Joe Mazumdar, co-editor with Exploration Insights
Focus: Junior mining stocks

MARKET OUTLOOK

The various indicators of the investment clock suggest we are at a “buying” moment for gold equities. The gold price is stabilizing at around US$1,500 per ounce after it rose about 20 per cent in just a few months due in part to concerns over global growth rates (U.S.-China trade tensions) and their impact on U.S. interest rates. There is about US$16 trillion in negative yielding debt and gold thrives in a negative rate environment.

We have tracked C$1.4 billion in equity financings from 126 separate transactions averaging C$10 to C$11 million per transaction, mostly junior non-cash flowing explorers getting funded by retail investors such as Eric Sprott.

In addition to support exploration that many majors have underfunded, producers are taking equity stakes or doing joint ventures in juniors as a proxy for their own exploration expenditures. We have not seen a lot of major financing transactions for majors or mid-tier producers such as back in March 2017 when Agnico Eagle raised US$220 million with one institutional investor.

Industry mega-mergers are a consequence of precious metal companies trying to remain relevant and compete directly with precious metal ETFs (GDX) with respect to trading liquidity, solvency and leverage. But companies can offer dividends, specifically sustainable ones. The result has been a billions of dollars’ worth of divestible assets that are sitting on the market which are competing for the attention of suitors (Australians, mid-tiers) with junior developers. Note that the divestors prefer cash to paper. Prior to the mergers, the cumulative market capitalization of the major producers was US$100 billion, US$20 billion less than BHP Billiton, a large diversified miner.

TOP PICKS

Joe Mazumdar's Top Picks

Joe Mazumdar, co-editor of Exploration Insights, discusses his top picks: Premier Gold, Trilogy Metals and Mirasol Resources.

PREMIER GOLD (PG:CT)

TRILOGY METALS (TMQ:CT)

MIRASOL RESOURCES (MRZ:CV)

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
PG Y N N
TMQ Y N N
MRZ Y N N

 

PAST PICKS: MARCH 5, 2019

Joe Mazumdar's Past Picks

Joe Mazumdar, co-editor of Exploration Insights, discusses his past picks: Sandstorm Gold, Regulus Resources and Mundoro Capital.

SANDSTORM GOLD (SSL:Ct)

  • Then: $7.28
  • Now: $7.48
  • Return: 3%
  • Total return: 3%

REGULUS RESOURCES (REG:CV)

  • Then: $1.87
  • Now: $1.32
  • Return: -29%
  • Total return: -29%

MUNDORO CAPITAL (MUN:CV)

  • Then: $0.215
  • Now: $0.145
  • Return: -33%
  • Total return: -33%

Total return average: -20%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
SSL Y N N
REG Y N N
MUN Y N N

 

TWITTER: @JoeMazumdar
WEBSITE: www.explorationinsights.com