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The PDAC starts today, and as usual, every year a big topic is about the PDAC curse. Many years, with a big contingent of mining people in Toronto for the PDAC, gold and junior mining stocks are down. The old mining gods have a twisted sense of humour, and on call, everything was fine until the last few trading days of this week.
Just when I thought this year, we might have been able to break the curse. Going into the PDAC, for the past few months, gold had gone through a couple key technical thresholds. Building a long cup and handle since April 2018, and while climbing up the right side of the cup it went through a golden cross. There was several reasons to be optimistic, then to end of the week it looked like we snatched a loss from the jaws of victory.
With the swoon in gold this week, many at the PDAC will have an extra spring in their steps, as the junior markets are healing, but, will ask what is happening with gold? It is a similar refrain every year come PDAC time.
Considering it will be the topic of the day during the PDAC, I thought I would have a go at answering it. The technical indicators, and long term supply and demand bullish fundamentals make me think we should recover quickly and see gold regain lost footing. Then make a move through the magic number of $1350.
Even though it has bullish indicators, there is a bearish one for gold as well. For the umpteenth time since gold topped in 2011, then rolled over, gold has struggled to jump over $1350. It did it again recently, just to add some drama to the whole PDAC curse stuff.
I remain very bullish on gold, exploration and mine development companies. Mainly, because these companies can fill a need in the mining space, an important one. They find and build the new mines that replace the old mines when they are done with their life of mine. The pipeline has the supply chain for gold very weak, and exploration success finding new discoveries is crucial.
Another key reason I remain very bullish is because of the US dollar (USD). It has benefitted from interest rate increases, but, that party is over. With all the debt sloshing around, between government and consumers, the Fed can’t afford to risk overshooting.
They don’t have much ammunition with interest rates in case of an economic slowdown and certainly don’t want to be the ones that put a match to the fuse. The next significant move by the Fed will likely be lowering. Although, I don’t think it is going to happen soon. Stopping raising rates has been helpful to the gold price, when it looks like the Fed is going to lower rates, the price of gold will be on fire.
Based on the bullish trends in the price of gold of late, and the help from the Fed to stop pumping up the USD with interest rate hikes. I suspect the PDAC curse this year will be short lived.
I maintain a very bullish outlook for gold, and can see confidence returning to gold stocks. The most needed part of the whole gold mining sector is exploration success. As gold has gotten more bullish, so have the junior exploration and new mine developers which is where my focus is in the gold space.
Before getting into the companies in the news segment, and there are several that had news out this week. I wanted to promote a couple shows I’m in the midst of pinning down which will be interviews from the PDAC floor. I won’t be there this year, but, I’m working on setting up a couple guests for shows, hopefully from their booths on the floor.
We are going to check the internet, it can be iffy at the venue where the PDAC is hosted. If it is strong enough, we will do interviews with key people right from their booths.
One of those shows, will be Victor Cantore, from Amex Exploration (AMX.V) with his VP exploration. They have a very exciting high-grade gold discovery to talk about. Amex has been a great pick for the Allan Barry Reports. I’m looking forward to digging deeper into the story with the guys from Amex.
Another show, will be from a new member of the Allan Barry Reports website sponsorship program. We are pleased to announce that Sirios Resources (SOI.V) will be our new sponsor to help bring our reports to readers and viewers.
Allan Barry Reports is an independent content creator. We don’t have subscribers, all the content is free to the viewers and readers. To make it possible, Allan Barry Reports has a website sponsorship program.
The participating companies don’t get preferential coverage, I do follow them the closest so I know their story inside and out. They do get in front of my audience by way of notice at the top of the reports and shows, that the content is brought to you by them.
Like any company that I follow in the reports, sponsors have to pass through the same filters for when I write about them and what I write about them. The sponsors have no say in when or what I write, nor have any editing privileges.
They see my commentary when everybody else does. I think it takes a lot of confidence in the sponsors own projects and my commentary, to sign up for my website sponsorship program.
The mining sector is very under followed, especially with quality content. Even the brokerage house analysts are fewer as the brokers are focusing more on cryptocurrencies, blockchain technology, weed stocks, and technology, than they are on mining.
The smaller the companies, even less coverage. So as an investor in the sector and a market commentator, I truly appreciate Sirios Resources for their sponsorship and making the work at Allan Barry Reports possible.
We are still working on scheduling the shows, I will share them as soon as they are completed.
On to the mining news...
Mining Stocks In The News
The week of the PDAC, is a key time for news, all of the companies there want to put their best foot forward. It will continue Monday through Wednesday the final day.
Since the last in the news report on Monday, there was a flurry of news and there are a bunch to cover.
Barrick Gold (ABX.T)
The biggest newsmaker during the lead up to the PDAC has been Barrick and their hostile offer for Newmont. Mark Bristow from Randgold, did a reverse takeover of Barrick when Barrick took over smaller Randgold, then handed over the management keys to Mark Bristow and his Randgold team. He has wasted no time in rocking the boat in the gold mining space. Going right for the top, by making an audacious hostile takeover offer at no premium for Newmont. He said he wanted to buy Newmont at the current valuation with no premium prior to going public with the hostile offer. He showed his cards, then went public with the hostile showing a fair bit of confidence that other mining leaders have questioned. Yet, he seems to be saying I can show you my cards and will still win. This will be the main topic of discussion at the booths at the PDAC throughout the conference. Newmont has indicated that they will fight tooth and nail to stay independent. Good thing the PDAC is in Toronto, because this is like an old school hockey fight. The two biggest in the gold mining business fighting for independence or a golden empire.
Galway Metals (GWM.V)
Galway Metals came onto my radar screen when they announced very good drilling results from their gold exploration project in New Brunswick, Canada. They put out the news and the stock took off, I’m not a big fan of chasing, so I thought I missed the bus. Not the first one. Then this week, they came out with two news releases, a couple days apart, on assay results. The quote from one of the news releases put things nicely into context.
"While we are eagerly awaiting additional drill results from our new Richard zone discovery located one kilometre to the west, we are very pleased that the George Murphy zone, which Galway initially reported as our first new discovery in December, 2017, is growing and contains significantly high-grade shoots; the 201 g/t nicely corroborates the previous result of 807 g/t," said Robert Hinchcliffe, president and chief executive officer of Galway Metals.
The team at Galway has previously had a takeover with Galway Resources taken over for $340 million. The company has around a $40 million valuation using issued, the management and directors own 20% and they have $7 million in cash.
What they have so far is near surface and is wide open. They have a lot of exploration ahead of them and are loaded with cash to do the drilling. I’m ready to make them a pick of the Allan Barry Reports. They have a solid opportunity based on the potential of their project and the valuation. Cashed up and ready to go.
Walker River Resources (WRR.V)
Had another batch of assays, with the highlight hole being 1.5 metres of 159 g/t gold. They have hit several so far with these bonanza grades in drilling at their Lapon Canyon project in Nevada. Their key zone has been drilled over 365 metres of strike length, width around 150 metres and 400 metres of depth. The lenses of bonanza grade and high-grade gold are good thicknesses with those grades. Those dimensions are based on historical mining and recent drilling, yet it remains wide open. The structure associated with the gold mineralization is at least 1000 metres or more. I made them a pick because of the gold grades and the size potential, the drilling keeps showing it can get a lot bigger. Now they can take all the data from the recently completed drilling to prepare for the upcoming spring and summer drilling. They are building drill pads that will enable them to better target the high-grade gold. They had around $900k of in the money warrants exercises, it is low cost exploration in Nevada, so they can tee up a lot of drill holes. They have one of the best potential to valuation setups I can find in exploration, which is why I’m a shareholder.
West African Resources (WAF.V)
Exploration in Africa is an expensive undertaking, the geology is very good, but, the costs are high. This is why many juniors exploring in Africa have such high stock counts. West African Resources has for a long time released impressive drill results, just like the ones they announced this week. Despite the impressive drill results, they have an anchor on the stock with nearly 900 million shares issued. So, the stock doesn’t do much. They have so much overhang, that even with a strong project it succumbs to the weight of the overhang. This is a prime example of why I think it is so important for investors in the space to focus on cost of exploration which you can see directly in the share structure.
Pacton Gold (PAC.V)
Pacton is focused on two key areas, one is in Australia near Novo Resources, the other is in Red Lake, Ontario. Right off the bat I’m way more interested in Red Lake. When it comes to Novo and their conglomerate gold play, I see it as an expensive science project, with results slow to arrive and even the selective sample results are not showing promotional gold grades. At Red Lake, they have a lot of ground, right beside Dixie Lake where Great Bear (GBR.V) has made an impressive high-grade gold discovery. Their ground has seen a lot of past work, which they are compiling and reevaluating. This is a similar method to what Great Bear did next door that took them on to their discovery. At the start, I really liked the potential of the west Australia conglomerate gold story. That was when they came out with their high-grade samples. Since then, as Novo does more sampling, they are selective in their reporting, and the trend in the grade keeps going down. I do like that Pacton is looking at the source of the gold differently, so it isn’t like I don’t think their ground has potential. But, if you look at the potential of west Australia or Red Lake, I would put my money on the Red Lake project.
Nevada Exploration (NGE.V)
Nevada Exploration is focused on Nevada gold exploration, with a twist. Their exploration model is that the rocks in the mountains of Nevada, where all the big gold mines are located, is the same rock under the desert valleys below them. The rocks are the same and just as prospective, the trouble is, they are covered and you can’t see them. To solve this riddle, Nevada Exploration uses groundwater data to look for clues that they could be on top of something exciting with a groundwater gold anomaly. They even added a small, portable drill that can drill through the cover to test the bedrock below. It all makes sense. Their key problem has been, the drilling is saying this is more of a science project than a real exploration model worth chasing. It is a worthwhile pursuit, to try to unlock more of the gold potential in unexplored parts of the state. But, based on the evidence over a number of years, it is looking more and more like this is unexplored for good reasons.
Amex Exploration (AMX.V)
Amex had results out this week from their Quebec discovery. Their highlight hole, was a 25 metre step out hole from the high grade discovery zone. It hit 0.80 metre of 581.59 g/t gold. Now they have 5 holes into the high-grade zone and a 25 metre step out, all with high-grade to bonanza grade gold. As I mentioned in the opening of this report, I will be interviewing Victor Cantore from Amex at the PDAC. We will dig deeper into the drill results from their exciting discovery.
Sokoman Minerals (SIC.V)
Sokoman has been an up and down story since I first started following them as a pick. What got the enthusiastic action in the stock was high-grade gold, drilled under a lake at their discovery. Since then, they have really been waiting for the drilling to get underway drilling from the lake. The results from the west and north of the lake have been iffy. But under that lake is where they hit the high-grade. It looks like the zone under the lake is flat-lying, so drilling a bunch from the ice on the lake should open things up. So far, from the visible description in the news release this week, it sounds like they are hitting the same kind of stuff as in the high-grade gold discovery holes. They hit and it lives, they miss and they will have pretty much killed the project.
Advance Gold (AAX.V)
Allan Barry Laboucan is President/CEO of Advance
This week, Advance Gold had a news release out to announce the completion of a $370k private placement. The funds from this will cover the next round of drilling, so the news also discussed an update on drilling plans. As stated in the news, one deeper hole will be drilled to test deeper into the cluster of epithermal veins targeting the boiling zone of the system. Previous drilling suggests that our drilling only caught the top of the system, and it is fully intact, and it had mineralization from anomalous to high-grade gold at the top of the system. It will be exciting to drill deeper into the system, inline with where we hit the most vein intersections in drilling. Additionally, we will drill a few near surface holes where we hit the Tabasquena vein in the oxides over 12 metres. Plenty of streaming companies and royalty companies have lots of cash, but, not enough projects to choose from. They need near term production projects and our project is fully permitted for mining. Stay tuned, drilling is around the corner so we should have a good flow of news soon.
Another topic that might makes its way around the PDAC convention floor is a new merger of mining and artificial intelligence. It has all the tech buzzwords, big data, AI, computer learning.
Of course they have high theoretical percentages of success. Two entrants I’ve heard about lately are Goldspot Discoveries (SPOT.V) and Albert Mining (AIIM.V) are in the AI meets mining space.
Whenever I hear this kind of stuff, it takes me back to a glaciologist, fresh out of university, that explained to us how with one till sample, he could zero in on the source. In my 25 years in the exploration business, I’ve learned that Mother Nature never makes exploration for buried treasures that easy.
This new spin, AI is a little bit of a stretch, what they have are experts systems that are designed to filter through all the data, to find deposits. If it sounds a little like geomagic to you, it should. Will it work in assisting the discovery process and save explorers lots of money, colour me skeptical.
On that note, I encourage folks to check out the past reports on the website, plenty of hidden gems of companies and knowledge in them. Be my guest to share it around on your social media and email to friends that you think would be interested. Your efforts to promote my work is greatly appreciated.
All the best,
Allan Barry Laboucan
Allan Barry Reports
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.