Gold Punished On Friday But Fear Not As The World Is Still Going Through The Death Spiral Of Debt That Will Force A Return To The Gold Standard
I talk about my top picks and new picks in this report.
Gold got smacked down on Friday fairly significantly. There were a couple reasons for that action including stronger than expected employment numbers. In addition, there were reports that the Chinese central bank didn’t buy any gold in May.
The employment numbers are a smoke and mirrors kind of thing. The headline is that the employment numbers were strong and would cause the Fed to hold off lowering interest rates. Beyond the headlines are that full-time jobs are declining, with part-time jobs being the reason for the stronger numbers.
Workers are losing their better paying full-time jobs to take on one or two part-time jobs to make ends meet. The government reported jobs numbers do not discern between full-time and part-time jobs, they are considered the same. This does not indicate a strong employment market or economy.
Of course, it does give Wall Street traders something to trade on. Gold and stocks were sold off when the report came out and the US dollar was up. They call this the risk-off trade day. To me it was an overreaction trade on the headline. These things have a way of changing direction quickly, likely on Monday.
Putting additional pressure on gold was that the Chinese central bank didn’t buy gold in May. Does this mean they are done, I highly doubt it. They know what they are doing and know this would put pressure on gold which will likely result in them buying more. The reasons for their buying have not changed.
The world is still in a Death Spiral of Debt caused by the Free Money Era after the 2008 GFC. The reasons for the need of the world to return back to the Gold Standard didn’t change on Friday. In fact, earlier in the week it was reported that the central bankers of the world have more reserves held in gold than the Euro.
The chart above gives us a good image of the trends in central bank reserve holdings since 1900. As you can see, the gold reserves of the central bankers were dominated by gold in the early part of the chart.
Peaking at a little over 90% in the 1930s. From the 1950s to 1970, it averaged around 65%. Then when the US went off the Gold Standard in 1971, and for much of the 1970s, it dipped significantly. Then in 1979 it jumped up again significantly and stayed above 50% until around the mid-1980s.
Then it dropped precipitously down to around 10% over the following 30 years. It bumped up after the 2008 GFC, then softened again for a few years. Since then, it has been increasing significantly up to its current level around 17%. The trend certainly looks very bullish and coincides with the Death Spiral of Debt gaining momentum.
Not only do I think the Death Spiral of Debt is a long term debt crisis, it will only get worse as politicians keep spending at insane levels, and the debt servicing costs rise in a frightening way like in the US which is on a path to $2 trillion. Much of the debt was built up during the Free Money Era, that debt has to be rolled over into much higher interest rate debt.
Ultimately, gold is on its way to exceed the US dollar as the dominant reserve currency to over 50%. With the politicians insane spending, and the Fed enabling them, printing money like it is going out of style, it makes me wonder why anybody would want to hold heavily diluted currency to support the spending with IOUs backed by nothing.
Since the 2008 GFC, the Chinese have been asking themselves why they need to hold so much US debt and currency, so they are selling. Others are doing the same, who can blame them. The Death Spiral of Debt and money printing on steroids is adding remarkable risk.
Buyers of the US debt are likely to drop and become more problematic. To the point that the Fed will have to return to being the buyer of last resort. If the international investors go on strike, they won’t need to convert their currencies to US dollars in order to buy US debt putting pressure on both.
The other big issue in the global economy is that the BRICS nations, who are reducing their reserves of US dollars and US debt, want an alternative to the US dollar being the dominant reserve asset and for international trade.
My thesis for speculating that gold will reach $20k in the next 10 years is based on seeing the world returning to the Gold Standard. And that gold plays a more significant role backing up world currencies and debt, while also playing a dominant role in international trade.
Another important thesis in my reports of late is a crucial catalyst I see developing in real time to bring the gold stocks into the gold bull market.
Gold is shaping up to average around $300 more per ounce in the second quarter compared to the first quarter. The second quarter will deliver windfall profits for several gold miners. This will come into play when gold miners report, even before, their second quarter reports.
Many gold miners will receive windfall profits in the second quarter that will without a doubt catch the attention of generalist investors. The gold stocks need new blood chasing them. I certainly believe that chasing is exactly what will happen because as a sector many gold stocks are coming off very low bases and trading at historically low valuations relative to what they have in the ground.
While gold has reached record highs recently, silver is still a long way from its record highs, while copper has also recently reached its record highs. Gold is definitely in a bull market, but to get a sense of how early we are in the trend is to assess confirmation indicators.
In a gold bull market, silver always joins the party early in the bull market, the fact that silver is still a long way from its record high indicates that it hasn’t confirmed the gold bull market yet.
Another key confirmation is the gold stocks. Prior to the PDAC in early March, the gold stocks had been going through a severe bear market for a couple years. Several of the larger gold stocks made multiple year lows prior to the PDAC and then came off their lows.
Basically, after being left for dead a few months ago, they have started to improve but really haven’t joined the gold bull market, at most one can say that some have risen off the canvas. They have a long way to go to be trading in a similar fashion as the bullish action in gold.
To have a real gold bull market, silver and the gold stocks also have to join the gold party. The fact that silver and gold stocks are only showing some green shoots of optimism, tells me we are still in the very earliest days of the gold bull market.
The PDAC this year avoided the PDAC Curse, I believe that the 2024 PDAC will be a seminal moment for gold and the gold stocks. After the PDAC, gold made a major breakout, and some of the gold stocks joined the golden party.
Just like gold and gold miners dodged the seasonal trend of the PDAC Curse, I also believe they will avoid the sell in May and go away until Labour Day trend. On the contrary, this summer is shaping up to be a very strong trend for gold miners.
The real catalyst to bring the gold miners into the gold bull market is when they report their second quarter and see windfall profits for several of them.
We only have a few weeks left to end the second quarter. It won’t surprise me at all if there is positioning of big money flowing into the gold miners, especially the best in class, well before they report their second quarters.
The windfall profits I see coming for some gold miners in the second quarter will make the gold miners hard to ignore by generalist investors. I believe it will prove to be the inflection point that brings a much larger group of generalist investors into the gold miners.
When it comes to generalist investors, the household names in gold stocks are Barrick and Newmont. With Newmont being the largest gold miner and Barrick being number 3. My favourite pick amongst the major gold miners has been, and continues to be, the number 2 gold miner Agnico Eagle.
While gold is at record highs, both Newmont and Barrick are well below their record highs, while Agnico Eagle has been on a tear that has them within striking distance of their record high. It would not surprise me to see Agnico Eagle hit its record high before they report their second quarter and then go on to make a series of new record highs as gold goes higher.
Newmont is lagging mainly because they are digesting the acquisition of Newcrest. It will take a few quarters for the number crunchers to assess if they think it is a good acquisition. In Barrick’s last quarterly report they had lower production and higher costs.
While Newmont and Barrick are facing challenges, Agnico Eagle is firing on all cylinders. In their past two quarters they announced record production, record reserves and record free cash flow.
This is why they are leaving their peers in the gold dust. And likely to continue that trend when they announce their second quarter with gold sold at much higher prices than they received in the past two quarters.
This doesn’t mean that I think Newmont and Barrick won’t benefit from the higher gold price in the second quarter over the first quarter. I firmly believe they will. I just see Agnico Eagle continuing to be the outperformer by a significant margin.
Another pick in our reports that has been doing very well, and will benefit from higher gold prices in the second quarter is Alamos Gold. They are producing gold at well below the sector average cost of production. While also growing their production profile and bringing down costs of production.
They are in a sweet spot as a low-cost gold producer that is able to increase production and lower costs, not many gold miners can say the same.
I consider them the current version of Goldcorp. Back in Goldcorp’s heyday, they were one of the lowest cost gold miners, while producing high-grade gold which gave them remarkable free cash flow and ultimately made them one of the top performing gold mining stocks.
In a bull market for gold stocks, low-cost producers spitting out high free cash flow have a way of being rewarded with very strong performance in their stock action. I see Alamos Gold fitting into that sweet spot as gold stocks enter into the upcoming gold stock bull market.
During the transition out of a gold stock bear market into a gold stock bull market, the high-cost producers can benefit in a big way. Mainly because they go from losing money, or making just a little money, to making a lot of money. Investors see the rate of growth in their bottom lines and jump in.
Not all high-cost producers are created equal, what is important to look for are those doing the work to increase production and bring down costs. In my universe of picks with valuations over C$500 million, McEwen Mining has been a stellar performer while being a high-cost gold miner.
The key reasons for their exceptional performance since just before the PDAC in early March, when several gold stocks bottomed and then went on bullish runs, is twofold.
They are making headway on their efforts to bring down costs and they also have a 47% interest in private company McEwen Copper that owns a top 10 undeveloped copper project that is also in the lowest quartile of estimated costs of production amongst undeveloped copper mines.
A sign that they are being recognized for their efforts to improve their gold mines is they recently did a private placement to raise money at a 19% premium to the market price on the day they announced the financing.
Keep in mind that this is after they had already doubled in price since they bottomed just before the PDAC in early March. The money will be used for exploration drilling at their gold mines.
Looking back a little further to the second half of 2022, their stock was around C$4.00 per share and has recently been over C$16.00.
The reason for this tremendous move is that mining stock investors saw the validation of their interest in McEwen Copper, when Nuton, a Rio Tinto venture, made two investments into McEwen Copper.
Plus, Stellantis, one of the world’s largest car makers also made a big investment. This took many by surprise because it was the first time a major car maker invested into a copper project.
There is a big trend developing that gold miners and other metals miners are hungry to add copper assets to their portfolios. McEwen Mining has a leg up in this trend with their holding in McEwen Copper which owns the Los Azules copper project. It is the kind of project both major miners need as do those that produce products that need a lot of copper.
SilverCrest Metals is a smaller version of Alamos Gold. They are a gold and silver miner, with low costs of production, who are mining high-grade and making a lot of free cash flow. They are only a few quarters into full commercial production and have shown their Las Chispas mine is a great new mine.
They came into full commercial production with $100 million in debt and have paid off all their debt, and built up a warchest of cash, as well as gold and silver bullion while buying back stock and paying taxes of $23 million.
Due to them sitting on a stockpile of cash and having a free cash flow machine of a mine, they don’t really need more cash, so they have been holding onto some of their gold and silver.
I would love to see more gold and silver miners do the same, it would help drive gold and silver higher, plus reward their shareholders with receiving higher gold and silver prices while they are increasing in value. Why sit on cash when they can sit on gold and silver which is rising, especially if they don’t need more cash.
Their performance with their stock appreciating and their bottom line doing so well puts them in a strong position to grow the company. They can look at buying other gold and silver projects that are at cheap valuations which aren’t big enough to move the needle for the major mining companies.
This could help them secure future growth. I think they are compelled to act on acquisitions because if they don’t, they will be a target. If they buy right, it can help them grow into a much larger mining company and they have shown they are very good at buying right.
I would hate to see them get bought out anywhere near their current valuation because I can see if left alone, they have the chance to become a mid-tier gold and silver mining company. The industry needs more mid-tiers that have exceptional growth profiles and low costs like SilverCrest.
i-80 Gold (sponsor, see disclosure below) has only been a public company for a few years. They are the result of Premier Gold being taken over by Equinox for the Greenstone Mine. Part of the takeover was that all of Premier Gold’s Nevada projects were spunout to shareholders to create i-80 Gold.
Since going public, they added key assets for producing gold from their McCoy-Cove, Granite Creek and Ruby Hill projects. They have done extensive drilling to advance those projects and have consistently reported drill results that are all characterized by being high-grade with thick intersections.
Have a look at their website for news releases with all their drilling hits, it is impressive. During my career in mining, I have never seen a junior miner with three world class projects.
When they first started trading, they caught a lot of investor attention, but during the past year or so they have suffered much like other gold stocks. Strangely enough, part of the reason is because they have an aggressive plan to simultaneously develop three world class projects.
In the tough market for gold stocks, skeptics seem to believe the plan is too aggressive and question their ability to pull it off.
I don’t share that view because I have seen all the remarkable drill results they have consistently delivered and recognize how impressive their assets are to help build them into a much larger company.
I also have the experience of watching Ewan Downie build two companies that were taken over and were big successes for their shareholders. In fact, Premier Gold was taken over for their Greenstone Mine which was built by Equinox (they are also a pick that I will discuss next) and is going to be one of Canada’s largest gold mines.
Additionally, I have seen juniors with aggressive plans become miners that went on to be big success stories. When you think of it, any junior that wants to become a miner will at some point be considered to have an ambitious growth plan.
Earlier, I spoke of Agnico Eagle and Alamos. In their early days, they also had ambitious growth plans and had many skeptics who didn’t believe they could pull it off. Now Agnico Eagle is the second biggest gold miner in the world and Alamos is a low-cost producer that is making a lot of money.
Nothing has changed concerning my opinion about the potential for growth of i-80 Gold, in fact my conviction is as strong now as it has ever been. I get that investors don’t seem to agree with that optimism now, but I have seen companies with great projects in a tough market turn that kind of situation around rapidly when things get more bullish for gold miners.
They have the projects and production assets to grow into a top 5 miner in Nevada. Plus, they have a team that has built and operated mines for majors in Nevada.
Equinox Gold is the most recent addition to the picks in the reports in the group with valuations over C$500 million. I picked them when they announced that they bought the 40% interest they didn’t own in the Greenstone Mine. Since then, they have started production at the Greenstone Mine and are ramping it up to full commercial production.
This is a Ross Beaty company who is a serial mining entrepreneur who has had a career of building companies from small producers into much larger companies. He has stated that this is his final company, sort of his swan song if you will.
Their business plan is pretty straight forward, buy and build mines to create a million ounce plus gold miner. The Greenstone Mine gives Equinox the leg up to move significantly toward that goal.
Although they were a miner prior to the Greenstone Mine, it is a key project for their production growth. It puts them in the sweet spot of the Lassonde Curve when they transition out of the development discount window to put Greenstone into production.
This transition has proven to be a rewarding juncture for investors. Which I think it will be for Equinox and why I chose to make them a recent addition to my special situation picks list.
Their timing to put the Greenstone Mine into production is happening at a time when gold has been performing exceptionally well and is positioned to keep going higher. But, there just aren’t a lot of new mines, especially ones that will become one of Canada’s largest.
As I mentioned earlier, I see the catalyst to bring the gold stocks into the gold bull market and there is a small menu of companies such as Equinox, on the cusp of high production growth, to choose from.
Down The Food Chain Picks
Relative to my peers, I have a small list of picks. This is partially by design as I’m not interested in hunting with a shotgun, I prefer to hunt with a rifle to find a smaller group of picks that can significantly outperform their peers.
Another reason is that I try to focus on companies in good jurisdictions, with reasonable share structures and outstanding projects. I often hear market commentators in the sector say to stick to good people.
By mainly only giving you the signal that they have done it before. There are issues with that recommendation.
Often when they have done it before, investors have to pay a premium, plus, after being successful they often aren’t as hungry as they were prior to their success. Additionally, it will cause one to miss out on the ones that have their first success.
I’m more interested in following the road map that tells me the people running a company are set up for success.
They tend to focus on good jurisdictions, that is where you find great geology and have the ability to see discoveries turn into mines. They also have reasonable to cheap valuations and put money into drilling to make discoveries and advance them. Finally, and most importantly, they have excellent projects.
Finding companies that tick all these boxes is not easy. Below is my current list of companies that range from explorers to small developers that pass through my filters.
Goliath Resources
They are about to start their 2024 drilling season and have a fantastic group of targets to drill. The main one is their Surebet discovery where they have found a series of stacked gold zones.
Most of their drilling had been focused on the zones in the sediments, in 2023 they had a big breakthrough when they tagged gold in the volcanics below the sediments.
I’m very much looking forward to their drilling into the volcanics below the sediments. I like their chances to find stacked zones of feeder zones in the volcanics.
They also have several other regional targets that show plenty of potential on their large land package in the Golden Triangle of British Columbia.
One of the regional targets I’m particularly impressed with is their Treasure Island target. It has a substantial area of outcrop that they sampled and found high-grade copper and gold in a VMS type system.
Drilling at Surebet has hit widespread gold mineralization with nearly all the holes and a high-percentage of visible gold in the hits. This is a clear geological indication that they have a powerful gold mineralization system that remains open in the sediments and in the volcanics below.
It looks to me to be a project with the potential to become a Tier 1 gold discovery. This is why they are my highest conviction gold discovery pick.
Borealis Mining (sponsor, see disclosure below)
It is pretty rare that I find a junior with exceptional exploration potential as well as a path to fast track their project into near term gold production.
Especially in a company that while a private company was able to raise C$15 million before going public. They were able to do this during a tough market for juniors to raise money.
The going public process is time consuming, but they are nearing the point when they expect to be able to get trading soon. I’m looking forward to them going public while gold is making a series of new record highs. Their timing really couldn’t be better to launch a new gold focused company in Nevada.
They have a unique combination of an exciting gold project, a strong team leading the company, marquee investors and going public well funded to advance the project during a strong market for gold.
What stands out to me from the first time I saw the project is that it has a vast alteration zone of 20 square miles. Which is one of the biggest in Nevada.
When a gold mineralizing system interacts with the country rock it chemically alters the country rock. This is very important because big systems leave big footprints and they have a giant one at their project.
It has also seen historical mining, is fully permitted and has a processing facility built and ready to be turned on. Plus, it has material on the leach pad and a stockpile of material to process.
They have a stellar board of directors that have built mines, operated them and been taken over giving their shareholders big wins. These people are very good at assessing projects and it is due to the high quality of their project that attracted their board and managers to the company.
They have two wealthy mining legends who made their fortunes investing in mining stocks as key investors. Eric Sprott is one, he is a household name in the mining sector, he owns a big chunk of shares. Rob McEwen, another marque mining investor owns nearly 20% of the company’s stock.
I’ve been in the mining business for three decades and can say that I have never seen a private company as well prepared to be a success as they transition to being a public company.
Kootenay Silver
I’m very bullish on silver, but what I have a hard time doing is finding strong silver exploration companies. Kootenay Silver has one of the best silver discovery stories in silver exploration at their Columba project in Mexico. It reminds me a lot of the early days of SilverCrest’s Las Chispas discovery that is now one of the best new mines in the gold and silver mining space.
Like at Las Chispas, Kootenay Silver is hitting impressive high-grade at Columba. Visit their website to see all the holes at Columba, I’m certain you will be impressed with the grades they have reported.
They are drilling now and are well cashed up for aggressive drilling. They have a cluster of epithermal veins at Columba. One of the first things you need to find in an epithermal vein system is the boiling zone of the system. They have a handle on where that is on the veins they are currently drilling and it will help them when they go after other veins in the cluster.
If you like high-grade silver discoveries with ongoing drilling, Kootenay Silver is a good one for you to check out.
Alta Copper (sponsor, see disclosure below)
There aren’t nearly enough copper projects in the development stages considering how much copper is needed now and into the future. Especially when you consider that the world is depending on a lot of ancient copper mines that are on their deathbeds.
The current copper mines are strained to keep up with demands for alternative energy, electric vehicles, with struggling power grids that need to be upgraded and power grids needing to be built in emerging economies. To power up our modern world requires a lot of copper, but the supply chain is ill prepared to provide enough copper for the demand and is facing near term supply crunches.
The world drastically needs more copper mines in the development stages, that can become future copper mines. Especially big ones that can last for many years.
Alta Copper recently published their optimized preliminary economic assessment and it shows that their Canariaco project is what the major copper miners need. It has robust economics based on current prices that will get better as copper goes higher which many copper experts predict is what will happen.
Another catalyst for the company is drilling; they have not drilled off the Canariaco Sur and Canariaco Norte deposits that are right beside each other. I’m looking forward to additional drilling as the known deposits remain open to grow.
Meridian Mining
Meridian Mining is my highest conviction gold-copper development company. What initially attracted me to the company was the remarkable numbers they have in their PEA. Since then, they have done plenty of drilling with outstanding results.
Most gold-copper development projects carry high costs to build a mine which really need to be developed by major mining companies. Meridian Mining has a project with a cost around $200 million to build which is within reach of what a junior can develop.
It has an extremely high IRR of nearly 60%, combined with the low capex to build, it can pay back the capex within a year of production. This kind of project is rare in the mining industry.
They have done a fantastic job with their drilling, they are currently drilling so have pending assay results and are cashed up to continue drilling aggressively. Another catalyst is that they are working on a pre-feasibility study to get higher confidence statistics on the project.
I can see strong news flow for this company.
Hercules Silver
Hercules Silver made an impressive copper porphyry discovery in Idaho during the third quarter of 2023. Then Barrick invested a bunch of money in them shortly after they announced the discovery.
This caught a lot of investors and people in the industry by surprise. Barrick is known for being very selective, and investing off the discovery hole was out of the ordinary for them.
Then Hercules Silver had to wait through the winter to be able to get back to drilling. Over the past few months the stock has been basing. Recently, they started drilling and due to being well financed they are able to go at it with an aggressive drilling campaign.
The market is awaiting drill results and trying to get a feel from public comments by the company about how things are going. So far, I get the feeling they are still trying to figure out the shape of the system.
I will be watching closely for the drilling results, if they can follow up with strong drill holes after the discovery it should be well received as they have a big audience of investors following their story.
NevGold Corp. (sponsor, please see disclosure below)
NevGold hit the ground running once Hercules Silver announced their discovery hole. They staked a key piece of ground in the right geology with historical mining on their Zeus project.
There has been a staking rush in the area and from Hercules Silver’s ground all the way to Zeus has been staked by Barrick.
When I looked at the new claim maps, it immediately stood out to me that Barrick didn’t go to the north of Hercules, they covered everything between Hercules down to NevGold’s Zeus project. Which tells me that the key geology is to the south of Hercules all the way to Zeus.
I’m also very impressed with NevGold’s Nutmeg project. It has a resource of around 1.25 million ounces of oxide gold. They feel that the source of the oxide gold is a cluster of epithermal veins below the oxide deposits. This catches my attention because the grades of gold are high for an oxide deposit. The potential of high-grade gold-rich epithermal veins below is very good.
I’m looking forward to the work they are doing to prepare the Zeus project for drilling and their next drill campaign at the Nutmeg project to drill below the oxide deposits.
Dryden Gold (sponsor, please see disclosure below)
Dryden Gold has been a public company for less than a year. Prior to going public they secured a large land package near Dryden, Ontario. This is highly prospective ground for orogenic gold systems.
Drilling on the property before Dryden Gold acquired it had hit extreme high-grade gold. They are really early in the drilling of this project and most of the drilling has been within the first couple hundred metres of the surface.
Orogenic gold systems are well known for having very deep roots that go down several thousands of metres. They have plenty of near the surface targets to test with drilling which I hope gives them the geological clues of where to go deeper.
The most exciting part of exploring an orogenic gold system is the depth potential which remains wide open. Deep drilling can get costly, so the best way to tackle an orogenic gold system is to use the close to the surface gold mineralization to guide them deeper.
The Red Lake area and Dryden are close and share the same kind of geological characteristics. Their geological team had plenty of experience working at the Red Lake Mine, where they found a lot of high-grade gold. They are applying all that they learned in Red Lake to lead their exploration efforts in Dryden, Ontario.
The field season recently started and they are doing a bunch of work right now to prepare for their next drilling campaign. We should see a good amount of news from the work that they are doing that will give clues about where they will drill next.
Dynasty Gold
Dynasty Gold is also in Dryden, Ontario, they have an exciting project that they have hit high-grade gold in an orogenic gold system.
The historical drilling was focused on the near surface gold and was confined to the first couple hundred metres of the surface. They used that information to drill just below and that is where they hit the best grades ever on the project.
Recently, they put out a news release describing their upcoming drilling campaign. What stood out to me is they have a solid model of the zone that hit the deeper high-grade gold. They also mentioned they are planning to drill updip and downdip from the high-grade gold.
My hope is that the downdip holes return high-grade and it leads them to focus on where to go after the system deeper.
They have a QP geologist leading the team, who was formerly Chief Geologist for Newcrest. While there he gained tons of experience with underground mining of high-grade gold.
He has done a great job with the modelling of what Dynasty has already hit and I like his plans for new holes. I think he will greatly help the company unlock the depth potential of their high-grade gold orogenic system.
Sokoman Minerals (sponsor, please see disclosure below)
Sokoman has been drilling with fairly shallow drilling into an orogenic gold system called Moosehead in Newfoundland. Recently, I did an interview with their CEO and we talked about something that is music to my ears.
Orogenic gold systems have deep roots that can go down for several thousands of metres. Another characteristic of them is that as you get deeper into them, the grades can get very high-grade.
A sign that they are getting nearer to the heat engine is that as they go deeper there can be a transition from fine grained visible gold to coarse grained visible gold.
They have drilled a lot of shallow holes that have hit fine grained visible gold. But, have probably not drilled deep enough to get the coarse grained visible gold. The music to my ears is when their CEO talked about their plans to go deeper with drilling in our recent interview.
They also have the Fleur de Lys project that has all the geological characteristics of an orogenic gold system. In our recent interview, Tim Froude showed a map that integrates all the prep work on the project that has only seen one hole drilled on it by a previous owner of the project.
What immediately stood out to me was that in their sampling, they have several sample locations with gold grains in them. The first question you want to ask is how many of them are pristine gold grains because this is an indication that they aren’t rounded and come from a nearby source. Not only did they find many gold grains, a high percentage of them were pristine.
I’m looking forward to more drilling at Moosehead, especially the deeper drilling, plus I’m excited to see what their initial drilling at Fleur de Lys comes across.
American Eagle Gold
American Eagle has a high-grade copper porphyry discovery in British Columbia that also has very good nearby infrastructure. Management has compared it to having grades and thicknesses that are usually found in South American porphyries.
It has caught the attention of Teck as a significant shareholder, who is also giving them advice on how to explore the project.
British Columbia is well known for having porphyry mines, but they are often much lower grade than the ones found in South America. The NAK discovery truly is hitting the kind of holes that are more consistent with the high-grade South American porphyries. This makes for them having something special in British Columbia which also benefits from being close to infrastructure.
In addition to having hit high-grade copper over thick intersections, they also have an extremely large geophysical anomaly that they have only drilled a small portion of. They are currently drilling and I’m looking forward to drilling news and core photos.
I’m a big fan of this project which is why I have done some initial interviews and made them an official pick. In fact, this is the exact kind of company that I like to have as a sponsor because it allows me the opportunities to do a series of interviews as the project evolves. They have been invited but unfortunately have not taken me up on the offer. I love having sponsors with projects like this as I can see they will have excellent news flow.
They currently have a 15k metre drill program underway. I have plenty of confidence they can keep delivering attention grabbing results. Mainly because they have already shown high-grade copper over thick intersections. This is a powerful mineralizing system and they tend to get bigger and better as more drilling is done on them.
Abitibi Metals
I recently did an interview with their CEO and found their high-grade copper project in Quebec very impressive. They optioned the project from Soquem, a Quebec based company that is well known for doing exceptional geological work and then bringing in partners to advance them.
I love high-grade and copper exploration, with great geology in mining-friendly jurisdiction such as Quebec. The province of Quebec is one of the best jurisdictions worldwide for exploration and mining. Let me tell you, this combination is very hard to come by.
The initial coverage I did was the interview with their CEO which was well received by my audience and theirs as well. On the day it was put out it traded multiples of its average daily volume and was up nicely as well.
When I see that kind of reaction it is clear to me that I can be helpful in getting the word out to an engaged audience of investors who follow mineral exploration companies. I immediately invited them to become a sponsor of my reports, unfortunately they passed on the offer.
It is clear to me that they will be able to keep releasing impressive drill results, plus they are well funded for aggressive drilling so they are in a position to have strong news flow.
I am very happy to make them an official pick in the reports. They have an impressive project in one of the best mining jurisdictions worldwide. They are in the midst of a big drilling campaign and cashed up to keep drilling throughout this year and into 2025.
I’m very confident that they have the kind of project that can grow dramatically with the realistic potential to become a future high-grade copper mine.
Earthlabs Inc.
Earthlabs has several moving parts that some believe is a little challenging to assess. They were born as a company using artificial intelligence to assist mineral exploration companies. They sold that business to a well-known company in the mineral analysis business, ALS Inc., which is used by many Canadian mineral exploration companies for assaying.
They used the funds from that sale to create a company with a three-pronged approach for growth. They own shares in several exploration companies, they also have a royalties division and a group of mining media assets.
One of their mining media assets is The Northern Miner which has been around for many decades and is a well regarded source of information about the mining sector.
Before the internet came along, for many investors in mining, it was the go-to publication for mining. They have evolved to writing about mining, doing interviews about mining and also being involved as a media partner for mining conferences. They put out a lot of great content that helps investors better understand the mining sector.
Another mining media asset that I am impressed with is their DigiGeoData. If you have been attending mining conferences as long as I have you will know this company as the one that would make claim maps around hot mineral exploration plays. They are also evolving into using technology to enhance their products that will assist investors to do more thorough research on mineral exploration companies.
The key reason that I’m making them a pick is for their prime asset which is a portfolio of shares in junior exploration companies. In a bull market for gold stocks, the exploration stocks can have a collection of losers and big winners.
For many investors these days they like to invest in funds that hold a group of stocks in a sector. For those kinds of investors they don’t have a lot of options when it comes to junior exploration stocks.
To have more big winners than losers the selection of those stocks needs to be well informed. They don’t publish their holdings, but I have learned about several of their holdings through their podcast called CrashLabs. I’m impressed with their selection process and team that evaluates the stocks they invest in.
One of their significant investments is in a private company that I know very well, Borealis Mining. They are a pick that I wrote about earlier in this report. I believe Borealis Mining is extremely well set up for success as they become a publicly traded company. They have other key holdings similar to Borealis Mining.
Several mining stocks bottomed just before the 2024 PDAC in early March and have since then gained strength. Earthlabs have tracked that trend very nicely and I see them as a very good proxy for the junior exploration stocks. They give investors that want a basket of well selected juniors to have exposure to exploration stocks.
Arizona Gold & Silver
I’ve been following this company for a while now, and was waiting for them to get a key piece of news. They have drilled a series of near the surface holes into what looks like an oxide zone with solid grades that has the potential of becoming an open pit mine.
That is not what really excites me about their project. They have drilled a small amount of holes below the oxides and hit very high-grade gold in an epithermal vein system. In order for them to go after the depth potential, they needed BLM permits to drill, they got those recently.
There are a couple key reasons that I like the depth potential over the oxides. One of those is that the oxides need a lot of drilling to show its potential to become an open pit.
They are lower grade kinds of systems and to put a substantial resource estimate on them, let's say to a couple million ounces that can then have economics wrapped around them will take a lot of drilling.
First, they would have to put out a resource, which I think will struggle to have a maiden resource over 1 million ounces of gold. I can find other juniors that already have similar resources. The problem is that juniors that do maiden resource estimates that are predominantly inferred have a way of capping the project in investor’s minds.
The key reason I am so impressed with the depth potential is the grades they have hit in minimal drilling under the oxides. To understand that potential requires me going into the geology of an epithermal vein system.
The drilling they have done below the oxides have hit high-grade to bonanza-grade gold in the breccia unit. Breccia is a mixture of quartz veins and country rock. Keep in mind that it is the quartz that carries the gold. You don’t get to assay just the quartz, the core that hit the breccia is sent in with the country rock and quartz vein mixture.
For me, this is where things get really exciting. Keep in mind that the quartz is where the gold is, but it gets mixed with the country rock and the country rock dilutes the gold grade in the quartz. To hit the grades they have in the breccia is remarkable.
I understand this kind of geology because I have extensively researched epithermal vein systems. I live in Mexico, which is the most important source of silver anywhere in the world. Most of that silver production has come from epithermal vein mining.
One project that I have covered many times in the reports is the Las Chispas mine owned by SilverCrest, it is one of the best free cash flowing gold and silver epithermal vein mines in the mining sector anywhere in the world.
What makes the Arizona Gold & Silver epithermal vein system so impressive to me is a combination. One is the high-grades of gold they have hit in the breccias. Secondly, finding gold-rich epithermal veins is not easy.
One of the world famous gold-rich epithermal vein systems is the Hishikari mine in Japan. For many years it was one of the highest grade gold mines in the gold mining sector and it also had very low-costs of production. I’m not saying they have the next Hishikari, but based on the grades they are hitting in the breccias, I also can’t say they don’t.
To really understand the potential of the epithermal veins will require deeper drilling below the breccias to hit the quartz veins and see what grades are in the boiling zone, or as some call it the bonanza-grade portion of the system.
Now they have the permits to go after that depth potential, I’m very much looking forward to them drilling the depth potential because I clearly understand what they have already found in the breccias.
In Closing
After gold got the smackdown on Friday, I wanted to write a report because it looked a little panicky to me for gold and the gold stocks.
I wanted to put together a report to explain why not only did I think there was no reason to panic, I also think it created opportunities for level headed investors.
I also wanted to discuss my current picks and new picks.
All the best,
Allan Barry Laboucan
Disclosure
i-80 Gold is a sponsor of Rocks And Stocks News, they are presented for the benefit of the company and for readers and viewers of Rocks And Stocks News reports. Allan Barry Laboucan is a shareholder of i-80 Gold’s common shares and in their tradable warrants. Allan Barry Laboucan is a shareholder of Goliath Resources’ common share and also own warrants to purchase additional shares. Borealis Mining is a sponsor of Rocks And Stocks News, they are presented for the benefit of the company and for readers and viewers of Rocks And Stocks News reports. Allan Barry Laboucan is a shareholder of Borealis Mining. Alta Copper is a sponsor of Rocks And Stocks News, they are presented for the benefit of the company and for readers and viewers of Rocks And Stocks News reports. Allan Barry Laboucan is a shareholder of Alta Copper’s common shares. Dryden Gold is a sponsor of Rocks And Stocks News, they are presented for the benefit of the company and for readers and viewers of Rocks And Stocks News reports. Allan Barry Laboucan is a shareholder of Dryden Gold’s common shares. Allan Barry Laboucan is a shareholder of Dynasty Gold’s common shares and owns warrants to purchase additional shares. Sokoman Minerals is a sponsor of Rocks And Stocks News, they are presented for the benefit of the company and for readers and viewers of Rocks And Stocks News reports. Allan Barry Laboucan intends to become a shareholder of Sokoman Mineral’s common shares
Rocks And Stocks News does not make buying or selling recommendations. The reports are for information purposes only. Sponsors pay a fee to Rocks And Stocks News for content creation. The business model of Rocks And Stocks News is to fund research and reporting on the sector, picks and sponsors through corporate sponsorship. We are thankful to sponsors for enabling commentary free of charge to readers and viewers of the reports. When reporting on sponsors it is on behalf of the sponsors discussed in the portion of the report mentioning the sponsor. Before making any investment decision it is important for you to speak with your financial advisors to consider your risk profile. It is also important to do your homework. To help in that process, Rocks And Stocks News means to be a gateway by doing reports and interviews of management of sponsors and picks. The reports and interviews should not be considered investment advice. Allan Barry Laboucan is the founder and owner of Rocks And Stocks News, he has worked in the mining sector since 1993 and has been reporting on the sector since 2005. He has worked with and been mentored by very talented geoscientists in geology, geochemistry and geophysics. He uses the skills he has picked up during his career to assess sponsors and picks in the reports. Whether a company is a pick or a sponsor they go through the same filter and are reported on when important news is made that Allan Barry Laboucan wants to discuss on the Rocks And Stocks News platform. He may own shares in sponsors and picks for investment purposes which he discloses when discussing them in the reports.