Get Ready to Add Great Miners at a Discount
A day after the election I wrote:
“The dollar, gold, and the major U.S. stock exchanges will all see simultaneous new highs, but expect one last pullback in the price of gold beforehand.”
Throughout the year I warned about lower gold prices, a higher dollar, and that we would see one last great buying opportunity in precious metals and the juniors to close out 2016 and set up for a historic run in 2017.
It didn't take long. Gold closed the week in the $1,220 range, the lowest price since June, trading down nearly 3% on Friday and closed the week down approximately 5.6%.
Meanwhile the dollar posted a weekly gain of approximately 2.2% as the major stock indices hit new highs this week.
Silver was down approximately 7% on Friday, registering a weekly loss of approximately 5%.
Platinum was down nearly 4% on Friday to $943 an ounce for a weekly loss of approximately 6%. Palladium was also down over 2% on Friday but soared nearly 9% for the week.
Copper has been on a tear. It closed down over 1% on Friday but was up approximately 11% for the week closing on the $2.50l/b range. Price levels not seen in five years.
The move comes as a result of better economic data out of China and the potential for large-scale — and much needed — infrastructure spending.
Oil closed down nearly 3% on Friday as doubts mount that targeted production limits are achievable. Oil traded near $45 per barrel
In the near-term I still expect lower gold prices. I expect tax loss/gain selling to exaggerate moves to the downside in the juniors and I expect to add to my shopping list of great names in the junior space at a discount.
The Week in Juniors
Premier Gold Mines (TSX: PG)(OTC: PIRGF)
On November 10, 2016 Premier Gold Mines announced results from the 100%-owned McCoy-Cove Gold Project along the Battle Mountain-Eureka Trend in Nevada.
The headline number was 12 meters of 28.64 g/t Au and 7.37g/t Ag. The results from the ongoing 15,000 meter drill program were between the Helen Zone and the historic Cove South Deep (CSD) underground zone.
Highlights of the recent results include:
- PG16-12: 28.64 g/t Au and 7.37 g/t Ag over 12.0m at 599.7m (or 0.84 oz/t Au and 0.21 oz/t Ag over 39.5 ft.)and 27.71 g/t Au and 12.95 g/t Ag over 6.9m at 627.1m (or 0.81 oz/t Au and 0.38 oz/t Ag over 22.5 ft.)
- PG16-14: 6.16 g/t Au and 0.86 g/t Ag over 10.8m at 653.9m (or 0.18 oz/t Au and 0.03 oz/t Ag over 35.5 ft.)including 9.48 g/t Au and 0.45 g/t Ag over 3.2m (or 0.0.28 oz/t Au and 0.01 oz/t Ag over 10.5 ft.)
- PG16-16: 5.31 g/t Au and 1.20 g/t Ag over 32.3m at 551.7m (or 0.15 oz/t Au and 0.04 oz/t Ag over 106 ft.), including 8.55 g/t Au and 2.41 g/t Ag over 7.6m ( or 0.25 oz/t Au and 0.07 oz/t Ag over 25.0 ft.)
- PG14-18: 5.56 g/t Au and 11.93 g/t Ag over 6.0m (or 0.16 oz/t Au and 0.35 oz/t Ag over 19.8 ft.) at 571.1m. This hole was drilled to complete the core tail of a pre-collared hole drilled in 2014
Nevada Exploration Manager Chad Peters commented:
“The 2016 exploration program continues to exceed expectations with PG16-16 further closing the gap with the Helen Zone to the northwest.
"We currently have four rigs mobilized at McCoy-Cove with the remainder of 2016 focusing on select Helen and CSD Gap infill and expansion drilling to support the upcoming Q1 2017 resource estimate.”
The McCoy-Cove Property is located along the prolific Battle Mountain-Eureka Trend that is host to numerous multimillion-ounce producing and past-producing mines.
The property includes the historic McCoy and Cove open pits and underground operations, which produced a combined 3.3 million ounces of gold and 110 million ounces of silver between 1986 and 2003.
Premier currently trades near 52-week lows and may warrant a closer look if weakness persists.
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AuRico Metals Inc. (TSX: AMI)(OTC: ARCTF)
On November 8, 2016 AuRico Metals reported assays from the 2016 exploration program on the Kemess Property.
The headline number was 628 meters of 0.53g/t Au and 0.41% Cu.
Highlights from the release:
- KH-16-13 intersected 628 meters of 0.53 g/t Au and 0.41% Cu, including 270 meters of 0.69 g/t Au and 0.48% Cu
- KH-16-12 intersected 549 meters of 0.55 g/t Au and 0.41% Cu, including 403 meters of 0.68 g/t Au and 0.47% Cu
- KH-16-9 intersected 504 meters of 0.52 g/t Au and 0.36% Cu, including 323 meters of 0.61 g/t Au and 0.37% Cu
- KH-16-11 intersected 372 meters of 0.59 g/t Au and 0.40% Cu, including 283 meters of 0.72 g/t Au and 0.45% Cu
Chris Richter, President and CEO of AuRico Metals, stated;
"This summer's Kemess East drilling successfully achieved our objectives, particularly with regards to intersecting significant higher grade intervals in and around our Kemess East deposit but falling outside of the existing resource. We look forward to incorporating these results into an updated Kemess East resource which we plan to release in the first quarter of 2017.”
The current Kemess East resource estimate (see press release dated March 23, 2016 and Technical Report dated May 6, 2016) includes a high-grade core estimated to contain Indicated Resources of 19.2 million tonnes grading 0.47% Cu and 0.72 g/t Au as well as Inferred Resources of 31.7 million tonnes grading 0.45% Cu and 0.63 g/t Au.
The Kemess Property is located in north-central British Columbia, Canada, approximately 430 kilometers northwest of Prince George.
The Kemess Underground Project is located approximately six kilometers north of the past producing Kemess South open pit mine that operated from 1998 to 2011 and produced 3 million ounces of gold and 749 million pounds of copper.
A Feasibility Study on the Kemess Underground Project was released on March 23, 2016 and proposes an underground panel caving operation with average annual production of 238,000 gold-equivalent ounces (129,000 ounces of gold and 52 million pounds of copper) for the first five years of a 12 year mine life.
AuRico Metals' Environmental Assessment Application was formally accepted by Provincial and Federal regulatory bodies on April 25, 2016 and it is anticipated that the regulators will submit their recommendations to their respective Ministers early in 2017. The Ministers' decisions are expected in February 2017.
Aton Resources (TSX-V: AAN)(OTC: ANLBF)
A good week for Aton Resources. On November 7, 2016 Aton resources announced it has signed a term sheet with Sprott Private Wealth LP and one of its affiliates, as part of a $3.0 million non-brokered private placement.
The net proceeds from the offering will be used to fund continued exploration and development activities at Aton’s 100%-owned Abu Marawat concession, located in Egypt.
Terms from the release:
- 46,200,000 units at a price of $0.065 per Unit (C$ 3,003,000).
- The Offering may be increased up to a total of 53,130,000 Units (C$ 3,453,450), at the Corporation’s election.
In addition there’s a full warrant. Dilution be damned, the company can keep drilling.
Just three days later on November 10, 2016 the company announced results for 13 drill holes from the recently completed 38-hole diamond drill campaign, totaling 3,428 meters, at Hamama West.
Hamama West is one of three zones that comprise the Hamama project, situated within Aton’s 100%-owned Abu Marawat concession, located in Egypt.
Highlights from the release include:
- Drill hole AHA-079 encountered 32.60m @ 1.49g/t gold (Au) and 126.9g/t silver (Ag), from 0.70 to 33.30 meters, or 32.60m of 3.31 g/t gold equivalent (AuEq).
This drill hole confirms the continuity of oxide mineralization previously intersected in drill holes AHA-015 (39.0m @ 2.22g/t Au and 102g/t Ag) and AHA-016 (27.5m @ 0.69g/t Au and 26.0g/t Ag),
- Drill hole AHA-085 encountered 18.25m @ 0.78g/t Au and 21.2g/t silver Ag from 0.00 to 18.25 meters, and drill hole AHA-074 encountered 18.23m @ 0.52g/t Au and 12.0g/t Ag from 0.10 to 18.33 meters.
These holes continue to demonstrate the presence of gold mineralization at surface in the gold oxide cap.
- Drill hole AHA-087 encountered 35.00m @ 1.20g/t Au and 20.7g/t Ag, from 0.00 to 35.00 meters, or 35.00m of 1.50 g/t AuEq.
This drill hole confirms the continuity of oxide mineralization previously intersected in drill hole AHA-013 (13.4m @ 1.00g/t Au and 29.9g/t Ag), see news release dated November 20, 2012.
“Most of these drill holes were planned to test the shallow oxide gold cap at Hamama West and holes 79 and 87 returned excellent results,” stated Mark Campbell, Chief Executive Officer of Aton. “Hole 79 returned 32.60 metres of 3.31 g/t gold equivalent, from surface, and hole 87 returned 35 metres of 1.50 g/t gold equivalent from surface. These results demonstrate the potential for an open-pit, heap-leach scenario at Hamama West.
The upcoming NI 43-101 report on Hamama West will help shed further light on this scenario and on Hamama’s overall potential.”
The Hamama project is located at the western end of the 40km-long gold trend at the Abu Marawat concession and is comprised of three zones, Hamama West, Hamama Central, and Hamama East.
The mineralized horizon at Hamama has a strike length of approximately 3km and remains open to the west and the east. Mapping indicates that the horizon may extend another 3.2kms to the east, which would more than double Hamama’s current strike length.
The project has great exploration potential, near-term catalysts, and with enough due diligence I may be able to justify a speculation in Egypt.
But 46.2 million shares with a full warrant at $0.065 is a lot of dilution for a company with a market cap under C$8 million.
Gold’s going lower and then higher. Buy low, sell high. Same applies to the juniors.
To your wealth,
For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Resource Stock Digest Premium, and Resource Stock Digest Trader. For more about Gerardo, check out his editor page.