Pay Attention to This Gold & Copper Play (Ticker Included)

Written by Gerardo Del Real
Posted August 28, 2017 at 7:33PM

Back on April 24, 2017 I wrote that although exploration budgets are rising, we had yet to see the type of discoveries that set off a rush of capital back into the resource space.

I outlined that only 12 tier-one projects (deposits with a net present value of over $1 billion) were uncovered in the past decade compared to an average of two to three a year since 1950, according to MinEx.

MinEx also reported that the average cost of finding a significant mineral deposit has tripled in the last 10 years to about $238 million.

The last few months have seen multiple discoveries that have the potential to be developed at a time when the underlying commodity enters a bull market.

Throughout the year I’ve made the case that copper was entering a new bull market and highlighted the drivers that would translate into higher prices.

Shrinking supplies, geopolitical uncertainty, a weaker dollar, and solid global economic growth have pushed copper to prices not seen in years, leading copper to breach the $3.00/lb. level.

Copper has hit a sweet spot where better-than-expected demand from China and supply disruptions have materialized simultaneously, boosting the velocity of the rally.

While I believe copper has strong fundamentals in the mid-long term it wouldn’t surprise me to see a slight pullback in the near term — much like zinc earlier in the year — before a resumption of higher prices.

Regardless of the near-term price direction there are two companies that I anticipate will have exploration success that will coincide with a bull market in copper.

The combination of a higher copper price and copper exploration success by companies with solid share structures will lead to much higher share prices.

As we come out of the summer doldrums and liquidity picks back up, there is one company which deserves your attention now before the rest of the herd catches on.

Almadex Minerals (TSX-V: AMZ)(OTC: AXDDF)

On August 15, 2017 Almadex announced its best hole yet at the El Cobre project in Veracruz, Mexico.

The project benefits from excellent infrastructure and a neighbor — the Caballo Blanco project, which Morgan Poliquin discovered before selling it, but not before retaining an NSR for Almadex — which is going through the permitting process and recently attracted the attention of Agnico Eagle.

I’ve written about Almadex before and had mentioned that this summer’s drilling program was one every investor should be watching.

A few months later Almadex released the best hole to date at El Cobre.

Hole EC-17-029 returned 534.9 meters of 0.90 g/t gold and 0.30% copper.

almadex el cobre

J. Duane Poliquin, chairman of Almadex, commented,

"Since the Norte Zone discovery we have been carrying out a systematic drill campaign to define this target. To date the program has been based on large step-outs which have yet to define the limits of mineralisation. Future Norte drilling will also focus on defining the high grade zone that is emerging from the drilling results. Continuous mineralization in hole 29 starting close to surface and continuing for over half a kilometer shows the Norte Zone is developing significant tonnage as well as good grades. Elsewhere on the project first pass Encinal Zone drilling is complete and while we await assays from this work a drill is now being moved to the newly discovered Raya Tembrillo target within the large Villa Rica zone for the very first drill hole there.”

I expect the El Norte Zone to continue to grow. Skeptics of the project who argued against the grade or size of the El Norte zone will be buying in at higher prices.

Drilling has started at the Raya Tembrillo zone while a rig keeps turning at El Norte. Despite the recent run-up, shares are still cheap.

I had an opportunity to speak with CEO Morgan Poliquin about the excellent results and what to expect.

I expect the company is considering isolating the El Cobre project as a standalone entity and spinning out the remainder of the portfolio into another company. Stay tuned.

Copper has broken out and gold will follow suit soon. I’ll spare you my now familiar rant about how I think gold and silver have one last leg down before the real breakout.

Whether I’m right or wrong about my precious metals forecast the one thing I’ll continue to be right about is that Almadex will keep delivering at El Cobre.

It’s well cashed up, it has a great share structure, it owns its own drills, and has one of the best geologists in the business. There are two drills turning, one at the Norte Zone and one at a new target — Raya Tembrillo — that has never been drilled but has high-grade outcrop several kilometers away.

The Norte Zone will grow and the potential for new discoveries is high.

I don’t believe the market cap of C$57 million will last.

Almadex also owns several royalties and joint ventures on other highly prospective projects.

One will see drilling soon and also has a high probability of early success.

Subscribe to Resource Stock Digest Premium for another one of my favorite copper plays and one that I believe has the potential to increase its market cap many times over in the coming months.

To your wealth,

gerardo-sig

Gerardo Del Real
Editor, Junior Mining Monthly and Junior Mining Trader.

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, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.

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