Category Archives: Precious Metals Investing

Never Underestimate the Replacement Power of Equities Within a (HYPER) Inflationary Spiral

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 money supply. Velocity is how fast money is turning over while money supply is the total amount issued. If the total amount issued sits in savings accounts or gold, it is a depressant upon activity because there are reduced transactions.

With the money-printing rescue that began in 2009, markets were forecasting that eventually, the $14 trillion in printed U.S. dollars would awaken from its low-velocity slumber and once roused, would rain down a mountain of inflationary pressures upon the consumer, which is what is about to happen in 2018. However, the chart below tells a very different story at first glance because you are seeing a steady decline in velocity despite unprecedented monetary growth and stimuli pretty much for the last ten years. The chart below says that bond yields and money velocity are watching the same maestro’s baton while stocks are listening to ear buds with blinders on. Sadly, we know from history that dichotomies like this cannot last; they die an agonizing death and take a pile of souls along for the descent.

The next graphic is one that I have used for years—the Citigroup Panic/Euphoria Model—and it now resides squarely in “euphoria” mode, a condition that has tended to usher in many of the bear markets of the past few decades. Bob Moriarty refers to Jake Bernstein’s “Daily Sentiment Index” for the S&P and NASDAQ, and says that it has broken into the 90s and traded up to 95 in that move, a reading not unlike my RSI readings above 70 for the Gold Miners in that they historically spell “T-O-P.”

The chart below has the RSI for the S&P above 80 and marks the sixth time since February 2017 that this has occurred. Now, based upon DJT’s tweets, we know that he is delighted with the performance of the stock markets under his “watch” but when you combine the Panic/Euphoria Model with the DSI and the RSI for the S&P, you have to be taking some very serious anti-depressants to stay invested.

Now, there is nothing in this world that I would love to report more than a major shift in thinking by your dutiful author. In the 1990s, the emergence of the Internet changed a great many ways of doing business and improved efficiencies and productivity in a manner that fully justified the decade-long boom and the concomitant ascent in stock prices. However, there is no such technological or geopolitical event that has occurred (NO it is not Bitcoin or blockchain) responsible for the boom in equities. And to prove just one difference between the 1990s and where we are today, I offer up one more chart from the Saint Louis Fed showing how money velocity was growing THEN versus the abysmal decline we have witnessed pretty much since 1998.

When I wrote about the “True Meaning of Bitcoin’s Success” in early December as it approached $20,000, what followed was a torrent of hate mail from the Bitcoin/blockchain longs (who have since been crushed) whose responses varied from extremely erudite dissertations to outright obscenities with the common thread being that I really did not “understand” the generational opportunity represented by this “alternative currency.” They were absolutely correct in their assessment of my cognitive shortcomings to the extent that they can now rejoice that I am committing the same cognitive indignity when it comes to stock prices. They are so correct! I do NOT understand Bitcoin and I do NOT understand this advanced mania/love affair with U.S. stocks.

I long for the days when a company’s value was dependent upon the amount of dividends it could (and would) pay to shareholders, which could be handicapped by observing the properly accounted for financials where free cash flow could be measured. I long for the days when an exploration company’s discovery would be celebrated with massive upside volume as savvy investors appreciated the rarity and wealth effect of a major drill core intercept. I yearn for a return to free markets where men and women delivered orders to buy and sell and were the collective respiration of the creature called a “market.” This techno-centric era of instantaneous gratification and engrained entitlement is now fully reflected in the melt-up in everything that resembles banker collateral, which is anything upon which they can earn a fee, whether duplicated or not. This irrational race for valuation supremacy by all-things-bank-controlled is matched in its ferocity only by an ignominious obsession to suppress the only time-tested stores of value (gold and silver) if only as a means to show us all that “it really is DIFFERENT this time.”

The title of this missive should not be confused as a portent of things to come; the “replacement value of equities” has already reflected investor disdain for savings and is a past era soon coming to an end. The move off the 2009 lows is nearly nine years old and is now in the record books for the length of advance without a meaningful correction. For the reasons mentioned above (and more than a few others too long to recount), I think that finally the very people that have controlled the advance—the central bankers—are finally fearful of this monstrous speculative entity they have created. Just as they are reeling in Bitcoin, the global central banks will reel in stocks and whether that comes via rate increases or the cease-and-desist orders on stock-supporting algorithms, it is finally time for the beast to exhale.

Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger’s adherence to the concept of “Hard Assets” allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.

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Disclosure:
1) Statements and opinions expressed are the opinions of Michael Ballanger and not of Streetwise Reports or its officers. Michael Ballanger is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. Michael Ballanger 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 immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

Charts and images courtesy of Michael Ballanger.

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/article/2018/01/17/never-underestimate-the-replacement-power-of-equities-within-a-hyper-inflationary-spiral.html

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A Candidate for ‘Deal of the Year’ in British Columbia

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.

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Kutcho project

1. Introduction

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.

2. Company

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 the Policy Perception Index according to the last Fraser Survey of Mining Companies, coming in at #41 out of 104 jurisdictions worldwide.

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Location map: Kutcho Copper: Kutcho project

The company signed a definitive agreement with Capstone Mining to acquire the Kutcho high grade copper-zinc-gold-silver project for C$28.8M and a 9.9% equity interest in Kutcho Copper, and at the same time released an updated PFS on June 15, 2017, which showed excellent figures. Seeing this being done at the same time is pretty unusual as well, but definitely confirms the can-do mentality of Sorace and his team for me. The base case scenario generates an after-tax NPV8 (8% discount) of C$265M and an after-tax IRR of 27.6%, using metal prices of US$2.75/lb copper, US$1.10/lb zinc, US$17.00/oz silver and US$1,250/oz gold and a currency exchange rate of 0.75 USD/CAD. This is all based on a modest initial capex of C$220.7M which is well below base case NPV, which is a strong feat for a base metal project in general. With current (much higher) metal prices this already proves to be a conservative PFS, and there is much more upside. More on this later.

Kutcho Copper could buy this asset as it made an impressive set of deals with Wheaton Precious Metals, formerly known as Silver Wheaton, and raised cash in the market. Besides the streaming deal which will provide US$65M for FS, permitting and early construction, a combination of a C$20M convertible debt loan and a C$4M equity financing with Wheaton, plus a mostly brokered C$14.7M equity financing (the aforementioned C$4M Wheaton equity was included here) provided for the C$28.8M cash component in order to acquire the Kutcho project from Capstone. I followed it closely and was amazed at the achievements, as I know how hard it can be for juniors to just raise a few million dollars. The Wheaton deal obviously opened many doors.

After closing the acquisition on December 15, 2017, which happened just a week after raising the C$14.7M, Kutcho Copper commenced trading on December 21, 2017, at the TSX Venture Exchange under the ticker KC.V.

As of January 16, 2017, Kutcho Copper has a share price of C$0.76 and a market cap of $36.82M, with only a very tight 48.45M shares outstanding (fully diluted 70.42M, all options and warrants out of the money at C$1.00, expiry in 3 years). The average volume since trading on December 21 is a pretty liquid 475,000 shares.

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Share price over 1 year period

As soon as the trading halt was lifted, the markets showed a lot of interest, and as fundamentals and future potential seem to be excellent, I see Kutcho Copper shaping up as one of the go-to base metal projects for the coming years.

Kutcho Copper has an estimated $4M in cash at the moment, and C$20M in debt. Management and Board controls 10% of shares, which is good to see; Wheaton Precious Metals holds 13% and Capstone Mining is the largest shareholder with 16%. There are 17.65M warrants, of which 6.37M are in the money and 3.4M of those will expire before the end of August. The balance has an expiry in 3 years @ C$1.00. The options have an average life of 4.25 years with a weighted average price of $0.62.

The management team and the board of directors consist of some very experienced quality people. For starters there is President and CEO Vince Sorace, who has been around for 25 years in the mining business, having raised over C$200M and founded various private and public resource companies. He managed to attract a few very interesting names to his team, as there are two key people from former high flyer Kaminak Gold: VP Community & Environment Allison Rippin Armstrong, and VP Exploration Rory Kutluoglu. COO Rob Duncan is also a household name in mining, having done a lot of exploration for majors including Rio Tinto and Inmet, with a lot of specific VMS experience. Eva Nakano does Corporate Development, and it’s the first time I see this job being done by someone who is a Professional Geologist with an MBA.

Recent additions are Len Holland and Angus Christie, no newcomers either in the mining industry. Holland led the re-commissioning of Trevali’s Caribou project, consults to Glencore, SNC Lavalin and First Quantum Minerals among others, and will lead the optimization of metallurgical processes. Christie, who led the Feasibility Studies by JDS for Sabina Gold & Silver and Kaminak Gold, will oversee the Feasibility Study process for the company. These two experts further complete and solidify one of the best technical teams possible.

The Board of Directors consists among others out of Stephen Quin, the current CEO of Midas Gold (who is also the former President and COO of Capstone Mining, and former President and CEO of Sherwood Copper, which amalgamated into Capstone during his tenure), Bill Bennet, former BC mines Minister for 3 periods, helped launch BC’s First Nations mine revenue sharing program, and Brad Mercer, who leads exploration at Capstone Mining, who also managed the Kutcho field program in 2010 that contributed to the 2011 PFS for Capstone at the time.

The Advisory Board has also three notable and very experienced names on board, as there are Peter Meredith, former CFO and Deputy Chairman of Ivanhoe Mines, Rob Carpenter, co-founder and long time President and CEO of Kaminak Gold, and Tookie Angus, current Chairman of Nevsun Resources and former Managing Director of Mergers & Acquisitions for Endeavour Financial, and former Head of the Global Mining Group for Fasken Martineau. With Sorace having arranged all financings necessary to complete the feasibility study under the current mine plan, I can’t think of a better team to handle exploration, project development and permitting.

I guess by now it becomes clear why I am pretty enthusiastic about Kutcho Copper, but first I will discuss the basics like the deals and main metals copper and zinc, before I delve into project, project economics and potential upside.

3. The Deal and the Financings

The acquisition of the Kutcho project by predecessor Desert Star Resources was a relatively straightforward deal, as the majority was cash, as can be seen in the summarized terms of the agreement as per the news release of June 15, 2017:

  • Desert Star to acquire 100% interest in Capstone’s wholly-owned subsidiary Kutcho Copper Corp. which holds 100% interest in the Kutcho project
  • Desert Star to pay Capstone C$28.8 million cash upon closing
  • Capstone to become 9.9% shareholder of Desert Star at the completion of the Acquisition
  • The shares issued to Capstone, will be restricted from sale for a period of two years from the date of issuance. Upon termination of the pooling restrictions, Capstone must give the Company written notice of its intention to sell any of the Purchased Shares, and Desert Star will have a 10-day right to designate the purchaser of such shares.
  • For so long as Capstone holds at least 5% of the issued and outstanding shares of the company, Capstone will retain the right to:

    – Appoint one director to Desert Star’s board; and

    – Participate in any subsequent security offerings on a pro-rata basis in proportion to Capstone’s beneficial ownership interest in the Company’s outstanding shares immediately prior to such offering

  • If the closing of the acquisition has not occurred on or before August 31, 2017, either Capstone or the Company may elect to terminate the Agreement

The C$28.8M cash component was puzzling to me when I first read about the intended acquisition, as normally it would be extremely difficult for an almost inactive C$10M market cap junior to raise that kind of money, not even taking into account the resulting amount of dilution. Therefore, the involvement of Wheaton two months later was quite a surprise.

The 9.9% stake of Capstone and a Board seat reinforces the relationship between the two companies, as director Quin was the former President and COO of Capstone, and already had the Kutcho project under his supervision as the CEO of Sherwood before it amalgamated with Capstone. VP Exploration of Capstone Brad Mercer is the representative for the 9.9% interest of Capstone in Kutcho Copper.

The last highlighted term turned out to be a formality, when the C$65M streaming deal with Wheaton was announced, Capstone was more than happy to initially extend the deadline to September 30, 2017, and extended this further into December later on, as CEO Sorace provided enough convincing arguments to do so.

The first streaming deal with Wheaton was already impressive, as Wheaton has the reputation of doing thorough due diligence. Here are the highlights:

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These terms are not too different compared to other deals. For example, the ongoing cash payments for silver come in at 20% at the Glencore-Wheaton deal (US$900M upfront cash).

In addition to this, Wheaton also agreed to participate in up to 14% of a proposed equity financing to a maximum of C$4M, proceeds to be used for the acquisition of the Kutcho project. This, and the US$7M upfront for FS expenditures were quite important in my view to convince participants in the pivotal C$14.6M round later on.

Another agreement very important for this round was the C$20M convertible debt loan with Wheaton, announced on October 31, 2017, which was fully backstopped by Wheaton, second lien to the US$65M stream and bears 10% interest per annum. This provided for the majority of the C$28.8M acquisition price for Kutcho in cash. The conversion price is a 25% to 30% premium to the price of any concurrent equity financing.

This equity financing was the C$14.6M round as mentioned before, priced at C$0.65 with half a warrant (@C$1.00, 3 years expiry). The money was raised by a syndicate lead by Macquarie, consisting of BMO, Haywood and PI Financial, and was the biggest risk in my opinion as everything else depended on it. CEO Sorace came through with flying colors, the acquisition of the Kutcho copper-zinc-silver-gold project could be finalized and Kutcho Copper was born.

Because of this deal, Kutcho Copper doesn’t have to finance US$57M of capex by itself anymore (US$65M Wheaton stream minus US$8M of FS expenditures), which according to rules of thumb of 2/3 debt-1/3 equity would save the company about US$20M in dilution (which is about C$25M) in the long run.

An old, still existing back-in right of Royal Gold for 50% for 300% of eligible expenditures triggered at the FS isn’t likely to be executed anytime soon. First, the back-in right is not on the entire deposit; it is only on a portion of the deposit. Royal Gold’s 50% of that portion amounts to 24% of the project. At the moment, the eligible expenditures are sitting at $50M and this will be increasing with another estimated C$12-15M. Therefore, their back-in payment would be at least C$150M and likely up to C$195M. If Royal Gold choses to back-in, they would additionally be responsible for their 24% of initial capex, so on a C$220.7M capex that is an additional C$53M, resulting in C$203-248M payments.

On a $265M NPV it doesn’t make much sense for Royal Gold to pay that kind of cash for only 24%, which is just C$63.6M. Even at an NPV of about C$800-1000M it would mean just break even for Royal Gold, but capex increases with the expanded scenario which would be needed for these kind of NPV numbers, so the needed NPV needs to be significantly higher before they would be interested. According to my modeling later on in this article, an NPV of C$800M comes close to the best scenario at C$3.75/lb copper, so never say never but it seems like this could only become a realistic scenario at C$5.00-5.50/lb copper.

Talking about copper, let’s have a look at the main metals of the Kutcho project.

4. The Metals: Copper and Zinc

The primary revenue generator of the Kutcho project is copper, followed by zinc, both accounting for about 92% of total revenues. According to the 2017 PFS, the majority (about 66%) of copper-zinc revenues for the Kutcho project is generated by copper at a US$2.75/lb copper price and a US$1.10/lb zinc price.

Copper

Copper is a well-known metal as it is used for many purposes (electronic devices, power cables, cars, plumbing, dynamo’s, building parts, etc.). Copper is deeply tied to the Chinese economy, which uses about 40% of global supply. The trading and pricing of copper has become an indication of the overall health of the Chinese economy. Before that, it more or less did the same for the world economy, hence the name “Dr. Copper.”

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Copper; ready to be shipped

Since 2001, the price of copper increased dramatically, following the development and growth of China. However, this growth path didn’t appear to be sustainable for the long term, and China is currently switching from an exporting producer to a consumer oriented economy.

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Copper price history

Since copper has been or is still used (little do we know) as collateral in many financings in China, it could very well be that large, hidden stockpiles still exist. A side effect of this function as collateral is that the perception of “Dr. Copper” changed, and cannot be used anymore to simply gauge the state of the Chinese economy, let alone the world economy. It becomes more of an indication of speculation on copper.

Notwithstanding this, as the Chinese economy and the world economy in general are doing well and keep improving, overall demand for copper seems to have picked up again since the beginning of last year. This has been fueled by several events and developments, as there were strikes at some of the largest mines, Indonesia temporarily halting exports of concentrate, improving Chinese growth figures, Trump’s tax cut plans, Chinese efforts on limiting pollution affecting smelter operations and the ongoing paradigm shift towards electrification of society (electric vehicles, solar, wind, grid storage, batteries, etc.), which will involve a significant increase in copper demand.

At a longer timeframe it is well known that the average grade of existing operations and their reserves keep dropping, impacting output. Besides this, it is also a problem that new projects aren’t discovered fast enough to keep up with ever rising demand. Codelco, one of the biggest copper producers globally, is currently investing up to $25B in its existing mines just to keep production levels intact. Another development is the increasing time from discovery to production, due to needed increasing size of projects, as lower grades result in increasing need for economies of scale, and this in turn leads to huge projects that are hard to develop, permit, finance and construct, especially since many jurisdictions hosting large copper resources are becoming more hesitant on increasing environmental concerns. This is all believed by analysts to lead towards a supply crunch for copper in a few years, widening to a massive 7-8Mt deficit by 2030:

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Copper supply/demand; Rio Tinto presentation
, source: Wood Mackenzie Q3 2017

2030 is a long way out from today of course, and part of the copper price is speculation, but it does look like Kutcho Copper is positioned well when aiming for a production decision in 2-3 years.

Zinc

A chronic shortage of supply of zinc is well underway now. The coincidental closure of major zinc mines (Brunswick, Perseverance, Century, Lisheen, Skorpion) through depletion during 2016, taking 500kt per annum off the table, resulting in a widening supply/demand deficit and lowering LME stocks to critical levels, and coupled with new capacity not coming online before the end of 2018, the outlook for the zinc price in 2018 looks strong. The price of zinc already ran up from US$0.67 to a recent US$1.53/lb, and is forecasted to go up even more this year, possibly even to US$2/lb:

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The zinc market has been in deficit for a long time (since 2012), but only since the end of 2015 did the zinc price start to appreciate, probably due to covert Chinese stockpiles which finally seemed to be depleted by then. Chinese stockpiles are always a possibility with any Chinese supply and/or demand dominated commodity.

Here is a chart from Kitco.com, indicating long term weakness in LME inventories, but only since the end of 2015 coinciding with factors like production going offline:

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It seems like the stocks are heading for new lows, and recently broke through the 200,000t levels, and dropped below the 10-day supply threshold that is deemed to be critical. China has also been shutting down numerous mines due to safety and environmental concerns. However, there are developments going on which could balance the current supply/demand deficit in a few years. Glencore is bringing back online a staged annual 130,000t of production at its Lady Loretta mine located in Australia, commencing in Q4, 2018 and at full production at the end of 2019.

Another mine is the Dugald River mine, owned by Chinese giant MMG, which would add 170,000t annually, also located in Australia. Notable operators looking to expand existing mines are Teck and Hindustan Zinc, adding another estimated 170,000t. This is also planned for late 2018 or the beginning of 2019. As total zinc production is about 14Mt per year, adding 470,000t doesn’t sound much but the earlier cutback of 500,000t was able to send the zinc market in a serious deficit. Big question will be what (Chinese) demand will look like when new supply starts to come online. As zinc is primary used for galvanizing steel, its demand is tied to general economic growth. At current growth rates, which aren’t accelerating yet and are modest, I see the zinc price coming down again after a peak somewhere this year, but could probably hold on to levels above US$1.10-1.20/lb for the longer term, as I don’t view the forecasted additional production coming online capable of creating a big surplus.

As the majority of revenues is generated by copper, the outlook for the long-term economics of this project is strong in my view.

5. Project

The Kutcho project is located in northern British Columbia, approximately 100 kilometres east of Dease Lake and Highway 37, and consists of one mining lease and 46 mineral exploration claims encompassing 17,060 Hectares. The site is accessible via a 900-meter long gravel airstrip located 10 km from the deposit and a 100 km long seasonal road from Dease Lake suitable all year for tracked and low-impact vehicles, and trucks in the winter period. The road and airstrip obviously have to be upgraded for a mining operation, and this is taken into consideration in the 2017 PFS, which will be briefly discussed later on.

I wondered what exactly the need is to upgrade the airstrip in BC which has some remote areas but isn’t exactly the middle of nowhere, and management had this to say: “It is very inexpensive to upgrade the airstrip such that it can be used for efficient mining crew rotations. That way scheduled flight service can pick workers up in towns far away such as Smithers, Terrace, and even Vancouver and a crew change out can still be completed in one day. The second, and very important, reason for the airstrip is that it provides a rapid way to get medical aid in and out if there is a serious incident on site. Lastly, it means less traffic on the haul road.” Fair enough.

Questions on a potential impact of a winter break were also quickly answered by management. They have planned the scale of the program such that they can achieve all the technical data collection for the feasibility in one field season. Allison Armstrong is also completing a Gap analysis going back from 2017 to 2011 for environmental permitting requirements, and all of that data can also be collected in 12 months. There isn’t really a winter break although the easy field season up there is May 21 to October 31. Outside this window, things are not impossible, just more expensive. Environmental monitoring occurs year-round with data downloads and monitoring monthly. These are simple skidoo or helicopter trips in the winter months.

Management will complete all drilling requirements June 1st to Sept 30th with up to four drill rigs. Therefore, Kutcho has some safety margin before things become more expensive.

The project has a long history, as mineralization was discovered back in 1968, and Sumitomo and Esso started developing the project from 1972 to 1989. From then onwards, Kutcho sees a number of different owners, where it always had a non-core position, or metal prices didn’t justify further development. The last owner Capstone didn’t develop it further after a positive 2011 PFS as it changed up its strategy towards larger projects, buying for example Santa Domingo and Pinto Valley, and shelving Kutcho. A few years ago, balance sheet issues emerged, and eventually forced Capstone into recently selling the project.

Mineralization at Kutcho comprises three known “Kuroko-type” volcanic massive sulfide (“VMS”) deposits aligned in a westerly plunging linear trend. VMS deposits are sought after as they usually occur in groups, close to each other. Features of the Kutcho deposits suggest that they formed at or near the water-seafloor interface in a structurally controlled depression.

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The red sulphide horizons in the right diagram host the mineralization for Kutcho. The chemical composition of the alteration around the Kutcho deposits is well zoned around the hydrothermal vent areas. For readers with geological knowledge: mineralization consists of a pyritic footwall with zoned copper and zinc towards a sharp hanging wall contact.

The largest deposit, Main, comes to surface at the east end of the trend, with Sumac followed by Esso down plunge to the west.

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Although Main dips to about 250m below surface, the operation will be largely an underground mine, with only in the first year a starter pit. The proposed mine only handles the Main and Esso deposits, as Sumac hasn’t been sufficiently delineated (just Inferred). The Esso deposit is located about 2km on strike from Main, and a possible upgrading and including Sumac into the mine plan could result in some likely development cost savings at Sumac.

The Kutcho project has a decent resource estimate, completed in 2017, and although the pounds of copper don’t exceed the 1B pounds (for comparison majors are looking for 5-10B pound deposits), the grade is pretty high. According to this now relatively outdated information from 2015, the global head grade could be ranging between 0.8-0.9% at the moment, and global reserve grade below 0.5% even, so Kutcho’s average 2% grade is either way impressive. The by-products improve this to an excellent 2.92% copper equivalent grade:

15.jpg

Management has outlined plans to increase production, and has to increase Reserves for this. The main strategy for this is to use a lower cut-off grade in order to increase Reserves, and as indicated earlier is looking into upgrading Sumac by infill drilling. More on this later, let’s have a brief look at the 2017 PFS first.

The results of this study, more in particular the stellar after-tax IRR of 27.6%, was the reason I was fascinated straightaway when I heard about the acquisition. Usually a copper dominated project has a capex well over US$1B and has IRRs below 20% @US$3.00/lb copper, but this one came in at a 53% higher IRR using US$2.75/lb copper as a base case, which is conservative at current copper prices of US$3.25/lb, and indicates healthy margins. A major threshold for me was also the capex of C$220.7M being lower than the after-tax NPV8 of C$265M, as I consider the capex being equal to NPV a solid starting point. As an aside: for megaprojects capex could be bigger to the tune of even two times before financiers/buyers lose interest, and IRRs could sink to 14-15% in that case as well.

The PFS used a 2,500 tpd underground mining scenario with a starter pit, with a life of mine (LOM) of 12 years. This results in a C$88k capex/tpd ratio which seems fairly conservative as I will show in a minute. An interesting feature is the limiting of a tailings pond, which is beneficial to permitting this part, as relatively recent failures (2015: Mount Polley, Samarco) have increased scrutiny. The tailings will be sent to a paste backfill plant to produce a cemented paste, half of which will be used for backfill while the other half will be sent to the surface tailings disposal.

This sounds good, but as permitting in BC isn’t always easy, I still wondered why management opted for a small 1y starter pit, as open pits create more surface disturbance, which generates more issues for permitting. According to management, the reason they retained the small year one open pit rather than having a 100% underground mine is that the hanging wall rocks from that pit are acid neutral or acid consuming and will be used as construction material for site roads and pads for infrastructure. They would have to dig a small pit for those materials anyway so the idea to have one dual purpose pit where they also get to extract ore from makes sense, at least to me.

Besides this, I suggested dry stack tailings as another option to minimize environmental impact and permitting risks. According to management, dry stack tailings versus paste tailings and a cover over them is something the company and JDS, the engineering firm responsible for the PFS, will indeed study in detail in the upcoming FS. However, at the moment the engineers at JDS favor the paste tailing facility due to factors surrounding climate and precipitation levels. If this remains the safest way to store the surface tailings, the company will be responsible for all interested parties, communities and First Nations understanding that.

CEO Sorace is very aware of the importance of including First Nations in the environmental process, and already struck a Communications Agreement with the Tahltan Central Government on October 26, 2017, creating the framework for strong engagement. Management has also taken initial steps to establish a relationship with the Kaska Dena Government. Typically an Impact Benefit Agreement is signed closer to the completion of a Feasibility or further along the process.

24.jpg

It is refreshing to see the First Nations having a prominent place early on in the process, and by hiring an expert like Alison Rippin Armstrong things seem to be in very good hands.

After this little intermezzo, let’s continue with the PFS. Recoveries will be 84.7% for copper and 75.7% for zinc, which indicates an opportunity to optimize the metallurgy according to management. The average annual production will be 33M lbs copper and 46M lbs zinc. The payback period will be 3.5 years after-tax.

Although the company completed a PFS last year, and it isn’t easy to find comparable peers, I wanted to have some idea of metrics for underground copper projects:

16.jpg

As mentioned, it can be seen that capex for Kutcho seems low in absolute terms, but in relative terms it is at least twice as expensive compared to peers. This has a lot to do with infrastructure, but probably also with economies of scale, as you can see at the different throughput rates. I also included the monster project of NGex Resources, Los Helados, to show what scale can ultimately do for capex/tpd. This is one of the reasons that management is aiming at a 4,500tpd scenario. Sustaining capital seems low as well vs capex, compared to its U.S. peers, especially for an underground operation. Management had this to say about it: it all depends how companies have distributed initial capex vs sustaining capex. The Kutcho initial capex includes items like full plant construction, road and full 1 year of underground development, therefore sustaining capital is low and primarily consists of underground development. I guess I would have to compare the studies more in-depth to fully understand the differences here.

The Nevada Copper IRR seems to look good on a conservative US$2.77/lb copper price, but looks can be somewhat deceiving. In reality their project has already benefitted from a huge US$220M in sunk costs. A significant part of it has been used for drilling, engineering, studies, permits etc, and also construction of part of the open pit component, but my guess is 35-50% was used for the underground project, more specific for engineering, surface infrastructure and facilities, headframe/hoist installation, warehouse, a 630m deep and 8m diameter production shaft and over 200m of lateral underground development.

Compared to the relatively high capex, Kutcho EPCM seemed low at first sight, but when I looked at Nevada Copper and Highland Copper, it turned out to be quite average for such North American relatively small-scale copper operations. As can be seen, copper recoveries for Kutcho are below those of its peers, and this is another target of management, especially zinc recoveries, which shouldn’t be too hard to get to 80% in my view.

When discussing the project, a number of options for further improvement of economics have been identified. Here is a brief overview, and other options as well:

1. Lowering the cut-off from 1.5% to 1% for the Main zone:

20.jpg

This could add 5Mt to the mine plan pretty easily, still maintaining most of the average grades for the various metals, and even more important the orebody looks much more continuous which could prevent dilution of ore with waste, so it wouldn’t surprise me if the actual head grade would be relatively higher versus the reserve grade in that case.

2. The same goes for Sumac, as this would add 4Mt. As Sumac is Inferred, more infill drilling is needed to convert this into Measured and Indicated and eventually into Reserves, needed for the upcoming Feasibility Study. The FS is planned for Q2 2019, as can be seen here:

19.jpg

3. The 3 deposits are all open down dip, so there is another possibility to add resources. According to management, 1.3-3.6Mt isn’t unrealistic at all. So Kutcho could be looking at 23-24Mt total tonnage potential.

4. There are many other drill targets identified on the property, more specific VMS sulphide horizons like the ones hosting the Kutcho deposits. To gain useful mineralization from these targets on a short term looks a bit like a long shot, as historic drill results were low grade, short intercepts that indicates lots of newly required drilling, but more importantly there is no time to possibly convert these targets from greenfield to eventual reserves before the end of Q4, 2018, when all drilling must be finished according to plan.

5. Improving recovery rates for copper and especially zinc, as according to the PFS: “Recoveries and reagent usage may be improved by further metallurgical test work, particularly zinc, which was not optimized during the latest round of metallurgical testing.”

6. The exchange rate of the Canadian Dollar versus the US Dollar is improving (PFS rate was 1.33, now 1.25)

7. Metal prices are significantly higher at the moment compared to the period when the PFS was completed (summer of 2017), management could hold on to these PFS price decks in order to be conservative, but in case of copper it doesn’t seem to be a long-term risk to use a slightly higher price. For zinc it looks like the current US$1.10/lb is just fine for the long term.

8. When the current Reserve would go from 10,44Mt to an estimated 20Mt (as you have to take into account some dilution) if everything works out as intended, the possibility for a 4,500tpd operation becomes a reality. When using a bit lower capex/tpd figure because of economies of scale (down from C$88,280 to C$75,000), initial capex is estimated at C$337.5M (coming from C$220.7M). Lowering opex from C$73.72 to C$65 seems realistic too.

When I would use a 20Mt scenario, an 80% Zn recovery rate, a 1.25 exchange rate, a US$3.00 base case copper price and a fixed US$1.10 Zn price, a 2,500tpd throughput scenario for a LOM of 22 years, and a 4,500tpd throughput scenario for a LOM of 12 years, this would be the resulting hypothetical sensitivity table:

21.jpg

Although the average grade goes down a bit on the expansion scenarios, the advantage of adding tonnage is obvious. The 4,500tpd 12-year scenario avoids the increasing discount over the years as is the case with the 2,500tpd 22-year scenario, and would result in a higher NPV and slightly better IRR. The ideal scenario would be, in my view at least, developing the 4,500tpd scenario, followed by potential delineation of more reserves for a longer LOM through exploration, as the geologists have identified many VMS targets in the area:

22.jpg

COO and geologist Rob Duncan explained to me why the not-too-interestingly looking drill results provide enough material to see exploration potential. According to him, in VMS systems, the most important thing to understand is the volcanic stratigraphy (layering) and the position of the geological time breaks where massive sulphides (from black smoker chimneys etc.) can accumulate on the sea floor or in the near subsurface.

The exploration results, simply because numerous assays do contain mineralization, however in short intercepts, indicate that the correct position has been found and that the semi massive or massive sulphides found there do contain economic metal minerals. In other words, they are not completely barren.

None of those results are near economic, however, Duncan has seen several examples where economic intersections can occur only 50m along strike from results like these. This is possible due to how dynamic the volcanic environment was at the time of formation. Just 50m away a different volcanic unit could very well provide the boundary for a sub basin that thicker accumulations if sulphides can get trapped in. Another frequent case is that in combination with the above, a secondary structure could appear, along which new volcanic units erupt from and/or higher heat flow channels the mineralized fluids through. So far drilling has resulted in economic grades, assumed to be in the vicinity of hopefully something bigger, by only the current anomalous results.

According to the opinion of Duncan, none of the exploration intersections (other than immediately west of Esso) represent targets from which to build resources from for now, but are highly encouraging from a pure exploration discovery point of view. Looking at the anomalous, non-economic results, versus the advanced stage of the existing deposits, I can only agree with this as it is too early stage to be included in the upcoming FS. However, this exploration potential could prove to be very interesting later on, as all intercepts are located within a 10km radius from the Main deposit, providing for good trucking options if economic mineralization might be discovered.

If this is the case, and tonnage could be added in order to increase LOM, this will have an impact on NPV and probably valuation as well in the future. In order to get an idea about valuation of Kutcho Copper, I will discuss this subject in the next paragraph.

6. Valuation

As I usually do, a peer comparison often comes in handy when it’s about time to say something about valuations. Not so this time, as my tables just indicate that for copper projects there is incredible variation in typical metrics, notwithstanding stage or jurisdiction:

17.jpg

And:

18.jpg

As is always the case with peer comparisons, every company has its own story with very specific details, causing valuations the way they are, therefore making it impossible to take comparison results at face value. A few remarks: for Nevada Copper I used the combined PFS this time, indicating economics for the total project, which are less positive than just the earlier mentioned underground scenario. This causes Nevada Copper to trade more or less as a leveraged play on copper, especially with a capex still much higher than NPV. Western Copper & Gold applied fairly high metal prices besides copper, for example, US$1400/oz for gold which is 35-40% of revenues. A somewhat more industry-standard US$1250/oz would have taken down the IRR to about 19%. Additional issue here is a big capex, also 37% larger than NPV. Besides this, because it is a large open-pit operation and permitting in the Yukon isn’t easy, the permitting takes a long time.

Although it isn’t a bad project, this causes the P/NAV to be very low, actually the lowest in my table. Entree is actually a very different situation, with the Oyu Tolgoi 20% JV, where it is taken to production by Rio Tinto. I just included it to more or less show the valuation of a developer under construction. As Entree has more projects at Oyu Tolgoi, and the recently published PEA results include them all, my figures aren’t very straightforward, but I chose to use the most advanced, smaller part.

Maybe the best peer to look at is Highland Copper, although this one also has another, earlier stage project (White Pine) besides its flagship project, Copperwood. It has been sitting on a 2012 FS for a very long time, actually during the full bear market, and will come with an updated FS in Q2, 2018. The grade, size and economics of their Copperwood project are more or less comparable, and Michigan, U.S. is a solid mining jurisdiction. It appears that Highland already has all major permits in place. The company has top notch shareholders (Greenstone 17%, Osisko Royalties 15%, Orion Mine Finance 14% and also 24% institutional shareholders), and management and directors hold 7% as well, which is all pretty impressive. There are a few differences of course: the share structure is very much diluted with 467.5M O/S and 617.8M F/D, and I am not aware of any financial packages like Kutcho Copper has arranged. Notwithstanding this, I consider Highland Copper an interesting copper play, worth further due diligence, as I don’t own it yet. This all results in a P/NAV for Highland of 0.30, which is 130% higher compared to the current figure for Kutcho Copper, which indicates re-rating potential.

When we would look at the P/NAV of smaller producers like Nevsun, Sierra Metals and others, we see an average P/NAV of 0.6-0.7, and considering the size of the Kutcho deposits so far, this category is the direction Kutcho Copper will be going.

It is very hard to pinpoint towards a value of a developer before it is fully financed and ideally built and commencing production, but in my view the Highland Copper P/NAV of 0.3 provides us with a realistic and conservative guidance at FS/permitted stage. With the current base case NPV8 of C$265M @US$2.75/lb Cu, this would result in an estimated market cap of C$79.5M, and a hypothetical F/D share price of C$1.14. As management isn’t going to sit on their hands, assuming they can in fact prove up 20Mt in Reserves, the 4,500tpd scenario would generate an estimated NPV8 @US$3.00 of C$584M, which would result in a hypothetical F/D share price of C$2.50 in 2 years from now, if all goes as planned. Also keep in mind that the Kutcho economics are excellent for a base metal project, and excellent economics usually get a premium in the market.

When the company achieves capex financing and successful construction afterwards, the P/NAV of 0.6-0.7 comes on the radar, with hypothetical targets of C$4 in sight, including new dilution as any package would probably contain some new equity. And this is all still at C$3.00/lb copper and C$1.10/lb zinc, which could prove to be conservative in a few years from now.

For this year, all efforts are geared towards increasing and upgrading the reserves/resources by lots of drilling, optimizing metallurgy, doing baseline studies and environmental assessment/permitting work. This will result in two major catalysts in the first half of next year: the updated resource estimate in Q1 2019, and the FS in Q2 2019. I asked management if they would be open to provide an updated PFS somewhere halfway (Q3 2018), based on already converted resources and optimizations until that point, and it seems a possibility in order to avoid a 2-year timeframe between the PFS and FS.

7. Conclusion

The longer I look at Kutcho Copper, the more I realize this is a very rare junior. It isn’t ten-bagger material in 2 years, but in my view this could be one of the most compelling and low risk triples over that same time frame that I know of.

Management is top notch, the project has excellent economics and lots of upside potential, backers are top quality with Wheaton Precious Metals, and main metal copper is forecasted to go into long-term deficits, which could create higher metal prices. Dilution will be limited to an absolute minimum as everything up to the start of construction barring unexpected events is accounted for financially, and the share structure is already very tight.

All fundamentals appear to check out for this junior, and it seems only a matter of time before Kutcho Copper enjoys even further enhanced project economics, visualized by key catalysts, hopefully causing a significant re-rating. In my view, Kutcho Copper could very well be on its way to establish itself as one of the go-to base metal juniors of 2018 and beyond.

I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter on my website http://www.criticalinvestor.eu, and follow me on Seekingalpha.com, in order to get an email notice of my new articles soon after they are published.

Disclaimer:

The author is not a registered investment advisor, currently has a long position in this stock, and Kutcho Copper is a sponsoring company. All facts are to be checked by the reader. For more information go to http://www.kutcho.ca and read the company’s profile and official documents on http://www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.

23.jpg
Exploration camp used by Kutcho Copper

( Companies Mentioned: KC:TSX.V,
WPM:TSX; WPM:NYSE,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/article/2018/01/17/a-candidate-for-deal-of-the-year-in-british-columbia.html

Turnarounds Coming at Three Resource Companies? 

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, strong drill results from both the Upper and Lower zones (the latter in joint venture with Freeport-McMoRan Inc. [FCX:NYSE]) have been released confirming the high grade and continuity of the deposit. This quarter, Nevsun expects to release an updated inferred resource and then a prefeasibility study. The latter, in particular, will be closely watched and could be a catalyst for the share price.

Separately, a British Columbian court ruled that an NGO lawsuit against the company over forced labor claims can continue, striking a blow to the company. Of course, the company did not release this significant item of news, though it was in the newspapers.

We are holding.

New mine and improved balance sheet
Yamana Gold Inc. (YRI:TSX; AUY:NYSE; YAU:LSE; US$3.44) is on track with the construction of its next major mine, Cerro Moro, on schedule and on budget, with commercial production expected before mid-year. Cerro Morro will increase the company’s cash flow by 25%.

The company announced that production and costs for 2017 were slightly better than guidance. And it has taken steps to improve its balance sheet, by selling its share of the exploration ground around Canadian Malartic mine for $163 million; issuing senior notes for $300 million; and finally selling forward at a discount some of its copper for $125 million. All these moves improve the battered balance sheet.

By addressing the issues that have hurt Yamana, and with a new mine ahead, the company could be turning around. However, the stock no longer trades at a discount to its peers, so we are holding.

 

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: 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: Wheaton Precious Metals, Nevsun Resources, Yamana 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 this article are billboard sponsors of Streetwise Reports: Wheaton Precious Metals. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. 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. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
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 immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Wheaton Precious Metals and Nevsun Resources, companies mentioned in this article.

( Companies Mentioned: NSU:TSX; NSU:NYSE.MKT,
WPM:TSX; WPM:NYSE,
YRI:TSX; AUY:NYSE; YAU:LSE,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/article/2018/01/18/turnarounds-coming-at-three-resource-companies.html

Exciting News with More to Come

Source: Adrian Day for Streetwise Reports   01/15/2018

Money manager Adrian Day provides updates for a handful of companies in his portfolio.

A day late and a dollar (in this case, a penny) short: The day after our last recommendation, Evrim Resources Corp. (EVM:TSX.V, 0.42 x 0.44) opened above our limit and has moved up dramatically ever since, trading as high as 47 cents on Jan. 12. Another respected letter writer listed Evrim as one of his top picks for 2018 on the same day as our recommendation.

Don’t forget who actually owns the property!

On Jan. 9, First Majestic Silver Corp. (FR:TSX; AG:NYSE; FMV:FSE), Evrim’s partner on its Ermitano project, put out a release discussing the results of its 2017 company-wide exploration. It highlighted some of the drill holes from Ermitano, which had been awaiting release. The information was sketchy; there was not even a map showing where on the property the drill holes were. And for whatever reason, nowhere in the release did it even mention that First Majestic did not in fact actually own the property. They are earning in to the property on certain conditions. A couple of so-called analysts put out their so-called research pieces regurgitating the press release, but whether through ignorance or laziness, also failed to mention that someone else owned the property.

In any event, the results look good; it will be interesting to find out where these drill holes are located. It is definitely positive news for Evrim. Either First Majestic steps up its program and meets the conditions set for earning into the property this time next year. (FM will earn 100% of the property in exchange for some modest payments and a 2% royalty for Evrim); or FM, failing to meet the terms, will make an offer to Evrim, perhaps for all three of its properties near FM’s Santa Elena mine (and Evrim will hold the upper hand in any such negotiations); or the property reverts to Evrim. Any one of these outcomes would be positive for Evrim, and we will know a year hence.

What to do?

We will look to revise our recommended limit once things have settled down. We would note that Evrim does have the right to force exercise of their warrants if the stock trades above 35 cents, and a forced exercise can cause some weakness since holders sell stock to raise cash to exercise warrants.

Another equity raise

Miranda Gold Corp. (MAD:TSX.V, 0.05 x 0.055), as expected has announced an equity raise, planning to raise up to $1.5 million. The terms are not overly generous, with the unit priced at 5 1/2 cents (current offer) and warrants exercisable at 12 cents, over twice current market. With potential cash coming in over the next 15 months, on new deals, this should be sufficient until the royalty income on the Lucky Shot mine commences. As discussed, Miranda is bottoming and if plans are executed over next year or more, should recover nicely.

Agreement close

Freeport-McMoRan Inc. (FCX:NYSE, 19.72) is close to an agreement with Indonesia on the future of the Grasberg mine. A multi-party memorandum of understanding is being signed by the parties today, in Indonesia. We await the fine print.

Temporary problem exaggerated in market reaction

Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX, US$84.99) plunged after announcing that the Mt. Milligan mine, its largest royalty asset by asset value and revenue, had ceased mill processing operations temporarily. The move, by operator Centerra, was due to a lack of sufficient water resources (due both to a rain/snow shortfall and extremely cold weather that froze the tailings facility). The company expects milling operations to be partly resumed by the end of the month, and fully resumed following the spring melt.

At worst, the shortfall in production—which will be recorded in the middle quarters of this year—will be a timing issue; the stock price move, down over 10% in two days, was an exaggerated reaction. It reflected the ongoing problems Royal has experienced with Mt. Milligan, I think, more than this specific issue. With the past week’s move in gold, the stock has mostly recovered—its low was just over $78—but we think it has much further to go.

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: Evrim Resources, Royal Gold. 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: Evrim Resources, Freeport McMoRan, Miranda Gold and Royal 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 this article are billboard sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. 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. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
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 immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Evrim Resources and Miranda Gold, companies mentioned in this article.

( Companies Mentioned: EVM:TSX.V,
FCX:NYSE,
MAD:TSX.V,
RGLD:NASDAQ; RGL:TSX,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/article/2018/01/15/exciting-news-with-more-to-come.html

‘Grossly Undervalued’ Miner Enters 2018 with Abundant News about Its Argentinian Projects

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 close to its 52-week lows, Golden Arrow presents a very attractive investment opportunity with a substantial upside.”

Commenting on the joint venture with SSR, Goldman wrote that, “Based upon the PFS, Golden Arrow’s 25% interest, once fully operational, should effectively generate approximately 2 million Silver Eq ounces per year at a cash cost of $7.40/oz (AISC $9.75 per oz). Based upon current silver prices of approximately $17.00 per oz. . .Golden Arrow would be receiving approximately $15 million to $20 million per year [as] a passive joint venture shareholder partner.”

Goldman believes Golden Arrow has “evolved from an exploration company into a revenue-generating entity,” and is “grossly undervalued.” Though investment in the company comes with risk, he added, “the potential upside in Golden Arrow could be substantial. “

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) Tracy Salcedo 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. Streetwise Reports does not accept stock in exchange for its services. 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 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 immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Golden Arrow Resources, a company mentioned in this article.

Additional disclosures

Disclosures from Gold Newsletter, December 2017-January 2018
The publisher and its affiliates, officers, directors and owner actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase or decrease such positions without notice. The publisher is not a registered investment advisor. Authors of articles or special reports are sometimes compensated for their services.

Disclosures from Seeking Alpha, Steven Goldman, Dec. 4, 2017, “Golden Arrow Resources: Undervalued with Catalysts”

Disclosure: I am/we are long GARWF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Additional disclosure: The CEO of Comstock Metals (TSX.V: CSL.V) is Dr. David Terry who is also a board member of Golden Arrow. I am a member of the board of directors of Comstock Metals.

Disclosures from GSA-Silver, Dec. 20, 2017
Companies do not pay for coverage. Selection for coverage is entirely determined by GSA-Silver’s staff and based in part on: 1) Stock trades in North America; 2) Current Silver production and/or a published independent feasibility study showing a deposit to be economic; 3) Current or potential 1+ mil oz/yr production. All rights reserved/protected under US Copyright Law. No reproduction of any portion without specific permission. GSA-Silver owns a token number of shares in all firms covered for information purposes. The Editor/Publisher and Employees may buy/sell securities of firms herein at any time, increase/decrease and trade around positions, but never act contrary to SSA’s basic recommendation.

( Companies Mentioned: GRG:TSX.V; GAC:FSE; GARWF:OTCQB,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/article/2018/01/16/grossly-undervalued-miner-enters-2018-with-abundant-news-about-its-argentinian-projects.html

Jack Chan’s Weekly Precious Metals Update

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.

Summary
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.

Disclosure:
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 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.

Charts courtesy of Jack Chan

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/article/2018/01/15/jack-chans-weekly-precious-metals-update-11.html

Thoughts on Novo

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 diamond core drilling to determine structure.

Investors have a hard time coming to grips with the concept of stock prices going both up and down. If a project is good, the share price “should” go up every day and if it doesn’t, it’s “proof” of either a conspiracy to manipulate price or the property was a heap of crap in the first place.

Huh? How does that work? As Rick Rule has said many times in the past, every great project with a big advance will have a 50% decline and it’s no big deal. Nothing released by Novo since July was anything other than exceptional yet investors fell all over themselves running for the exits.

In late December Novo began to release the trench results. There were three assays from three samples. The first was 15.7 g/t, the second was 17.7 g/t and the third, taken from 40 cm above the basal contact was 1.3 g/t. Those investors who had not already broken one or both legs in the rush to exit stumbled to the door to sell in the hopes of capturing the biggest loss they could while they still could.

If you average the first two samples, you come up with 16.7 g/t over 40 cm on top of the basal contact which makes a great marker. That’s twice the grade of gold being mined at a profit today in the Vits. Except it’s at surface in Karratha which is a whole lot cheaper to mine. And 40 cm is an average of Vits thickness.

In their ignorance, investors took the 1.3 g/t assay as being negative. That’s pretty stupid. First of all, drilling is aimed at determining two things. As all mining engineers know, there are only two kinds of rock, ore and waste. It’s just as important to know where the waste is than to know where the ore is. So an uneconomic assay sample is not bad news, it’s exceptionally important to know what is not ore. And actually, with gold at $43 and change a gram as I write, 1.3 g/t rock is worth $56 a ton. At surface that’s also economic but if the sample had shown no gold at all, it was still important information for Novo to know.

The summer sun bakes Western Australia now and will for another month or so. Work has stopped at Purdy’s for now. Novo has applied for their Plan of Work and already has some approvals including permission for a 10,000-ton bulk sample. Novo expects to begin work at their 80% owned Comet Well by the end of February.

There has been a lot written and said about the processing plant at Radio Hill all of which is nonsense. It’s a plant designed for sulfide ore. Purdy’s is not sulfide ore, it’s nuggety gold and Radio Hill can’t possible process it. Lenigas keeps talking about putting in a gravity circuit but even that is a giant problem. There isn’t a gravity plant in the world today capable of handling ore of this grade. As I have been saying for months, this is a unique deposit and has to be approached in a unique way with new thinking.

What Radio Hill does have that might be valuable to the JV is water for processing and a permitted tailings pond. But anyone saying all you have to do is truck the rock over to Radio Hill and run it through the existing plant is blowing smoke. An entirely new gravity circuit built around jigs and a big sluice box would work but it will take months to put together.

Novo is not sitting on their hands. The company is talking to the native corporation as I write and having a royalty agreement in place for Comet Well is a high priority. Fifteen to twenty bulk samples have been sent to Nagrom and by the end of January results should start coming out.

While it would have been nice to be able to determine gold quantity and grade with the large diameter drill, it’s not mandatory. We know it’s nuggety gold, the variation in grade from the first two assays show how difficult it is to measure even within the same sample. Quinton is holding out a belief that somewhere there will be small gold in the system easier to drill but I hold no such hope. What I do know is all of the gold samples so far have been exceptional grades that are economic for certain. You don’t have to be able to measure it, you can mine it.

I feel bad for the investors who were buying at $9 and sold in a panic but I’ve been trying for five years to give a more balanced view of Novo and the Pilbara. Anyone writing off the company and the project is making a giant mistake. I’ve seen identical gold spread over 135 km at least and that’s good enough for me.

I own a lot of Novo and they are an advertiser and I am biased.

Novo Resources
NVO-V $3.39 (Jan. 15, 2018)
NSRPF $2.73 OTCQX 148 million shares
Novo Resources 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: Novo Resources. Novo Resources 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 are billboard sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees.
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. 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 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 immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

( Companies Mentioned: NVO:TSX.V; NSRPF:OTCQX,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/article/2018/01/15/thoughts-on-novo.html