Wrapup Report on PDAC 2018
Last week was another hectic PDAC for me, I always enjoy the chance to see people in person to talk rocks and stocks.
The conference was well attended as it always is, but not near the records set during the final couple years of the 2001-2011 gold bull market. There was a good energy in the room, it wasn’t like in a raging bull market and neither was it like in the bear markets. More of an air of optimism.
Even though the bear market in gold and junior mining stocks from 2011-2015 ended and a new bull started in January 2016, the junior mining stocks haven’t really joined the party. Over the past couple years we have seen remarkable moves in weed stocks and cryptocurrency stocks that have pulled money out of the junior miners.
This lack of enthusiasm for junior miners, plus the bullish outlook for gold and other metals has me very bullish.
Even a couple years into the 2001-2011 gold bull market, the junior mining stocks were not participating. I remember people saying when gold gets over $500, the juniors will take off. Then it was $600, $700 and then $1000 would be the magic number. The numbers may have changed but the sentiment hasn’t.
The crowd is not greedy at the moment when it comes to juniors, the weed stocks and cryptocurrency stocks have their attention. I wouldn’t really say they are fearful either, just busy with something else. But nothing goes straight to the moon. We have watched some of the bloom come off the cryptocurrency stocks and plenty of weed stocks are very richly priced for the average investor in the space.
I’m getting the feeling this year will be a powerful one for the quality junior miners. We saw a very powerful one-two punch for gold with a strong Santa Claus rally in December followed by a very bullish January Effect reading.
So it looks like gold is ready to go, I’m looking for a 20% gain during 2018 from the price it started the year at. If we have that kind of year, with the junior gold stocks having historically low valuations, we are primed for a junior gold stocks to join the bullish gold party.
Now that I’ve set the stage for a bullish year for gold and other metals, let’s talk about some stocks now.
Stocks to Watch
One of the areas in the gold mining sector that is in need of, in a big way, are companies in the middle tier. This an enviable size to reach as it affords growth opportunities that are too small for the majors but profit centres for a smaller middle tier.
Premier Gold (PG.T) has been a long time sponsor of my website that I have had a front row seat to watch them grow over the years. They are following a path to middle tier status, and are doing it with smart acquisitions that they have been able to add value with exploration success. Ewan Downie runs the company, he is a talented leader, a rock guy which isn't easy to find running companies of this size. I like the foundation they are built on, their prospects for the future and their chances to outperform their peers in a strong gold market.
Sabina Gold and Silver (SBB.T) has an excellent gold development project that looks to be a serious money maker when it gets into production. They have recently made getting taken over more challenging when they brought in a large Chinese investor. They sound determined to go the long haul and build a mine. I like that aggressive move, but it comes with an issue called the development discount. Often when companies are between discovery and production they are discounted during the building of the mine part. What could temper that is this is truly a world class mine that could lead Sabina to grow into a much larger gold company. They will also benefit from stronger prices for gold I see coming. Even though they may not be as much of a takeover target as they were before, I still like their chances for strong performance in a gold bull market like the one we are in now.
Now that I've spoken about a couple gold stocks that are larger in size, it is time to move down the food chain to some exploration stocks I'm watching and think investors that want exposure to explorers should as well.
Adamera Resources (ADZ.V) has been a company that I've covered in the reports at good times. One was a few years ago during the depths of the last gold bear market, John Kaiser and I made them a pick on our show the Zombie Rescue Mission. Next, I interviewed Mark Kolebaba in late 2016. In 2017, they had a breakthrough year on their gold project in Washington State. I had a chance to meet with Mark Kolebaba at the PDAC to chat about their exploration efforts. We looked over the maps and it is clear they have large unexplained geochem anomalies with the source yet to be discovered. Mark and his team have the skills and tenacity to find these new discoveries. I like their chances to deliver market moving results and their current valuation looks like a good entry point.
Minaurum Gold (MGG.V) has been catching my attention over the past couple months, since their stock came out of the doldrums in January. This was also when they announced some bonanza grade silver in drilling from their Alamos Silver project in Sonora, Mexico. The company was co-founded by Dr. Peter Megaw who has had incredible success in Mexico in the past, and looks like he is ready to do it again. I’m very bullish on silver, but finding good juniors is not easy, they are hitting with the truth machine and it looks like things are wide open for them to keep delivering with the drilling.
Mexican Gold (MEX.V) is much smaller in market valuation than Minaurum, and is another junior delivering drill results, in Mexico, that have caught my attention. In their most recent drilling news, they reported 10.19 g/t gold equivalent (4.51 g/t au, 16.17 g/t ag, 3.33 % cu) over 38.0 metres at their Las Minas project in Mexico. I had a chance to speak with management at the PDAC and I like their gameplan. I’ll be watching for upcoming news on drilling, the stock has been basically going sideways but should breakout to the upside on good drill results.
Advance Gold (AAX.V) okay, so I’m a little biased as I’m the CEO of the company, but it is what we have in projects that makes Advance Gold worth following. Our two projects at the moment are the Tabasquena silver project in Mexico and a joint venture with Acacia Mining (Barrick owns over 60%) on a gold project in Kenya. Tabasquena is an old silver mine that is close to a well known Mexican silver mine called Milagros, Spanish for miracles. The same epithermal vein extends from Milagros to Tabasquena. At Tabasquena, there has been no drilling under the oxidized portion of the epithermal vein. We are getting ready to run geophysics over the property and then gear up to drill. In Kenya, we are nearly at the point where we will be diluted down to a 3% NSR. Our ground is right beside where Acacia has a gold resource of 1.2 million ounces with an average grade of 12 g/t gold. We have two very good projects in precious metals and a tiny valuation.
GT Gold (GTT.V) was another company that I got to check out at the PDAC. They had a booth and also core from their drilling at the coreshack. I picked them last year on the enthusiasm for their early drill results. It was great to see a season worth of work plotted on their maps. The have large structural stories and drilling has turned up gold throughout what is evolving as a very big system. Now they will need to try to focus their drilling on spots where they can see high-grade gold deposits hang together. Since I picked the stock it has come down a lot, but part of that has to do with seasonality of drilling in the Golden Triangle of BC. Now that the stock is washed out, it is a good time to bring average prices down for those that own it, and a great entry point for folks new to the story. In the next few months it will be drilling season again and it will be game on when they start drilling again as they learned a lot from last year’s drilling and can now better pinpoint where to drill for high-grade.
Novo Resources (NVO.V) was one of the shining lights in the junior mining stock space last year due to their gold exploration efforts in the Pilbara region of Australia. What caught the imagination of investors was the potential they could be sitting on a new Witswatersrand discovery. The mining promotion machine kicked in thinking it could be even bigger than the largest gold mining region ever found, even better, instead of fine gold in the conglomerates the Pilbara had course gold nuggets. Then once the excitement had reached a fevered pitch the crowd got antsy as they weren’t finding any fine gold. It was the course gold that got me excited, with this course gold you could find big pockets of the stuff that could add up to many millions of ounces quickly. Many in the audience following the story started to speculate that without a fine gold component, it would be difficult to produce a resource estimate. I disagree, sure they have a nugget effect, but diamonds make this course gold look like child’s play. If you can do a resource on a diamond deposit, you can certainly do one on this course gold. Since I started covering the company and their projects, in my mind this is like a big diamond project. They will have to run big tonnage samples and collect lots of data, but having course gold, spread out over a vast area is tremendously exciting when it comes to gold exploration. Novo is in the midst of the most important gold discovery in over 100 years, plus they have lots of money and good people to figure it out.
Artemis Resources (ASX:ARV) is a website sponsor, and they are also right in the heart of the Pilbara gold rush, including being partnered up with Novo on some of the key ground in the region. It is run by David Lenigas who is a quick-witted scrapper type that I’ve enjoyed getting to know in past interviews. Since the Pilbara gold rush got cranked up in the middle of 2017, things have been unfolding nicely as they were there long before the crowd arrived. Even before Novo. In addition to being partnered with Novo on the Purdys Reward project, they also have plenty of key ground in the Pilbara. Not only do they have a lot of ground in this exciting new gold discovery play, they have other assets in other metals. They also have an old plant that they are refurbishing and turning back on. This is a crucial asset to me because they are putting on a gold recovery circuit that would be ideal to process large bulk samples. Being a diamond guy, I got kind of a chuckle when I started reading news from Novo and Artemis calling samples in the kilos bulk samples. When I talk about bulk samples I’m talking in tonnes, many of them in the thousands. That is what it is going to take to figure out these course gold nugget deposits in the Pilbara. It is clear that Artemis sees that, and is getting ready to roll up their sleeves for real bulk samples. They can process material from their own ground or the joint venture at Purdy’s Reward. They have the permits and soon they will have the gold processing circuit at their Radio Hill plant, and that is a gamechanger asset.
That’s all for now,
Allan Barry Laboucan
Allan Barry Reports
Alset Energy (ION.V)
Advance Gold (AAX.V)
P.S. my reports are for information purposes only, before making any investment decisions it is important to do your homework and speak with your financial advisers.
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Alset Minerals (ION.V)
Focused on lithium with their key projects in Mexico, looking for low-cost exploration, development and production potential. Visit their website at www.alsetminerals.com to do your homework.
Advance Gold (AAX.V)
Focused on exploration for silver on its well-located Tabasquena silver project, a shadow of a headframe project near an important silver mine, Milagros and the Colonel large tonnage gold mine. Visit their website at www.advancegold.ca to do your homework.
Artemis Resources (ARV.AX and ARTTF.US)
Well positioned with an enviable amount of key ground in the Pilbara region, in the middle of the hunt for the Wits 2.wow gold discovery. Visit their website at www.artemisresources.com.au to do your homework.
Premier Gold Mines (PG.T)
Gold focused, with an enviable portfolio of projects from exploration to mining in Ontario, Nevada and Mexico. Visit their website at www.premiergoldmines.com to do your homework.
Sirios Resources (SOI.V)
Gold focused, drilling high-grade gold target at Cheechoo project in Quebec, located next door to Goldcorp’s Eleanore gold mine. Visit their website at www.sirios.com/en/ to do your homework.
Tudor Gold (TUD.V)
Gold exploration with a strong portfolio of projects in heart of the Golden Triangle of BC, founded by Walter Storm of Osisko fame. Visit their website at www.tudor-gold.com to do your homework.
Wolfden Resources (WLF.V)
Base metals focused, with a discovery of high-grade nickel-copper near Snow Lake, Manitoba and recently added an impressive base metals project in the state of Maine. Visit their website at www.wolfdenresources.com to do your homework.