The Gold Stocks Are At An Inflection Point That Will Bring Them Into The Powerful Gold Bull Market
An important development happened just prior to the early March PDAC this year. The gold stocks ended a brutal bear market and gold went through a powerful rally that led to the second quarter of 2024 having the highest average price of gold, ever.
We are at another inflection point as the gold miners are about to report a blowout quarter with windfall profits for several of them. This will catch the attention of generalist investors and prove to be the catalyst to bring the gold stocks into the powerful gold bull market.
SilverCrest Metals
SilverCrest put out an update last week that is a wonderful precursor to what the gold and silver miners are about to report when they present their second quarter 2024 financials.
They have one of the best new gold and silver mines in the business. Over the first few quarters of full commercial production it has performed exceptionally well.
They were able to bring it into production on time and budget, over a challenging period during the Covid pandemic and a period of high inflation.
Since then, they have paid off all the debt, and built up nearly $100 million in cash and $25 million in gold and silver reported in their news last week. They also paid $23 million in taxes in the first quarter of 2024 and regularly buy back their stock.
I’m a big fan of their Las Chispas silver and gold mine. It has a low cost of production and high-grades, which makes it a free cash flow machine.
Equally as impressive is their business plan, as they are eating their own cooking by holding a substantial amount of gold and silver. Plenty of gold mining companies espouse the benefits of gold as a better asset to hold than fiat currencies and as a terrific hedge against inflation.
They bang that drum, but most of them are in a hurry to sell all their gold for fiat currency and stockpile cash while its purchasing power is brutalized by inflation.
SilverCrest is a unique miner, in that not only do they promote the merits of gold and silver as a store of value and protection against inflation. They actually do it. More miners should follow their lead.
Part of the reason they are able to employ this strategy, is because they can, due to the healthy profit margin at the Las Chispas Mine.
Gold and silver are outpacing inflation and so they are in a great position to keep moving higher benefiting SilverCrest’s stockpile of gold and silver, plus they have an exceptional mine at Las Chispas.
Agnico Eagle Mines
When it comes to the top 3 gold miners worldwide, Agnico Eagle has been significantly outperforming Barrick and Newmont. This is because they are firing on all cylinders by increasing production, and in growing their resources and free cash flow.
They had peer leading performance during the first quarter of 2024 and are set up to keep that trend going in the second quarter. The average price of gold during the second quarter of 2024 is by far the best ever and Agnico Eagle is primed to keep seeing their stock price significantly outperform their major gold mining peers.
They truly are the standout of major gold miners and are a wonderful pick for investors that want leverage to bullish action in gold with less risk than smaller gold miners. I only see that becoming an even stronger thesis when they report the second quarter 2024 financials.
Alamos Gold
Alamos Gold is another gold mining company that is performing very well with their operations and in their stock action.
They are growing their production while already having a handsome profit margin. While on a path to make them a much lower cost producer than many of their peers.
In a rising gold price environment, growing production while bringing down costs is a tremendous one-two punch combination. They are delivering on both and benefitting in the market for it.
Barrick and Newmont have just recently started to make new 52-week highs and remain well below their all-time highs, while Alamos is a picture in contrast.
As gold has broken out over the past few months, Alamos is doing the same by making new 52-week highs and all-time highs.
This week they announced that they are reducing the hedging that they inherited from the acquisition of Argonaut Gold. I don’t like hedging, especially in a powerful gold bull market, nor do investors in gold miners.
Their 2024 estimated gold production is for them to produce a little over 500k ounces of gold, with a goal to grow that to 800k.
What impresses me the most is that their estimates for all-in-sustaining cost of production for 2024 is $1150 with a goal for 2026 to bring that down to $1025.
Low cost gold producers in a rising gold environment tend to do very well relative to their peers. A perfect example from the past was Goldcorp during their heydays.
They had a free cash flow machine of a mine with low cost of producing high-grade gold. They were rewarded by being one of the best performers relative to their peers.
I like the chances of Alamos Gold to be a Goldcorp 2.0 story.
McEwen Mining
No matter what sector I look at, I love to find turnaround stories. Back in the third quarter of 2022, McEwen Mining was being left for dead. I saw value that wasn’t being recognized and was fortunate to start a series of interviews with Rob McEwen.
I was very lucky with my timing because shortly after starting the series of interviews with Rob McEwen, they were rewarded when Rio Tinto’s Nuton venture invested in McEwen Copper followed by Stellantis (one of the world’s leading car makers) making a large investment as well.
McEwen Copper has one of the best undeveloped copper projects in the world at a time when copper supply is weak and demand is very strong. These supply and demand fundamentals are actually only going to get much better as there are copper supply shocks forming.
McEwen Mining owns a little over 47% of McEwen Copper. The Los Azules project, owned 100% by McEwen Copper, is just what Doctor Copper ordered. It is a top 10 in undeveloped copper projects worldwide, with robust economics, as it is projected to be in the lowest cost quartile of undeveloped copper projects with a very long mine life.
It is a fantastic situation when an investor finds a turnaround play when it is in the early days of turning around. McEwen Mining has been a terrific turn around pick as it is up multiples since its lows in the third quarter of 2022.
I also personally feel fortunate that Rob McEwen has become such a great friend of our shows at Rocks And Stocks News. For one, it has helped elevate the profile of the shows amongst investors in mining.
Secondly, Rob McEwen is a visionary in the mining sector who built Goldcorp from a small mining company into a big success during his tenure running the company. He is also a legend of an investor in the mining sector making himself very wealthy by spotting trends before the crowd.
He is very generous with his time when he appears on our Rocks And Stocks News shows. Sharing his thoughts on McEwen Mining and McEwen Copper as well as his opinions on metals such as gold and copper and his investment strategies for investing in mining stocks. I’m very thankful on behalf of my audience for being able to learn from Rob McEwen.
He started his interest in mining as a young boy talking with his father about the importance of mining and gold. Following that, he has devoted his entire career to mining and gold.
Back when I started doing a series of interviews with Rob McEwen, I felt strongly that the potential of McEwen Copper was not being recognized. It has been a key driver to their turn around over the past couple of years.
Now, I don’t think their gold mining operations are being properly recognized. So in many ways, I still think of them as a turnaround play that is still in its early days.
What made Goldcorp the success story it was, happened through the drill bit. They had been struggling as a gold miner. Then they decided to make all their geological data available to crowdsource a path to success. Nobody had ever done something like the Goldcorp Challenge.
It was a resounding success that caused them to drill much deeper into the orogenic gold system at their Red Lake Mine. When they drilled down to 1000 metres and below, they tagged the bonanza-grade gold portion of the system. The rest was history.
They had extremely high-grade and low costs of mining which made the mine a free cash flow machine.
I think that their drilling at their projects in Ontario could be on a path to success with the drill bit. It is not lost on me how important drilling at Goldcorp was to unlock remarkable value. It is also not lost on the McEwen Mining team because they are doing extensive drilling.
It does seem to be lost on gold mining investors as most of their valuation looks to be pegged to McEwen Copper. I would actually argue that even Los Azules is not accurately reflected in the valuation of McEwen Mining.
Going forward, I see value creation available from McEwen Mining’s Los Azules copper project and the potential for big success with their drilling at McEwen Mining’s gold mines.
i-80 Gold (sponsor, see disclosure below)
I just wrote about my former favourite turnaround pick, now it is time for my current top pick for a junior miner turnaround pick in i-80 Gold.
No matter what sector you look at for a turnaround pick, the first thing that needs to happen is they have to stop going down, then start improving from there.
i-80 Gold is a relatively new public company that started trading a few years ago. They became a public company when Equinox bought out Premier Gold for its Greenstone Mine in Ontario. In the takeover transaction, Premier Gold spun out its Nevada assets to shareholders to create i-80 Gold.
The same team that ran Premier Gold and found the Greenstone Mine and advanced it prior to Equinox taking them over is running i-80 Gold. Equinox is a new pick that I added to the reports because they are now starting production at the Greenstone Mine. I will write about Equinox next in this report.
The i-80 Gold team had great success with the Greenstone Mine and I think they will have even bigger success with their Nevada focused i-80 Gold. Finding and advancing one of Canada’s largest new gold mines is no small feat.
The first 1.5 years of being public were very good for i-80 Gold but since peaking at a bit over C$4.00 per share in January, 2023, they have been under pressure. 2023 was a tough time for many gold stocks, from the smallest to the biggest.
As strange as it sounds, but part of the reason they got hit hard was actually because they have an ambitious plan of growth. It includes simultaneously developing three projects at the same time. When the stock went down, concerns went up about their ability to pull it off.
There is a very real reason that they went with such an ambitious plan. They have an autoclave, which can be thought of as a really big pressure cooker. You need this kind of a plant in order to extract gold in a sulphide deposit.
They require 24-7 operation and therefore need a lot of material fed into them. To get it, they need the sulphide material from their three deposits at Granite Creek, McCoy-Cove and Ruby Hill.
Moving ahead with this kind of game plan in a bull market is not as big of an undertaking as going through it during a bear market. Timing the market is not a luxury they had, they had the projects and need to move on them.
They are not the first junior miner that went with an aggressive growth plan. In fact, my top pick of the major gold miners, Agnico Eagle, went through a similar aggressive plan. It was certainly challenging, but it helped them grow into the second largest gold miner in the business.
I believe in i-80 Gold’s case, it will result in them becoming a much bigger company on the other side of their growing pains. Plus, they will have an important strategic asset.
There is a transition about to happen in Nevada. For the past 50 years, the gold mining has been primarily low-grade oxide gold deposits that were mined using open pit mining and heap leaching to extract the gold.
The state has been well picked over for outcropping oxide deposits. In the future, more gold mining will come from underground mining of higher grade sulphide deposits below the oxides. To make that happen you will need processing facilities for sulphide deposits.
There are very few of them in Nevada, and they are owned by the majors and i-80 Gold has one. This will put them in a position to look at projects that aren’t big enough for the majors. They may even be able to look at major gold mining sized projects that the majors don’t look at because their priorities are elsewhere.
Many believe that i-80 Gold’s valuation doesn’t reflect the value of their plant to process sulphide material. Not only for its ability to process their own material from their Granite Creek, McCoy-Cove and Ruby Hill, nor for it being a strategic growth asset to look at other sulphide deposits as a buyer. I’m in that camp.
I’ve never thought of i-80 Gold as a short term investment in a high-growth junior miner. I’ve always thought of them as an attractive company for their ability to grow into a much bigger Nevada focused gold miner. Nothing has changed despite the challenges they have been going through.
I think there is a pretty good chance they have done the first step in a turnaround story, which is to stop going down. The next step I’m watching for is to see them start coming off the bottom.
Equinox Gold
I have been watching the progress at Equinox Gold’s key asset, the Greenstone Mine, since it was first found by Premier Gold many years ago. When Equinox took over Premier Gold they got 60% of Greenstone, and then built the mine with their 40% partner Orion Mine Finance Management (Orion).
As they were about to turn the mine on, they were able to buy the 40% interest from Orion. This is when I made Equinox a pick in the reports. Now they own one of Canada’s biggest new mines that will double or better their production and get them closer to their goal of becoming a one million ounce per year gold producer.
In order to buy the 40% interest from Orion, they needed to take on debt. The next couple of years will likely be all about paying off that debt.
This is a Ross Beaty venture, he is a serial mining entrepreneur that has built several successful mining companies. He has stated that this is his swan song and after it will ride off into the golden sunset.
During his career he has used the buy and build strategy to build his other mining companies. But as a true mining guy, he doesn’t like debt so they are now going to focus on getting all of their mines humming and pay off the debt.
Their various mines, if maximized for production, can get them to their goal of being a one million ounce per year gold miner. But, they don’t want to stop there, their first priority was getting to that level of annual production, now the focus is to reduce the debt.
I don’t think buying more assets is in the immediate plans, but you never know. I’m sure there are some projects out there that they would be interested in if it is a deal they can’t refuse.
Their timing is pretty ideal, bringing Greenstone into production while we are in the early days of a powerful bull market is fortuitous. Higher gold prices will help them pay off the debt faster.
There really aren’t very many gold miners out there with aspirations to grow into a mid-tier. I can see a catalyst immediately in front of us, which is when the gold miners start announcing their profits for the second quarter of 2024.
The second quarter had the highest average gold price for a quarter, ever. This will mean windfall profits for several gold miners. This is the catalyst that will prove to be the one that brings the gold miners into the gold bull market.
The windfall profits I see coming for gold miners will surely catch the attention of generalist investors. When they start looking at gold miners, they will have a small menu of high growth miners like Equinox to choose from.
Goliath Resources
I’m always on the hunt for gold explorers that make impressive discoveries. They aren’t easy to find, but in the case of Goliath Resources, they have one in the Golden Triangle of British Columbia.
The combination of the quality of their discovery and having a modest valuation with plenty of room to grow much higher, is why they are my highest conviction gold discovery pick.
For exploration companies, it is all about the drill bit. They have recently started their 2024 drilling campaign. Within the first two weeks of drilling, they already had great news from their first hole.
One of the key characteristics about this project is that in a high percentage of their drilling they hit visible gold. Following seeing visible gold in their core, they followed that up with strong assay results.
Their first hole from the 2024 drilling campaign, reported abundant visible gold and other minerals that suggests they are getting closer to the heat engine of the gold mineralizing system.
Not all visible gold is created equal. Sometimes it can be fine grained with just the odd speck here and there in the core. Other times, it can have a higher amount of fine grained gold. As you get further into a gold mineralizing system in addition to the amount of visible gold grains going up, they can get more coarse grained.
That progression is exactly what Goliath has found as they have drilled from the top of the system and followed it deeper. My speculation is that as they keep following it deeper, they will get increasingly coarser visible gold and higher amounts of visible gold.
During the three season’s of drilling, it has gone from a discovery, to a more important discovery, in 2023 it started to show it has the potential of being a tier 1 discovery. In 2024, I think they will have their best year and show it is a tier 1 discovery.
They have gone from sparse fine grained visible gold, to abundant visible gold, to coarse gold and now they are showing the start of more abundant visible gold. This is an ideal progression.
The zones are predictable, as can be seen in the fact that of the 200 plus holes they have drilled, they have over a 90% success rate in hitting gold mineralization. They have a strong geological team that is learning more as they are going and have an exceptional understanding of the geology.
In 2023, the Colorado School of Mines did a study and concluded that there is a porphyry source that is the heat engine that drove the gold mineralization up in the system. From the first hole of 2024, they are seeing the kinds of minerals that suggests they are in fact getting close to the heat engine of the entire gold mineralizing system. Which looks to be a gold rich porphyry.
Often porphyries can be buried. But, in Goliath’s case, Mother Nature is working in their favour.
Their initial drilling was just below a large area of outcropping gold that was traced from the bottom of one side of a mountain, to the top and down the other side. After that they started following the system deeper down the mountain. While doing this they saw the transition of visible gold that I mentioned earlier.
The first couple of years of drilling was completely in the Hazelton sediments. Last year they got into the contact of the Hazelton sediments and Hazelton volcanics, and then into the top of the Hazelton volcanics.
This gives them around 700 metres of vertical relief from the top of the mountain down to the volcanics. This year their goal is to drill deeper into the volcanics that will get them down to the valley floor.
If this is in fact a gold rich porphyry heat engine, it is likely sitting near the valley floor. Instead of needing to access it under 700 metres of cover, they could very well be able to come at it from the valley floor.
I have been covering the company since their second year of drilling and have been very impressed with its progress.
I don’t throw around terms of potential tier 1 discovery lightly because I know how rare they are. The drilling with the Truth Machine, and the progression of visible gold is why I have used that term for Goliath’s Surebet discovery that has morphed into having multiple zones of gold mineralization from the sediments and now into the volcanics.
I’m very excited about this year’s drilling into the volcanics and going after the heat engine for the entire gold mineralizing system.
I expect to see an exceptional series of news releases from their 2024 drilling. It has already started with the update they put out from their first drill hole of the 2024 drilling campaign.
Juggernaut Exploration (sponsor, see disclosure below)
Right beside Goliath Resources, Juggernaut Exploration has a key piece of ground that they did their initial drilling on in 2023 and drilled into a lookalike discovery. They are following the same path to success as their neighbour starting with a small drill program that made a discovery and in 2024 they will be following that up with their second season of drilling.
So far, they have made hits that are comparable or even better than the earliest drilling at their neighbour's discovery. In addition to following the lead of their neighbour they have key geological people from Goliath at Juggernaut and share the same camp and use the same drilling company.
Juggernaut can fast track their discovery due to the team they have that knows the Goliath discovery so well and how to drill it.
Juggernaut is about to start their 2024 drilling campaign and I’m looking forward to them following the same kind of progress as their neighbour.
I’m looking forward to interviewing their CEO and key geologist as they start their drilling. It will be a great chance for viewers of our interviews to learn more about the Juggernaut story.
I like what I see so far from their minimal drilling, geophysics and structural interpretation. I think they will be able to have great news flow out from their 2024 drilling, while their neighbour Goliath reports great news from their drilling next door.
I’m a big fan of the Golden Triangle of British Columbia because it is a prolific mining camp well known for high-grade mines. I have only covered a few companies in the camp with great success over the years.
I covered GT Gold from early in its discovery through to them getting taken over. I did the same with Pretium Resources. I’m really happy to see the progression from Goliath Resources and think it will be a big winner as well.
Now, I have added Juggernaut as a grassroots discovery that looks to have something special in their early drilling.
Borealis Mining (sponsor, see disclosure below)
Last, but certainly not least, for this report is private company Borealis Mining. They are about to become a publicly traded company shortly. During my 30 years in the mining business, I can confidently say that I have never seen a private company on the cusp of publicly trading that has been setup for success like Borealis Mining.
During a tough market for juniors to raise money for exploration, Borealis was able to raise C$15 million as a private company. This was due to the quality of their project that also attracted a who’s who of mining executives including Tony Makuch as their chairman. He is the CEO that built Kirkland Lake Gold into a huge success.
Kirkland Lake started as a small miner, built themselves up to a much bigger miner, and had a low-cost high margin mine at their Fosterville Mine in Australia. The Fosterville Mine made them into one of the best performing gold miners prior to their takeover that was a huge winner for those that stayed along for the ride.
One of their key investors was Eric Sprott, who made off like a bandit from Kirkland Lake’s success. He is also a significant shareholder of Borealis Mining.
The key leading forces for Borealis Mining are their CEO, geologist Kelly Malcolm and their COO Andreas Steckenborn. They first worked together at one of Canada’s largest mines, the Detour Lake Mine.
Kelly on the exploration team and Andreas on the mine building team. After leaving Detour Lake, where Kelly helped find a lot of gold, he went on to find a multi-million ounce gold project in Quebec. After Andreas left Detour Lake, he went on to help build the Cote Lake mine which is another important Canadian gold mine.
They joined forces again when they found the Borealis Mine project, which they acquired from Waterton Global Resource Management. Then they put together an impressive board of directors and financed the company as a private company.
Waterton is in the business of acquiring mining projects, then selling them to public companies for stock or cash, or a combination. They are in the process of winding down their resource fund and liquidating the stocks they have in public mining companies.
As a private company they were able to pull off a wonderful development when legendary mining entrepreneur Rob McEwen bought Waterton’s entire stock position in Borealis Mining to become Borealis Mining’s largest shareholder.
Due to the success they had raising money as a private company, they were able to start drilling for additional gold on their project and recently started gold production.
Last week, when they reached the milestone of beginning gold production, I had the pleasure of interviewing the dynamic duo of Kelly and Andreas. I highly recommend you check out that interview to learn more about their efforts to follow a dual track to success with exploration drilling and gold production.
When you consider what the company has accomplished as a private company. First by acquiring a great project that attracted highly talented mine builders, and financed it while keeping the share structure tight. The quality of the company’s project attracted funding during a tough market to fund juniors.
They brought in legendary mining investor Eric Sprott while the company was private as a key strategic investor. And also brought in another legendary mining investor Rob McEwen, who took over the project vendor's share block to become Borealis Mining’s largest shareholder.
I started by saying I have never seen a private company as well prepared for success as they transition to become a publicly traded company. I think it is clear from the path they are on that anybody that invests in mining stocks would be hard pressed to find another private junior gold miner as well prepared for success as Borealis Mining.
Tony Makuch, Eric Sprott and Rob McEwen have proven time and time again that they do their homework and know what to look for. Their endorsement of Borealis Mining is a great testament to the team's ability to put together a unique and compelling story.
In Closing
I’m of the strong opinion that gold is headed much higher and that investors can get additional leverage from top of class major gold miners, high-growth miners and explorers.
In this report I wanted to present my picks of top gold stocks that cover a range from a major down to explorers.
In addition to these picks, I also have other gold stock picks that I have featured in past reports that you can find here.
I’m always looking for great gold stocks, if you think I have missed some, I encourage you to reach out and tell me which ones you think I should cover.
I’m also very bullish on copper and silver. Recently, I put out reports with my top picks in those metals. Again, you are welcome to submit any stock picks in those metals that you think I should cover at Rocks And Stocks News.
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. Additionally, sponsors benefit readers and viewers of Rocks And Stocks News reports that enable them to receive the reports free of charge. 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 owna warrants to purchase additional shares. Juggernaut Exploration is a sponsor of Rocks And Stocks News, they are presented for the benefit of the company. Additionally, sponsors benefit readers and viewers of Rocks And Stocks News reports that enable them to receive the reports free of charge. Borealis Mining is a sponsor of Rocks And Stocks News, they are presented for the benefit of the company. Additionally, sponsors benefit readers and viewers of Rocks And Stocks News reports that enable them to receive the reports free of charge. Allan Barry Laboucan is a shareholder of Borealis Mining.
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.
