GDX holding it’s breakout and we saw an M&A transaction in the sector
Dave Erfle is with us today for a look at the precious metals sector and the stocks. There are a lot of very encouraging things going on with metals stocks, one of the best being GDX holding it’s breakout.
In terms of M&A, Silvercorp is buying Guyana Goldfields for $75million. This is about a 60% premium on the current share price however does not benefit any long term shareholders. We comment on this transaction.
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The Guyana Goldfields acquisition was just taking out a dead man walking. I was a shareholder from about 2013 or so and had a multi-bagger in the 2016 rally….made some trading profit, but stupidly never trimmed my core position…Then it came out that their resource model was incorrect and shares totally bombed…and rightfully so. Sold at a loss …though above the current takeout price. Hard learned lesson.
I applied that to Pretium Resources…this time when they reported inconsistencies in their model…I sold all shares and took my profit in fall 2019. It proved to be a good choice.
Overall, (SVM) Silvercorp scooped up (GUY) Guyana Goldfields on the cheap and put them out of their misery. I have far more confidence in the operations team at Silvercorp as a longer time shareholder, and I’m curious to see what SVM does with GUY’s assets.
Just a month or two back I mentioned (SVM) Silvercorp was all cashed up from all the free cash flows with the best margins of any Silver producer on the planet. My speculation was that they’d takeover (NUAG) New Pacific metals, because they have a 29% stake in it already.
However, they surprised many by going after the distressed gold producer (GUY) Guyana Goldfields instead. I did think GUY was a reasonable takeover target, because it needed a bigger producer to bail them out, but I was actually expecting another gold producer to do it, not a silver producer.
However, as has been the trend with many Silver producers these days (like Americas Gold & Silver, Coeur, Hecla, First Majestic, SSR Mining, Great Panther, and most recently Excellon), now Silvercorp has become diversified into Gold as well.
(SVM) Silvercorp Metals to Acquire (GUY) Guyana Goldfields Creating a Diversified Precious Metals Producer
April 27, 2020
Junior Gold Speculators Now Face Upside Risk says David Erfle
Apr 28, 2020 – MiningStockEducation.com
“In this interview, professional mining investor David Erfle, the Junior Miner Junky, provides his current commentary on the junior gold sector and how he is managing his personal portfolio. David believes junior gold speculators are now facing upside risk after the GDX broke through the 7-year resistance at the 32 level.”
0:15 Introduction
1:10 Time to go “all-in” on junior gold stocks?
4:23 Trading volume on GDX
5:05 Where to invest in junior gold sector now?
6:14 Will you sell some royalty stocks to invest in explorers soon?
7:54 Thoughts on oil?
9:05 Thoughts on Vista Gold Corp.?
9:51 Avoid Papua New Guinea as a jurisdiction?
10:49 Eric Sprott invests $60M into MAG Silver
11:59 Interested in commodities other than gold now?
12:37 Recent feedback from your subscribers?
13:40 No summer doldrums for gold sector this year?
14:36 Giving a junior mining management team a second chance after a failure?
15:47 Final thoughts
When the mkt wakes up and sees the debt and slow recovery of economy stocks could crash again, lot of leverage out there, and there goes the gold juniors.
I don’t trust juniors follow through. Buying majors and royalties, selling juniors on this pop.