Setting Up A Historic Gold Market

Written by Gerardo Del Real
Posted November 7, 2016

As the election nears, the precious metals market has reacted to the uncertainty by registering its fourth consecutive weekly gain, trading just above $1,300.

The 2% gain came despite a jobs report that supports a rate increase in December. The U.S. added 161,000 new jobs in October, and the unemployment rate fell to 4.9% from 5%.

Silver was flat on Friday but added 3.7% for the week. Copper was also flat on Friday but also put in a robust gain, adding 2.6% for the week and closing in the $2.25/lb. range.

Platinum and palladium added 1.1% and 1.3% each, closing at $1,005 an ounce and $624 an ounce respectively.

Oil, meanwhile, lost nearly 10% this week as the dysfunction between Saudi Arabia and Iran coupled with higher inventories last week pressured the market.

I expect tax loss/gain selling as we close out the year, which should provide an opportunity to add to the best names at attractive entry points.

I also expect gold to pull back a bit more after the election dust settles. It’ll give everyone an opportunity to get ready for 2017.

A year which I expect to be the next leg up in what will end up being a historic gold bull market.

The Week in Juniors

IDM Mining (TSX-V: IDM)(OTC: RVRCF)

On November 1, 2016 IDM Mining announced assays from 10 underground core holes completed at the Red Mountain gold project.

Highlights from the recent underground drill results (capped) include:

  • U16-1194: 23.13 meters true width at 5.81 g/t Au and 16.11 g/t Ag; AV zone infill and metallurgical hole
  • U16-1200: 7.44 meters true width at 12.18 g/t Au and 19.04 g/t Ag; JW zone infill
  • U16-1202: 17.81 meters true width at 6.45 g/t Au and 60.70 g/t Ag; JW zone infill and metallurgical hole
  • U16-1204: 15.43 meters true width at 10.97 g/t Au and 9.18 g/t Ag; Marc Zone infill and metallurgical hole
  • U16-1205: 8.00 meters true width at 20.29 g/t Au and 68.74 g/t Ag; Marc Zone infill and metallurgical hole

"These results confirm the substantial widths and robust grades at Red Mountain," said Robert McLeod, President and CEO of IDM Mining. "Our underground drill crews at Red Mountain are currently wrapping up the final resource expansion holes from the 2016 program, with additional assay results to be announced through the remainder of the year, including surface drilling from Lost Valley, 141 and Brad Zones.”

IDM Mining should have plenty of news flow the rest of the year.

The 17,125 hectare Red Mountain gold project is located in northwestern BC, 15 km northeast of the town of Stewart. The project hosts 441k ounces of gold and 1.379 ounces of silver in the Measured and Indicated categories.

IDM is advancing a feasibility study for a high-grade underground gold mine, which envisions primarily bulk underground mining methods.

Good group of people doing good work. It’ll be interesting to watch Red Mountain develop.

Klondike Gold (TSX-V: KG)(OTC: KDKGF)(FRA: LBDP)

On November 10, 2016 Klondike Gold announced assays for the first two drill holes testing the Lone Star target within the company’s Klondike District project located near Dawson City, Yukon Territory.

Below are highlights from the release:

  • The first hole at Lone Star, LS16-58, intersected a broad zone of disseminated gold mineralization with two quartz vein arrays which assayed 2.4 g/t Au over 37.0 meters including 6.6 g/t Au over 7.05 meters and 9.4 g/t Au over 3.6 meters respectively.
  • The second hole at Lone Star, LS16-59, drilled 40 meters along strike to the east, intersected a broad zone of disseminated gold mineralization which assayed 1.2 g/t Au over 27.7 meters including 2.3 g/t Au over 7.3 meters.
  • Gold at the Lone Star target is interpreted to be associated with a structurally significant thrust fault and documented to occur as locally visible disseminations within altered host rock and as visible gold-bearing quartz vein arrays.
  • Visible gold has been observed in twelve of the seventeen holes drilled across the entirety of the 700 meters tested.
  • Assay results for fifteen holes at the Lone Star target are pending.

The objective of the 2016 Lone Star target drill program is to systematically test an interpretation of geology and continuity of mineralization that, if successful, would upgrade the potential for economically interesting gold mineralization both at Lone Star and throughout the company’s 527 square kilometer Klondike District project.

Mineralization for the two holes starts at 6.5 meters and 16.5 meters respectively.

Otis Gold (TSX-V: OOO)(OTC: OGLDF)

On October 31, 2016, Otis Gold announced results from its Kilgore Gold Project drill program in Clark County, Idaho.

The headline numbers were 30.5 meters grading 5.37 g/t Au in hole 16 OKR-315 and 114.3m grading 1.00 g/t Au in hole 16 OKR-327.

Craig Lindsay, Otis President and CEO states:

"We are extremely encouraged by the assay results in hole 16 OKR-315. The grades are greater than that achieved at the Crab Claw in 2015, and continue to support the potential to increase the grade and size of the Kilgore Deposit at depth. Just as importantly, the majority of the other drill holes reported in this release are located in the target Aspen Formation beneath the existing deposit, and the majority of the drill holes report grades higher than the current resource grade of both the Indicated and Inferred mineralization contained in our current Kilgore NI 43-101 Resource Estimate.”

The drill program is coming to an end for the year. It was a busy year for Otis with the expanded drill program, the doubling of its land package, and an updated 43-101 report.

I’m not crazy about the share structure but have been impressed by several non-dilutive financings and the exploration potential. Especially in light of the recent land acquisition which increased the land position by 116%.

Nemaska Lithium (TSX: NMX)(OTC: NMKEF)

On the lithium front, Nemaska Lithium announced on October 31, 2016 that it had entered into an agreement with FMC Corporation pursuant to which Nemaska Lithium will provide FMC with 8,000t per year of lithium carbonate beginning in mid-2018.

This is the second multi-year supply agreement for Nemaska Lithium, the first being with Johnson Matthey Battery Materials.

From the release:

"With the signing of this second multi-year agreement, we have total purchase commitments for close to 50% of the Corporation's total planned production starting in mid-2018," commented Guy Bourassa, President and CEO of Nemaska Lithium. "FMC is looking to diversify its supply sources of high quality lithium products and our proprietary process enables Nemaska Lithium to produce low cost lithium carbonate that meets FMC's quality specifications. Our customers, including FMC, will begin receiving lithium samples from our Phase 1 Plant in 2017.

Nemaska Lithium is building a commercial Hydromet lithium plant (the "Hydromet Plant") with a name plate production capacity of 28,000t of lithium carbonate equivalent (LCE). When constructed, the Hydromet Plant will produce battery grade lithium hydroxide and lithium carbonate.

Bourassa continued," Our production line is flexible and cost effective, allowing us to be opportunistic and address a broader lithium salts market by producing both battery grade lithium hydroxide and lithium carbonate. I believe in the long term the lithium battery market will continue to move toward lithium hydroxide chemistries and we are very well positioned in this space.”

There will only be a handful of successful companies that actually provide new sources of lithium to the growing market. The Resource Stock Digest Premium portfolio now has two companies that I believe have important differentiators that will set them apart from the pack in the mid-long term.

Lastly, a big congratulations to my Chicago Cubs. I’ve been a Cubs fan since I was six years old when my family moved to Chicago. It’s been challenging. But this year’s team has allowed me to type words I never thought I would get to type.

The Chicago Cubs won the World Series!

cubs win

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.

*Follow Outsider Club on Facebook and Twitter.

Comments

Investing in Marijuana Without Getting Burned

NOIC_conf2017_350X350_white_bkgrnd