On The Hunt For Golden Cigar Butts With Silver Bands Thrown On The Street By Dr. Copper
Warren Buffett is one of the greatest investors ever, and most investors look at him now and think they would love to be like him. What is less well known is that he started his career investing in very small companies, most of them trading on the pink sheets. He found that they were under-covered on Wall Street, un-known by generalist investors, and traded at huge discounts to their true value.
He called those stocks cigar butts that were thrown on the street with only half the cigar smoked. It was his way of explaining value, he wanted assets that were thrown away that he could buy at a steep discount with plenty of value still in them.
Cigar butt stocks of today are the mining stocks. They are under-covered on Wall Street, ignored by generalist investors, while trading at steep discounts relative to what they have in the ground. In many cases, they haven’t even been lit yet.
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Spotlight On A Few Picks
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Arizona Gold & Silver is currently drilling on their Philadelphia project in Arizona where they have hit high-grade gold in past drilling. Recently, they put drill cores pictures up on their website that caught my attention.
Most of the high-grade gold they hit in the past was in brecciated rock with a mixture of quartz and country rock. What stood out to me from the recent holes is that they are down to depths where there is more quartz than country rock.
It is important to point out that all the gold is in the quartz, not in the country rock. So seeing the grades they have in the past is very impressive due to the dilution of the gold bearing quartz and the country rock.
Now we need to see the assays from the recent drill holes and future holes that I think will transition into the quartz only portion of the veins.
Blackrock Silver is drilling to expand the size of their high-grade silver-gold project in Tonopah, Nevada. Their past drilling went into a resource estimate of 100 million ounces of silver equivalent. They also have a preliminary economic assessment (PEA) that has a low capital cost (Capex) with a 2.3 year payback of the Capex.
The PEA has an all-in-cost of production at $11.96 per ounce and an internal rate of return (IRR) of 39.5%. The base case metrics in the PEA use $1900 per ounce gold and $23 per ounce silver. Using $2,280 per ounce of gold and $27.60 per ounce of silver, the IRR jumps up to 54%.
The drilling that went into their resource estimate was well confined as they wanted to have silver and gold zones that could be realistically used in the PEA. There is plenty of potential to add to the resource inside the veins in the resource and PEA, plus outside the resource where there is plenty of room to grow the resource with step out drilling.
They are well funded for aggressive drilling and currently their plans are to continue into early 2025 with the current drilling campaign. Lots of assay results are pending from completed holes and upcoming holes. I like the potential for them to come out with plenty of impressive assay results.
Heliostar Metals has been performing very well with their stock trend and most importantly with drilling at their Ana Paula project and did a transformational acquisition. Both Ana Paula and their new mines are in Mexico, which is where their CEO, Charles Funk, had remarkable success with Vizsla Silver.
Ana Paula in Mexico is an exciting project. It was originally being developed as an open pit project by the previous operator. Charles and his team acquired it at a very opportune time for two reasons. One, was that the previous President of Mexico, was talking about banning open pit mining. Secondly, when they got it gold stocks were in the midst of a bear market.
They looked at Ana Paula differently. They spotted that there was a high-grade gold core that had fantastic potential to be an underground mine. Since acquiring Ana Paula, their drilling focused on the high-grade core theory has been proven correct with many impressive drill hole intersections.
A couple weeks ago they announced that they completed the acquisition of the mines in Mexico which transformed them from an explorer to a producer. Plus, it gives them cash flow to expand things at the mines and move Ana Paula forward.
They are at a very important juncture that will lead them to become a much larger company. On a big picture perspective, the mining industry needs a lot more high-growth miners and there are projects out there that are too small for the majors and mid-tiers that would be amazing growth engines for a company like Heliostar.
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Not only is there plenty of unlocked value based on current prices of gold, silver, copper and other metals. But, the supply chains are broken from explorers to major mines, and the demand is powerful. While the mining stocks are being thrown away on the streets.
In the case of silver, there is already a deficit as supply can’t keep up with demand. Gold is in a powerful bull market due to the Death Spiral of Debt causing investors in the East and central bankers in the BRICS nations to put themselves on the Gold Standard. Copper is heading toward a deficit because the supply chain is broken and the demand is growing rapidly.
There has never been a better time to be hunting for gold cigar butts, with a band of silver, and a still red like Dr. Copper’s red metal.
All the best,
Allan Barry Laboucan
Disclosure
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.
