the company has cash of around $24 million, plus shares in Midas Gold worth around $5 million. With an annual spend of a little over $5 million, approximately half each on G&A and advancing the Mt. Todd project in northern Australia, Vista has the cash for final work to take Mt. Todd to a development decision.

It also has several opportunities to raise additional cash in a non-dilutive manner, including selling additional shares in Midas, selling its mill (in which there has been some renewed interest), or completing some sort of transaction on its Guadalupe de los Reyes project in Mexico. Following completion of metallurgical and other test work on Mt. Todd this summer, Vista intends to update its 2013 preliminary feasibility study, incorporating improved gold and currency prices.

Vista represents solid value here, particularly with the lack of any need for additional financing. But given the likely slow news flow in coming months, we would look to add to Vista on price declines, perhaps to the low 90 cent range.

Price drop makes Nevsun attractive again
Nevsun Resources Ltd. (NSU:TSX; NSU:NYSE.MKT, NY 2.43) finally made clear to the market that the metallurgical issues at the new expansion at its Bisha mine in Eritrea are ongoing, with no solution apparent. At the same time, it slashed its dividend by 75%.

The market’s response, not surprisingly, was vicious, with the stock falling from over $3.20 to the current level. At this price, Nevsun is discounting most of the issues at Bisha. More important, it becomes attractive for a copper company interested in the Timok project that it acquired when it purchased Reservoir Minerals last summer. We would not be surprised to see a company make a bid for Nevsun, concurrent with a move to divest itself of Bisha. The political issues associated with operating in Eritrea—including a lawsuit alleging that the government supplied slave labor to the mine—are too much for most global companies.

But the value of Nevsun today is less than the value which Lundin was willing to pay for part of Freeport’s interest in the Timok project, so a bid for Nevsun is a strong possibility. With Nevsun’s CEO Cliff Davis already having announced his retirement, the timing may be right as well. We would buy Nevsun here, as a potential take-over target. (We sold one of our two positions in December for $3.16. You can buy back over 20% cheaper!)

Adrian Day, London-born and a graduate of the London School of Economics, heads the money management firm Adrian Day Asset Management, where he manages discretionary accounts in both global and resource areas. Day is also sub-adviser to the EuroPacific Gold Fund (EPGFX). His latest book is “Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks.”

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.

Disclosure:
1) Adrian Day: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Midland Exploration, Vista Gold and Nevsun Resources. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management hold shares of the following companies mentioned in this article: Midland Exploration, Vista Gold and Nevsun Resources. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
4) This 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 Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview/article until after it publishes.

( Companies Mentioned: MD:TSX.V,
NSU:TSX; NSU:NYSE.MKT,
VGZ:NYSE.MKT; VGZ:TSX,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17345

A Core Holding Keeps Getting Better

Fund manager Adrian Day reviews one of his favorite resource companies and updates a few others.

Altius Minerals Corp. (ALS:TSX.V, 13.07) is one of our “core” resource companies. It has tremendous expertise in grass roots exploration and has leveraged that skill into a portfolio of royalties. CEO Brian Dalton has also demonstrated—more than most in this sector—the patience and discipline needed to take advantage of the inevitable cycles.

Altius has used the downturn of the last few years to accumulate a large package—over 2 million hectares in nine different locations—of prospective ground. Now with the resource sector coming back, they are seeing it as a time to harvest. Some of this is traditional joint ventures, and some the sponsorship of new public vehicles in which Altius has specialized.

New zinc company
Last month, Altius announced the IPO of Adventus Zinc Corp. (ADZN:TSX.V), with exploration land in Eastern Canada and Ireland, and $10 million from the offering. In addition to a 27% share interest, Altius maintains a royalty of the land. Altius has employed this strategy before, with varying degrees of success. Even with Alderon, where the collapse in the iron-ore price stymied the plans for bringing the Kami project into production, Altius has more than regained its original investment, and still holds shares and a royalty.

We expect to see more such transactions in the period ahead, with perhaps a copper company (to include many properties in Chile) the next.

Starting to work joint venture properties recently acquired
In addition to these transactions, Altius is attracting the interest of many companies who want traditional joint ventures. Although senior companies are not yet showing great interest, junior companies are. These companies want projects. “The interest in our projects has never been stronger in the history of our company,” Dalton said.

One such agreement is between Altius and Midland Exploration to explore for metals in the James Bay area of northern Quebec. Two well-funded and well-respected exploration teams coming together provide intriguing potential.

A counter-cyclical approach yields results
This is a clear indication of Altius’ counter-cyclical approach, building assets in the downturn, and dealing them as the markets come back. Another indication is its approach to the balance sheet. By nature, debt-adverse, Altius took on debt at the end of 2013—when the markets and their outlook appeared pretty bleak—to purchase a package of royalties.

Since then, it has paid down that debt from cash flow, with currently $80 million of debt, $20 million in cash, and about $80 million in equities. The equity portfolio has gained significantly over the past 15 months from the recovery in the market. Selling down the equities (while always keeping its royalty interests) to pay down its debt would, Dalton suggested, be a good use of the equity gains.

Resources are extremely cyclical, while most miners are notoriously pro-cyclical, taking on debt and over-paying for large marginal projects at the top, and subsequently selling the projects for losses and issuing new shares to pay off the debt at the bottom.

Brian Dalton and Altius (and only a few others) in this stand apart from the industry, with the desire and ability to take advantage of the cycles. Significantly, when I asked him recently about the company’s debt, he said the company would pay down debt from the sale of its portfolio of shares and from cash flow. “At the bottom of the next cycle, we want to be in a strong financial position with lots of cash” to take advantage of the assets available. Few in the industry are looking ahead and planning for that next bottom.

Higher resource prices and new funding
Two other significant developments have helped and will continue to help Altius. First, of course, is the general rally in most commodity prices, so that its revenues have increased over expectations. For 2017, the company had been expecting about $40 million in revenue, while at today’s commodity prices, revenue from the same assets would be well over $50 million.

Second, last month, Fairfax Financial, led by Prem Watsa (who has been called Canada’s answer to Warren Buffett), made a strategic investment in Altius of up to $100 million. So far $25 million has been issued, and Altius has the option of drawing down the additional $75 million by the end of the year. The investment is in preferred securities, which can be redeemed by Altius after five years, with warrants, exercisable at $15 per share.

Access to capital, if needed
The deal is very positive for Altius, providing it with attractive long-term capital, which it can draw on at its option, and equally important perhaps providing access to Fairfax’s strength and experience.

Characteristically—at a time when most junior resource companies are raising money and increasing the size of the raises “because the money was offered”—Altius emphasized that it would draw down more funds only if they were needed.

A volatile stock
Altius is a core holding, but the stock can be volatile. One example is in early February when the stock fell to just north of $11 after Altius announced a write down on one of the coal royalties it acquired in 2013. This came in response to Alberta’s plan to phase out coal by 2030, and was triggered by a compensation agreement reached between a power plant (Altius’ customer) and the government. The reality is that the royalty’s value had already been adjusted by analysts who follow the company. In addition, the royalty will continue to pay for the next 14 years. In actuality the write down could be viewed as positive, since it opens the possibility of Altius receiving compensation for loss of value to its royalty.

Given the recent recovery from $11 to $13, we would wait for better opportunities to add to positions. But on any weakness, we will be strong buyers of this top-quality resource company.

New joint venture for Miranda
No sooner had we written our brief overview on Miranda Gold Corp. (MAD:TSX.V, 0.095 x 0.10), in which we expressed the hope we would “see the fruits of Miranda’s work in Colombia” in coming months, than the company announced a joint venture with IAMGOLD Corp. (IMG:TSX; IAG:NYSE) on its prospective Antares property. IAMGOLD will commence work shortly—with a guaranteed 2017 spend of $100,000; in the first year after the government grants Miranda’s application, IAMGOLD must spent $750,000 to maintain its option, a total $5 million spend required to earn 51%.

This is a good agreement and good partner for Miranda. IAM is well funded and already active in Colombia (signing another joint venture in Colombia the next day). In announcing the agreement, Miranda said it intends to “maintain the momentum” of acquiring and joint-venturing additional projects in Colombia. Miranda firmed on the announcement, but did not move much, providing a good opportunity to buy the stock.

Stock portfolio up
After our recent comments, Osisko Gold Royalties Ltd. (OR:TSX; OR:NYSE, 10.97) reported year-end financials, generally in line with expectations. One notable fact: the share portfolio, with a cost basis of $155 million, is now valued at over $255 million. The market does not reward Osisko much for its stock buying, but the strategic positions allow the company to acquire royalties. Also the company emphasized its commitment to the dividend. Last year, it paid out a little under 30% of cash flow, for a yield of just over 1%. It has targeted around 25% of cash flow to be paid out. Buy on any additional weakness.

Adrian Day, London-born and a graduate of the London School of Economics, heads the money management firm Adrian Day Asset Management, where he manages discretionary accounts in both global and resource areas. Day is also sub-adviser to the EuroPacific Gold Fund (EPGFX). His latest book is “Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks.”

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Disclosure:
1) Adrian Day: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Altius and Osisko Gold Royalties. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management hold shares of the following companies mentioned in this article: Altius, Miranda and Osisko Gold Royalties. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
4) This 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 Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview/article until after it publishes.

( Companies Mentioned: ALS:TSX.V,
MAD:TSX.V,
OR:TSX; OR:NYSE,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17343

Warren Buffett’s Biggest Loss

Tom Beck of Portfolio Wealth Global shares his strategy for investing in commodities.

For close to five years, investors, experts and analysts have been predicting that commodities, as a group, are going nowhere.

Still, millions of respected, intelligent investors seek to invest in minerals and resources because of one important reason: one solid position can fund a decade worth of retirement.

Warren Buffett, whom I personally regard as the absolute best investor the world has ever known, was even duped into buying oil stocks because he fell into the “Peak Oil” theory, which was popular prior to the invention of “fracking.”

This reminds me of the famous 1890 London Futurist experiment, where the most highly regarded scientists of Oxford were asked to envision London 40 years into the future, and the prediction was sealed until 1930, when it was finally opened and read.

Their theory was that London would be impossible to live in because of horse manure and diseases caused by sanitation.

They couldn’t possibly forecast that within the decade after their brainstorming, the automobile would be invented.

Today, London is the most expensive and sought-after location of the ultra-rich, as well as a tourist hub.

The bottom line is that commodities are unpredictable, and they often move inversely to fundamentals, research and common sense.

Even worse, when they do change from bust to boom and vice versa, the discipline it takes to notice the trend change and the precision involved with investing and timing it is sheer luck.

In 2016, Portfolio Wealth Global, the highest-ranked free financial publication of the year, profiled just three mining companies.

I believe it was a combination of timing, months of research and, ultimately, ridiculously undervalued stocks that allowed you to profit from two trades that gained 103.4% on average, and from one stock that gained 312%.

Here are the facts that Wall Street never shares with you, but would save you millions of dollars and countless hours of needless reading through the course of a lifetime:

1. The S&P 500 returns an average of 7% per annum in a 30-year span.

S&P 50 Index History

This translates to making 750% every three decades.

If you start out with $50,000, you’ll have roughly $400,000 about three decades later.

The lesson here is that in order to generate serious returns that will kick in before the time you’re 60, you’ll have to outperform the S&P 500.

2. Wall Street analysts do not focus on the one sector that allows 750% returns in a few months or a few short years: junior mining.

To tackle these two facts, you should adapt a contrarian outlook on the markets.

A. Instead of investing in the S&P 500, which is a basket that will always include mediocre, struggling companies, find Wealth Stocks.

These are companies that grow, historically, at 9%–12% and are undervalued.

This is the ultimate company that we’ve found.

B. Instead of chasing the sudden and erratic boom and bust cycles of the commodity prices, take an approach that will make you much more balanced, take much of the uncertainty out of your portfolio, and allow you to potentially make those big returns that commodity investors desperately crave for.

My strategy is simple:

1. Only risk what you can afford to lose.

2. Only invest in exploration-stage companies where the geological team is made up of proven experts and the management is world class.

That way, no matter what is going on in the commodities market, this stock will make money if a discovery is made.

I like that approach because if I did my homework, there’s a real chance of making an extraordinary investment.

There’s a clear example of this type of situation forming in the cobalt market.

This is the stock I am thinking of.

Tom Beck is senior editor of Portfolio Wealth Global. Known as one of the first millennial millionaires in the United States, Beck is a relentless idea machine. After retiring two years ago at age 33, he’s officially come out of retirement to head up Portfolio Wealth Global. He brings a vision of setting a new record for millionaires with his seven-year plan to accelerate any subscribers’ net worth who will commit to the income lifestyle. Beck delivers new ideas on the marketplace that were once only available to the rich. Traveling the world, he’s invested in over a dozen countries, including real estate.

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.

Disclosures:
1) Statements and opinions expressed are the opinions of Tom Beck and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. 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) This 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 Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview/article until after it publishes.

Charts provided by the author.

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17342