Gold for Protection; This Metal for Wealth

Inflation has been rising at a rapid rate since the election. Not only is the CPI up, but the Dow Jones just experienced its fastest 1,000-point move in history. With the bull market in its ninth year, Lior Gantz of Wealth Research Group believes this is the time for investors to become very selective, and he points to one commodity that is experiencing very tight supply right now.

China’s infrastructure plan dwarfs America’s and the big players are betting on Asia.

This bull market is now entering its 9th year, which makes it the 2nd longest in history.

In my personal 2017 portfolio and game plan, I stress the need to make sure that you’re defending gains and becoming very selective when it comes to new investments in the broad indices.

Every savvy investor must own a combination of Safe Havens.

Bull Market

Zero-percent interest rates have played a major role in making the S&P 500 the most expensive it has been since the Dotcom bubble, and retirees have few options to earn High yields—there are very few Wealth Stocks at bargain prices left.

Now, with inflation rising and Trump’s trillion-dollar infrastructure plan on the table, the big banks are finally bullish on commodities after 6–7 years of bearish outlook.

In 2016, I’ve studied close to 758 resource stocks, and less than 1% of them have the characteristics of greatness.

TSX Venture Exchange

The resource market is predictable—it booms and busts.

Since the U.S., China, and Europe were in a recession or a severe slowdown between 2011 and 2016, most industrial metals were trending downwards.

The most bullish consequence of a bear market is that the sharper and more violent it is, the bull market that follows is just as explosive.

Precious Metals YTD Performance

In 2016, it was zinc that first broke out of its multi-year bear market, and the reason is simple: supply is generationally tight.

Two major mines were closed in 2016, and stockpiles are at a decade low.

Zinc is the world’s 4th most in-demand metal, and China cannot carry out its vision for mega-cities with interconnecting highways without a tremendous inventory of zinc.

China's Share of Global Commodity Consumption

It consumes close to 47% of the world supply.

The research Wealth Research Group has conducted over the past 4 months has made it clear that the opportunity isn’t to get involved with the active miners.

The reason is that there are relatively few pure zinc mining stocks, and no one will be able to ramp up production that easily.

The gains are at the exploration stage, and the fattest gains are the SEDEX deposits.

Giant Sedex Deposits

There are only a few of them ever discovered, and Peter Meredith, who is the right-hand man to mining billionaire Robert Friedland, has become heavily involved with a newly founded company that is sitting on a potential mother lode.

Robert Friedland is the entrepreneur that investment genius Rick Rule calls the “smartest man in mining,” as well as the founder of Ivanhoe Mines.

When I profiled Cordoba Minerals (the company he is the chairman of) in January, I had no idea it would advance by 91% in 75 days. He is now making a big play into an undervalued company in the zinc market, and it has not made its big move yet.

Kootenay Zinc Corp. (ZNK:CSE; KTNNF:OTCQB; KYH:FSE) is the ultimate pure exploration company to own.

It is now drilling and looking for the sister of the famous Sullivan zinc mine, one of the world’s largest SEDEX silver, lead, and zinc deposits. Over its life, Sullivan produced 17 million tonnes of lead and zinc and 337 million ounces of silver from 150 million tonnes of feed. At current prices, the value of production was USD $49 billion.

It’s my personal No. 1 zinc exploration position, and though it is a high-risk, high-reward play, the people involved couldn’t be more experienced.

The flagship project is the Sully deposit, and because Tookie Angus—the best dealmaker in Vancouver and the entrepreneur who has led companies to 1,400% returns before—is also in the picture, this company has attracted the quintessential group of SEDEX geologists and geophysicists, all of which are confident this anomaly in the ground is a rich deposit.

Gravity Mapping

Consider taking a position in this company now as a calculated speculation in the zinc market.

The way I look at it is that striking zinc could make this stock a potential takeover for the big boys in the area, and the gains will be in the thousands of percent.

The Sully Project

I’ve spoken with dozens of management teams and reviewed the corporate presentations of 109 zinc projects, and I’ve never seen a company with such a solid financial position, tight share structure, location in a safe jurisdiction, respected management, and being a potential game-changer to the zinc industry.

This is big, and I guess it’s the reason why people with multimillion-dollar salaries, like Peter Meredith, are getting involved in this early stage—the huge potential gain is too overwhelming to pass by.

Zinc is the anti-corrosion metal, and China’s booming middle class will gobble up all new supply to meet its car demand.

Project Grown of Private Consumption in China

Get positioned early before drilling results are published and Kootenay Zinc (CSE:ZNK & OTC:KTNNF) becomes a huge news story.

Do your research NOW!

Lior Gantz, an editor of Wealth Research Group, has built and runs numerous successful businesses and has traveled to over 30 countries in the past decade in pursuit of thrills and opportunities, gaining valuable knowledge and experience. He is an advocate of meticulous risk management, balanced asset allocation and proper position sizing. As a deep-value investor, Gantz loves researching businesses that are off the radar and completely unknown to most financial publications.

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Disclosures:
1) Lior Gantz: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Kootenay Zinc Corp. (Wealth Research Group LLC received shares in a financing).
I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: Kootenay Zinc Corp. (Wealth Research Group LLC was paid). My company has a financial relationship with the following companies mentioned in this article: Kootenay Zinc Corp. I determined which companies would be included in this article based on my research and understanding of the sector.

2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.

Charts provided by Wealth Research Group

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17341

Jack Chan’s Weekly Gold and Silver Update

Technical analyst Jack Chan charts the latest moves in the gold and silver sectors.

Our proprietary cycle indicator is down.

chanhui13-18
The 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.

chanhui23-18
The gold sector is on a short-term sell signal. Short-term signals can last for days and weeks, and are more suitable for traders.

chanslv3-18
Silver is on a long-term buy signal.

chanslv33-18
SLV is on a short-term sell signal, and short-term signals can last for days to weeks, more suitable for traders.

Summary
The gold sector is on major buy signal. The cycle is down. A correction is in progress.

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/pub/na/17340

Gold Stocks for All Risk Appetites

Money manager Adrian Day reviews recent developments at a handful of gold companies, both juniors and seniors.

Franco-Nevada Corp. (FNV:TSX; FNV:NYSE,NY 62.58), already one of most diversified of royalty companies, is expecting further commodity diversification ahead, with CEO David Harquail saying the company will do more deals in non-precious metals, particularly oil and gas. The company’s mandate allows for up to 20% of the portfolio outside precious metals—currently it’s at 94% precious metals—and Harquail said he would like to get to that level soon. Franco currently has availability liquidity (cash and credit lines) over $1 billion.

The reason for the diversification is that the gold industry is essentially “ex-growth,” according to Harquail, who says companies are investing in new projects to maintain production, but “none of these projects are really great.”

Company can take its time
Harquail also noted that Franco does not need to be in a rush to invest. It has growth built in for the next five years from royalties on advanced-stage projects, while it could maintain its dividend for the next 32 years even if it did nothing else.

Franco is also appealing more and more as an investment to long-term conservative institutions, including generalist funds who want a small exposure to gold and resources without the extreme volatility from mining companies. Franco remains a foundational investment for us. If you don’t own it, it’s a good buy here.

Some debt and greater risk, but higher potential?
Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX, NASDAQ 63.03) also has near-term growth from new mines (including New Gold’s troubled Rainy River, which is still scheduled to start up later this year). Its main assets have long lives, while it has a strong pipeline with optionality to higher prices. Following concerns about the balance sheet when it added to investments in Mount Milligan, the new debt ratios are now reasonable and the company has $420 million in available liquidity with no further funding obligations.

Unlike Franco, it carries debt, and the revenue sources are more concentrated. But in a stronger gold environment, Royal likely has more upside than Franco. It has increased its dividend each year for the past 16 years (currently yielding just over 1.5%). Royal is a strong buy at current levels, albeit with more downside risk if gold is weak.

Flat outlook means wait
Silver Wheaton Corp. (SLW:TSX; SLW:NYSE, NY 19.44) has a flat production outlook for the next three years, following a period of strong growth. The Canadian tax issue is still hanging over the company. Silver Wheaton remains our favored way to gain exposure to silver, even though some 45% of its revenue now comes from gold. Given these reasons, we want to buy SLW when it is particularly cheap, so we’ll hold for now.

Buy out ahead?
Almaden Minerals Ltd. (AMM:TSX; AAU:NYSE, NY 1.01) is nearing completion of its Preliminary Feasibility Study (PFS) on the Ixtaca deposit, which should show improved economics over the PEA (January 2016); the study is expected by the end of the month. Importantly, it should show a larger deposit. The PEA showed life-of-mine production of 724,000 ounces of gold and 49 million ounces of silver at an operating cost of under $700 per ounce of gold, with very attractive returns.

Meanwhile, the company has continued to drill high-grade mineralization in areas within and outside the previous PEA; this material will be included in the new study. The company has many other targets on the Tuligtic project besides the Ixtaca deposit. Also, last month, the company raised $3.4 million in a private placement and is now well funded to continue advancing the project. Final permitting is expected to commence soon, with a 6 to 12-month target for permits. Once the PFS and permits are in hand, we suspect other companies will take a much stronger look at Ixtaca and possible acquisition. With a production profile almost 50/50 gold/silver, Ixtaca could be attractive to one of the several junior silver producers operating in Mexico.

It’s a clean deposit, with low capex, upside potential, and in a good jurisdiction. Buy Almaden at the current level.

Multiple properties, with key deposit
Almadex Minerals Ltd. (AMX:TSX.V, 1.19), spun off from Almaden a year ago, holds all of the exploration properties and royalty assets, including the more advanced El Cobre project which is the company’s main focus at present. This is a large property with good grades, and near good infrastructure.

In all, Almadex has about 20 properties, and has been active optioning them to ensure work gets done on as many as possible while it focuses on El Cobre. Almadex has also completed a placement, raising nearly CA$3.4 million to add to its already solid cash, bullion and share hoard. We like Almadex and its management, but would look to buy on further weakness.

Miranda Gold Corp. (MAD:TSX.V, 0.09 x0.095) has been active of late in Colombia, tying up land and seeking joint venture partners. We hope to see the fruits of this work in coming months. The transition from Nevada is complete. The company’s Willow Creek in Alaska is moving forward as its partner, Gold Torrent, has obtained financing to develop the project. Though small, Willow Creek once in production—Gold Torrent is forecasting the end of 2018, though that sounds optimistic to me—will provide cash flow to Miranda sufficient to cover overhead. Currently, Miranda has $3.2 million in cash, sufficient for nearly two years’ expenditures. At this price, Miranda is a good buy, but I wouldn’t chase it higher until there are partnerships in place in Colombia.

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: Franco-Nevada and 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: Franco-Nevada Corp., Royal Gold Inc., Silver Wheaton Corp., Almaden Minerals Ltd., Almadex Minerals Ltd. and Miranda Gold Corp. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Silver Wheaton Corp. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview/article until after it publishes.

( Companies Mentioned: AMM:TSX; AAU:NYSE,
AMX:TSX.V,
FNV:TSX; FNV:NYSE,
MAD:TSX.V,
RGLD:NASDAQ; RGL:TSX,
SLW:TSX; SLW:NYSE,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17334

Trevali Proving Zinc Is Golden

Trevali Mining has added a portfolio of zinc assets to its already impressive resource list with the purchase of Glencore’s producing Rosh Pinah and Perkoa zinc mines.

Trevali Mining Corp. (TV:TSX; TV:BVL; TREVF:OTCQX) announced on March 13th its agreement to purchase a portfolio of zinc assets from Glencore International Plc (GLEN:LSE), “which includes “80% interest in the Rosh Pinah mine in Namibia, a 90% interest in the Perkoa mine in Burkina Faso, an effective 39% interest in the Gergarub project in Namibia and an option to acquire 100% interest in the Heath Steele property in Canada.”

Dr. Mark Cruise, president and Chief Executive Officer of Trevali stated, “The acquisition of Rosh Pinah and Perkoa is a historic event and unique opportunity for Trevali shareholders, and sets the stage for a multi-asset, low-cost global zinc producer.”

Glencore will increase its stake in Trevali to 25% from 4% and will gain an additional seat on Trevali’s board, bringing Glencore’s seats to two. Glencore will also have the offtake from all four of Trevali’s mines.

The acquisitions extend Trevali’s zinc reach globally, adding mines in Africa to its ongoing operations in Canada at Caribou and in Peru at Santander.

In a Mar. 13 report, Paradigm Capital analyst Jeff Woolley stated that the Santander mine is “generating positive cash flow and its second mine, Caribou, now commercial,” is moving Trevali into a path for growth.

Woolley’s 2017 forecast has Trevali’s “payable production of 178Mlb Zn (+19% y/y) and 216Mlb ZnEq (+10%y/y) at a cash cost of US $0.53/lb Zn or US $0.72/lb ZnEq.” Woolley concluded that “Trevali remains our most leveraged name to benefit from the improving zinc and lead pricing environment and a Top Pick for those seeking financial exposure to these commodities.”

In Paradigm’s Mar. 7 report, Woolley detailed the production increases taking place at Santander, highlighting that “the zinc grade appears to be increasing at depth in the Magistral Deposits with the anticipated head grades mined/milled rising to 5.0–6.0% Zn by 2018 from the current 4.0–4.5%. The higher head grade translates into an increase in our 2018/2019 production forecasts to 75–80Mlb Zn (payable) versus 65Mlb in 2017.”

Cormark Securities analyst Stefan Ioannou outlined high expectations for the company in 2017. In a Mar. 13 report, he stated, “With zinc production from two established mines expected to ramp up to ~200 MMlb per annum by 2020, we believe Trevali is poised to become a (the) marquee ‘pure-play’ zinc producer in a market facing a significant near-to medium-term supply issue. Bottom line, we believe Trevali should be considered as a core position underpinning any investment strategy looking for zinc exposure.”

Ioannou went on to support his position with some numbers from Santander and Caribou, highlighting that “the Magistral deposits at Santander remain open at depth, where zinc grade appears to be increasing. Additional drilling in 2017 will facilitate longer-range mine planning, including a potential mill expansion.” He also pointed out that “Caribou’s H2/16 operating cost profile, in the context of ongoing ramp-up considerations, caught us by surprise—an average onsite operating cost of US$56.39/t milled (including US$54.79/t in Q4/16) came in well below our expectations (+US$75/t milled) and Trevali’s H2/16E guidance (US$64-68/t).”

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Melissa Farley compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Trevali Mining Corp. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.

Additional Disclosures for this Content

( Companies Mentioned: GLEN:LSE,
TV:TSX; TV:BVL; TREVF:OTCQX,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17338

Silver Wheaton’s Profile Boosted by Progress at Antamina Mine

Silver Wheaton Corp. and Franco-Nevada Corp. hosted a mine tour of the Antamina Mine in Peru on March 2, and the promise of substantial additions to the streaming company’s assets prompted positive comments from two industry analysts.

“With Antamina representing a significant proportion of SLW’s production profile, the tour highlighted the opportunity for substantial mine life extension, including the potential to upgrade material and add additional ounces through exploration,” analyst Andrew Kaip noted in a March 7 report for BMO Capital Markets.

“We see Antamina as representing a meaningful proportion of SLW’s production profile,” Kaip stated.

Production from Antamina totaled 431kt of copper in 2016, Macquarie analyst Michael Siperco wrote in a March 6 report. In addition, guidance from Silver Wheaton and Franco-Nevada “implies total silver production averaging 14–16moz over the next 20 years.” Macquarie considers Antamina a “top ten global producer of copper, zinc and silver,” with the site encompassing “a polymetallic skarn deposit containing copper, zinc (together ~90% of mine value), silver, molybdenum, lead and bismuth.”

Silver Wheaton Corp. (SLW:TSX; SLW:NYSE), like Franco-Nevada Corp. (FNV:TSX; FNV:NYSE), has “multiple multi-decade streams on high quality mines with high quality counterparties,” Siperco continued. “These are the type of assets that have set SLW and FNV apart from their competitors, and should support cash flow generation and dividend increases for decades to come.”

According to Macquarie, “both FNV and SLW will continue to be core holdings for investors looking for low-risk exposure to precious metals in growing, dividend-paying vehicles.”

Kaip noted “SLW has a stream to acquire an amount of silver equal to 33.75% of the silver production from the Antamina mine until delivery of 140Moz of silver and 22.5% of the silver production thereafter for the life of mine. SLW will make payments of 20% of spot price per silver ounce delivered.”

Prior to the Antamina tour, a Feb. 28 research report from BMO commented on the strength of Silver Wheaton’s portfolio, noting the company’s “current cornerstone assets include Salobo, which produced record gold production in 2015 of 126koz; Penasquito, where silver grade is expected to climb through 2019; Antamina, the eighth-largest copper mine in the world; and San Dimas, SLW’s first stream.”

The Feb. 28 report also stated that Silver Wheaton “provides more leverage to commodity prices relative to investing directly in bullion, as well as acquisition growth potential, exploration potential, and a dividend yield linked to operating cash flow.”

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 owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Silver Wheaton Corp. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.

Additional Disclosures for this Content

( Companies Mentioned: SLW:TSX; SLW:NYSE,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17336

Great Panther Is on the Prowl for Acquisitions

Great Panther Silver’s modus operandi is to buy a past-producing mine, get it up and running as quickly as possible, and use the cash flow to fund more acquisitions, says CEO Bob Archer in this interview with The Gold Report. Having succeeded in Mexico with Guanajuato and Topia, the company is now taking on Coricancha in Peru.

The Gold Report: Can you start off by telling us your perception of the silver market and how you think silver is going to perform in the Trump era?

Bob Archer: I believe precious metals bottomed near the end of 2015. Through 2016 we saw quite a nice rebound both in metal prices and in market sentiment, so that’s been very positive for the industry. The price of silver rebounded a lot faster than the price of gold. That reversed the gold-silver ratio that had been going up until the end of 2015, when it peaked at about 83 or 84.

Through 2016, on a percentage basis, silver outperformed gold, so the ratio has dropped back down. At one point it got down to around 65, but it’s back up around 70 right now.

I think that trend will continue: The gold-silver ratio will continue to decrease. The longer-term average over the last 10 to 20 years has been around 60. But when metal prices peaked in 2011, that ratio went down to about 35. So there is a very good sense that silver will outperform gold quite significantly over the next few years.

As far as Mr. Trump is concerned, so far he’s been really good for precious metals, largely because the market does not like uncertainty, and that pretty much surrounds him like a cloud. Nobody really seems to know what to think. As long as that uncertainty is out there, precious metals will do quite well.

TGR: Would you tell us a little bit about your own history? You’re a geologist, and your first ventures were in exploration. Then you moved into production. What did you learn from this?

BA: One of the key things that I learned was that exploration companies are solely reliant on the markets for funding. Given the cyclical nature of this business, it’s great when things are going well, it’s easy to raise money and you can fund your programs. But when you go through a downturn, you can get several years where it’s virtually impossible to raise money for exploration companies and exploration projects. Those times can be extremely difficult.

So when my original business partner and I started out with the concept of Great Panther Silver Limited (GPR:TSX; GPL:NYSE.MKT), our business model was to get into production as quickly as possible and then grow the company primarily out of cash flow. That way we wouldn’t have to weather these cycles quite so badly. I am pleased to say that we have been successful in doing that, and we’ve emerged from this last downturn stronger than ever.

TGR: Great Panther has two mines in Mexico: the Guanajuato mine complex and Topia. Do you anticipate difficulties in conducting business in Mexico in light of tensions between the Trump Administration and the Mexican government?

BA: Mining doesn’t really seem to be affected too much by all of that. If anything, it’s been beneficial for us because the tension has created a lot of weakness in the Mexican peso. The foreign exchange rate has worked to our benefit because most of our costs in Mexico are in pesos, while revenue is in dollars. That favorable foreign exchange rate has been one of the things that has helped us to push our cash costs down over the last couple of years, last year in particular.

TGR: Would you tell us about your Mexican operations?

BA: Our Guanajuato operation is our flagship; it provides more than 75% of our production. We produce silver and gold from Guanajuato in the form of a pyrite concentrate that gets sold directly to smelters. There are two mines operating there that feed into one central plant. The bulk of the production, about 60% of it, comes from our San Ignacio mine, which was a discovery that we made in 2010.

Because San Ignacio lies just outside the city of Guanajuato, and just outside our main property and plant, we were able to bring that into production very quickly. We’re just trucking the ore around to the plant, so we didn’t have to build a new mill facility or permit tailings ponds. We were able to go from a discovery hole to commercial production within three and a half years, which is a very fast time frame in the mining industry.

We’re continuing to grow the resource base at San Ignacio. Lots of good things ahead for that project and for the mine in general.

Our other mine is called Topia, which is located in northwestern Durango. It’s a narrow-vein silver-lead-zinc mine with a small amount of gold. Topia is higher cost than Guanajuato largely because of being labor intensive but is still profitable. We produce a lead concentrate that contains the silver and a zinc concentrate as well, both of which get sold to a metal trader in Mexico. Topia typically generates about 1 million ounces (1 Moz) a year of silver equivalent (Ag eq), while Guanajuato produces about 3 Moz Ag eq. So in total we’re producing around 4 Moz Ag eq annually.

TGR: In 2016 Great Panther’s production in Mexico decreased. What happened?

BA: We had produced about 4.15 Moz in 2015, and we dropped down to about 3.9 Moz in 2016 largely because of a couple of temporary shutdowns at Topia in Q3 and at Guanajuato in Q1. Then we shut down the Topia plant on Dec. 1 to conduct some upgrades and maintenance, as well as to switch over the tailings storage facility there from a wet tailings deposition to a dry stack.

The plant is still shut down at Topia but that project is almost complete. We should be back up and running this month.

The other reason was that grades were slightly lower at San Ignacio last year than they were the previous year. That’s really just natural grade variability within the veins as we move along strike. We’re bound to get that within these types of systems. Some years are better than others. But these are just typically slight variations.

Our forecast for this year is to be back up between 4 and 4.1 Moz.

TGR: Great Panther recently signed an agreement to acquire the Coricancha mine in Peru. Can you tell us why Peru and why this mine?

BA: I first went to Peru in 2009, and I saw a lot of opportunity there for a company like ours. Peru is the second largest silver-producing country certainly in Latin America; some people would say the world depending on whether you count China as No. 2 or No. 3. Mexico is No. 1. What I recognized in 2009 was that there were very few midsize public companies working in Peru. Statistically, geologically, you have to have a lot of midsize deposits. The big ones are being mined by the larger companies, the smaller ones mainly by small private operators. But there weren’t a lot of midsize companies.

So we’ve been looking in Peru fairly actively since about 2010 and have been negotiating on a number of different deals through that period. I’d been familiar with Coricancha since that time and followed it. When it came available, in 2014, we expressed interest and took an option on the project first to do some work on it, get comfortable with it and decide if it was something that we really wanted to step up and buy.

Essentially we decided that we did. We conducted about $2 million ($2M) worth of work on the property. Then last year we notified the owners, Nyrstar (NYR:BSE), that we wanted to move ahead with an acquisition. We negotiated the terms in Q3/16 and signed the purchase agreement in December. We’re just waiting for that to close. Then we’ll take possession and start to advance the project.

TGR: Do you have any idea of how soon you would start drilling?

BA: The underground drilling should start probably within a couple of months of us taking possession. Surface drilling will take longer because it requires a permit. We may be able to get a permit by Q4/17 or it may go into Q1/18. The mine is on care and maintenance at the moment. It does have a fully operational 600-ton-per-day plant. Everything is fully permitted. So it’s really a question of conducting a prefeasibility-level study, including engineering and environmental evaluations, and doing the drilling.

We’ll be upgrading the resource by Q2/17. All of that will give us a better understanding by, hopefully, the end of 2017 as to what really needs to be done to bring it back to full production and the time frame it would take to do that.

But at this point, with the information that we have, we’re estimating that it will take about 18 months to bring it back into production at an approximate cost of around $25M. We are fully funded to do that, so we don’t anticipate having to come back to the market.

TGR: Where do you see Great Panther going from here?

BA: Focusing on getting Coricancha back up and running is going to be a key aspect of what we do over the near term. At full production, based on historical records, we estimate that Coricancha has the potential to produce about 3 Moz Ag eq on an annual basis, which would be about a 75% increase for us. So it’s a very meaningful addition to our portfolio.

But in the interim, we are also looking to make another acquisition. If we could find something that’s actually in production now, that would be ideal.

TGR: Great Panther’s shares have been quite high recently and have been staying quite high. Can you tell us what’s going on with the company financially?

BA: One of our strengths right now is our balance sheet. We did raise some money last year. We completed a bought-deal financing in the summer for $30M, plus we raised another $5.5 through an at-the-market financing over a few months. So net proceeds from all of that were a little over $33M, which, combined with our positive cash flow, has given us about $56M in cash and cash equivalents, and working capital of about $67M, with no debt. So we have a very, very strong balance sheet.

That, plus the prospects for Coricancha and the fact that we don’t anticipate going back to market to finance it, are all reasons why the company is attractive right now. I’m pleased to say that there was a positive response in the market when we announced the Coricancha deal back in December, so that was very nice to see.

TGR: Is there anything else that you’d like to tell our readers?

BA: We’re very optimistic about the future for Great Panther and are moving forward on our growth strategy with expansion through Peru. We would like to use Coricancha as a foundation for future growth in Peru. Great Panther was built by acquiring past-producing mines and bringing them back into production, refurbishing them and bringing them up to their proper operating efficiencies. So we hope to do the same thing with Coricancha and be able to build on that. By focusing on Mexico and Peru and trying to maintain our focus on silver as much as possible, we think the company has a great future.

TGR: Thank you for your time.

Bob Archer is a cofounder of Great Panther Silver Limited, and as CEO and a director, he is responsible for the development of the strategic direction Great Panther Silver. Archer has more than 35 years of experience working for mining companies throughout North America, including Newmont Exploration of Canada Ltd., Rio Algom Exploration Inc., Placer Dome Canada Ltd. and Noranda Exploration Inc. He spent eight years in senior management roles with companies in the junior sector prior to founding Great Panther.

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Disclosure:
1) Patrice Fusillo conducted this interview for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or her family owns, shares of the following companies mentioned in this interview: None.
2) Great Panther Silver Limited is a sponsor of Streetwise Reports. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclaimers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Great Panther Silver Limited had final approval of the content and is wholly responsible for the validity of the statements. Opinions expressed are the opinions of Bob Archer and not of Streetwise Reports or its officers.
4) Bob Archer: I was not paid by Streetwise Reports to participate in this interview. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview. I or my family own shares of the following companies mentioned in this interview: Great Panther Silver Limited.
5) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.
6) This interview 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.
7) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17333

Time to Get Back into Gold Stocks

Money manager Adrian Day updates developments and guidance from three major gold companies.

Gold stocks have been on their not-untypical first-quarter ride, rallying 33% from the mid-December lows before giving back most of that move. The decline in mining circles is known as the “PDAC curse,” since it occurs right before the world’s largest mining conference in Toronto. This year’s show, which attracted over 24,000 attendees, up a little from last year though still down some 20% from 2012’s record, had an air of growing optimism, among both companies and attendees, though far from mania. One good sign: many exploration companies noted that the senior companies seemed more interested in doing deals than they had been the last few years.

Osisko Gold Royalties Ltd. (OR:TSX; OR:NYSE, 10.64) remains the most undervalued and prospective of the royalty companies on our list. Of course, the valuation gap to its large royalty peers is partly justified, since Osisko is the newest of the “Big Four,” with fewer assets and less diversification. Its assets, however, particularly its cash-flowing assets, are high-quality in a safe jurisdiction (Canada), and it is working hard to add more royalties and close the gap.

New silver revenue
At the end of February, Osisko acquired a cash-flowing stream, on the long-life Gibraltar mine. A copper mine in British Columbia, Gibraltar has a 23-year plus life. With a US$33 million upfront payment, Osisko has the right to buy 75%-owner Taseko’s share of silver production, for future payments of $2.75 per ounce. The contract is backdated to January 1.

This is Osisko’s first silver stream. It maintains the company’s precious metals profile (with approximately 94% of revenue from gold) and politically safe profile (100% of cash-flowing assets are in Canada). Mildly accretive on an asset basis, the stream will boost cash flow by almost 10% through 2019. We believe the stream was acquired at a very good price.

After this transaction, the company has about CA$450 million in cash, which with its undrawn line of credit, gives it about CA$650 million in funding capacity. (This also follows the sale of its nearly 10% interest in Labrador Iron Ore Royalty, for CA$113 million.) This gives it more cash than any other royalty company, though less available credit than Franco-Nevada Corp. (FNV:TSX; FNV:NYSE) and Silver Wheaton Corp. (SLW:TSX; SLW:NYSE).

What’s next?
There is no secret that Osisko is looking for a large cash-flowing stream. Such streams, however, are subject to intense competition, and the returns—given the long lives—tend to be relatively modest, certainly at the prevailing commodity price. But such an acquisition, in my view, would give the company a greater profile, moving it clearer to the “big boys’ league,” and help close the valuation gap.

In the meantime, Osisko is building its strong pipeline with high optionality from its unique business model investing in smaller exploration companies, both directly and through Osisko Mines. Osisko is a buy, currently up to $10.75.

Goldcorp’s ambitious plan
Goldcorp Inc. (G:TSX; GG:NYSE, 14.82) has laid out five-year guidance, with 20%/20%/20% forecasts: production to increase by 20% to 3 million ounces by 2020; resources to increase by 20% to 50 million ounces; and all-in sustaining costs (AISC) costs to drop by 20%, to $700 by 2021.

A grand plan, and the ramp-up of two newer mines—Eleonore and Cerro Negro—lend some credibility to the targets. But the company lowered its 2017 production guidance, an inauspicious start. The company also said it expects ongoing capex to be higher than expected.

Goldcorp has a solid balance sheet, a good cost profile, a growth pipeline, including several quality exploration projects that, along with a couple of higher-cost developments projects, provide it with good optionality to higher gold prices. One analyst (Tony Lesiak at Canaccord) summed it up, “still rebuilding trust.” Under $15, Goldcorp is a good buy, particularly if one expects a stronger gold market.

Yamana disappoints again
Yamana Gold Inc. (YRI:TSX; AUY:NYSE; YAU:LSE, 2.62) concluded the listing of its Brio Gold unit, and now has sold an additional 6 million shares, reducing its ownership to 79%. The near-term outlook is not looking particularly bright: guidance for this year indicates production will decline (even omitting the reduction in Brio and the sale of the Mercedes mine), as will reserves, while costs are expected to increase. The reserve reduction is particularly notable at its cornerstone El Penon mine in Chile, which also accounts for much of the production decline.

With the sale of part of the Brio unit and the Mercedes mine, Yamana’s balance sheet is improving, but bigger problems are the lack of near-term growth and the continuing management credibility problem. Yamana, as shown in the rally earlier this year, has strong sensitivity to higher gold prices. For more aggressive investors, it is a buy at this level, but we regard it more as a trading stock than one to hold for any period of time.

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: Osisko Gold Royalties and Goldcorp. 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: Osisko Gold Royalties, Goldcorp and Yamana. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Silver Wheaton. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview/article until after it publishes.

( Companies Mentioned: G:TSX; GG:NYSE,
OR:TSX; OR:NYSE,
SLW:TSX; SLW:NYSE,
YRI:TSX; AUY:NYSE; YAU:LSE,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17332