Erik Wetterling - The Hedgeless Horseman – Thu 11 Jun, 2020

Comments on the US market selloff and recent Novo news

Erik Wetterling joins me today to share his thoughts on the big move down in the US markets today and the land acquisition news out of Novo Resources. When it comes to the markets Erik shares why he thinks this selloff is warranted. In terms of Novo we address the news and also look ahead to what he thinks could drive the stock int he near term.

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Comments:
  1. On June 11, 2020 at 11:09 am,
    The Hedgeless Horseman says:

    A recent article I did on Novo FWIW:

    Novo: The “Egina” in The West
    https://www.thehedgelesshorseman.com/novo-resources/novo-the-egina-in-the-west/

    All the best,
    Erik

  2. On June 11, 2020 at 12:04 pm,
    David says:

    Great article Erik…again. I was just reading some great comments from B. Moriarty about your writings about Novo and other stocks. I am an owner.
    (Not to take away fro this article, but Dolly Varden just hit for 30% down. ES just closed a private placement. Might be a false drop as no news driving it. Could be the US market. I added…???)

    • On June 11, 2020 at 12:05 pm,
      David says:

      20% drop….not 30…yet

      • On June 11, 2020 at 3:13 pm,
        Excelsior says:

        Most of the mining companies and the general markets got clobbered today, and in particular the Silver miners. Eric Sprott increasing his position is only a positive for DV.

        Eric Sprott Announces Holdings in (DV) (DOLLF) Dolly Varden Silver Corporation

        by @newsfile on 11 Jun 2020

        https://ceo.ca/@newsfile/eric-sprott-announces-holdings-in-dolly-varden-silver-e53c8

        • On June 11, 2020 at 4:21 pm,
          Excelsior says:

          Other news in the Silver space today:

          (AG) (FR) First Majestic to buy silver stream on (FF) (FFMGF) First Mining’s Springpole project
          Jun. 11, 2020

          https://seekingalpha.com/news/3582226-first-majestic-to-buy-silver-stream-on-first-minings-springpole-project

          • On June 11, 2020 at 5:15 pm,
            Excelsior says:

            That’s a bit incestuous to have First Majestic financially bailing out First Mining, and shoots a hole in Keith N.’s “One Country, One Metal” tag-line, but I guess he needed to help out his smaller venture with the larger one.

            I don’t currently have a position in First Majestic but I have been a regular shareholder for the last 4 years most of the time, and this move seems unusual and I wonder if that is really the best use of First Majestic’s cash reserves at this point. It may turn out to be brilliant if Springpole does get developed into a mine, but this royalty stream will be a factor any suitor for Springpole will have to discount for as it eats into the margins.

            I wonder if other mining companies are going to start doing more financing of developers in exchange for NSRs to get in on the royalty game?

        • On June 11, 2020 at 5:16 pm,
          Excelsior says:

          (SVM) Silvercorp gives up bid for (GUY) Guyana Goldfields
          Jun. 11, 2020

          https://seekingalpha.com/news/3582200-silvercorp-gives-up-bid-for-guyana-goldfields

          • On June 11, 2020 at 5:38 pm,
            Excelsior says:

            In a way this is a relief. I was fine with the initial bid from Silvercorp for Guyana, but didn’t like when they upped their stakes on the 2nd bid to outbid Gran Colombia Gold, and was worried they would do it a 3rd time now that this “foreign-based multinational mining company” raised the stakes once again.

            I’d rather see Silvercorp go after a distressed Silver producer or developer in Mexico, Canada, or Australia, or to take over New Pacific Metals since they already have a 29% stake in it in Bolivia.

            Having said that, if they found another distressed Gold producer that would have good economics, and they have the cashflow and experience to turn it around, then as long as it is an accretive Precious Metals transaction then it’s worth grabbing. I’d just prefer to see them aligned with Silver to keep that leverage as the underlying metal still has so much room to run higher.

          • On June 11, 2020 at 5:54 pm,
            David says:

            Silvercorp ought to buy Silvercrest. Sounds like a strong silver play.

          • On June 11, 2020 at 6:11 pm,
            Excelsior says:

            I also like that (SVM) Silvercorp is going to make an easy $9 Million for Guyana breaking their agreement. Value creation for spotting the deal first.

            “Silvercorp says it expects to receive a C$9M termination fee if Guyana accepts the offer.”

            https://seekingalpha.com/news/3582200-silvercorp-gives-up-bid-for-guyana-goldfields

          • On June 12, 2020 at 2:32 am,
            Excelsior says:

            As for (SIL) (SILV) Silvercrest, they are a top quality silver development project, but they are already valued appropriately at $1.44 Billion and they are not distressed like (GUY) Guyana Goldfields was in April when (SVM) Silvercorp (valued at $1.1 Billion) made their initial offer.

            So for Silvercorp to go after Silvercrest would have to be a merger of equals, which would be much different than their target of acquiring a bolt-on long life distressed producer like Guyana Goldfields. It would be better for Silvercorp to scout out another distressed producer to scoop up and bolt-on to their operations, which would be much more of a win for SVM shareholders, than a merger of equals in market cap.

            Also, (SSRM) SSR Mining has been assisting (SILV) Silvercrest with their financings for years and (SSRM) is valued at double what (SILV) is, so they are the most likely suitor. Obviously, their hands are full with their merger of equals with (ASR) Alacer at present; but I think it would have made far more sense and have been more warmly received for SSRM to have done that same merger with SILV instead of this merger with ASR.

          • On June 12, 2020 at 2:37 am,
            Excelsior says:

            Besides the $9 Million payment that (SVM) will receive from (GUY) for them to break their contract, it should also be noted that Silvercorp holds around 10% of the shares of Guyana Goldfields, and will still make out like bandits on the re-rating higher of these shares for this new “foreign-based multinational mining company” as they take over (GUY). So either way, (SVM) wins.

            This was summed up well over at ceo.ca by a contributor @Tony4ever:
            ___________________________________________

            @Tony4ever – “$SVM holds about 16.5 M shares of $GUY. After it decided to walk away, I do not know if it will hold the 16.5 M shares. If it does, I suppose it will vote for the bidding of C$1.85/share. Assuming the acquisition will be completed, $SVM will make at least US$12M capital gains.”

          • On June 12, 2020 at 4:47 am,
            Excelsior says:

            Zijin Mining to Acquire Guyana Goldfields Inc. in an All-Cash Offer for $323 million
            by @newswire on 12 Jun 2020

            Alan Pangbourne, President and CEO of Guyana Goldfields, stated:

            “The all-cash offer from Zijin represents a significant premium to the amended Silvercorp offer price and is an excellent outcome for Guyana Goldfield’s shareholders. Zijin is a highly regarded mining company with an impressive track record of successful international acquisitions and operations. We look forward to working with Zijin over the coming weeks to close this transaction and transition to the new team.”

            https://ceo.ca/@newswire/zijin-mining-to-acquire-guyana-goldfields-inc-in-an

        • On June 11, 2020 at 5:49 pm,
          David says:

          I added DV as I couldn’t pass up the 20% drop. I was looking at my screen and all silver stocks of note took a hit at the same time the general markets did their end of day tank…about an hour left. I went through the morning news and saw ES had added and couldn’t find anything but algos to blame. Sounded like a buy.
          I decided it was musical chairs day and added To Discovery, White Gold, Minera Alamos (mediocre drill results), Banyant, Freegold and a little Ely. I wish we wouldn’t have corrections as it makes me rearrange. However, with no fees, I guess it is the same stuff, in another place.

          • On June 11, 2020 at 5:59 pm,
            David says:

            Banyan Gold

          • On June 11, 2020 at 7:11 pm,
            buzz says:

            When I saw the route wasn’t going to bounce, sold a bunch of Dolly at .39, bought even more back end of session at .32

          • On June 11, 2020 at 8:19 pm,
            David says:

            Buzz:
            I wasn’t thinking about it until it was 18% down which was more than most others. You had the better play, but first I was checking for news to see if I was missing something. Once I was comfortable it was a little excessive compared to others, I got some. Not sure I could have projected the drop. Good buy. I always like more shares.

          • On June 12, 2020 at 2:59 am,
            Excelsior says:

            I have a large weighting in (DV)Dolly Varden and was buying at much lower prices than where things pulled back today, and simply held onto them, but didn’t add or sell any based on one day’s move.

            DV was only down 12.5% on the day, which was definitely in line with many other Silver stocks on the day. For example, I was buying more CDE Coeur and AXU Alexco today which were both also down over 12%, and replacing what I trimmed in (AUN) Aurcana down about 10% on the day.

            Look at ASM Avino that was down 18%, or AUMN Golden Minerals down 14.4%, or Hecla down 11% on Thursday. It was rough across the board in the Silver stocks, so again, I don’t attribute anything significant to Dolly Varden’s move at all.

            ____________________________________________

            Silver Producers that had big pullbacks on (06/11/2020)

            ASM Avino Silver & Gold Mines Ltd. 0.5850 -0.1310 -18.30%
            CDE Coeur Mining, Inc. 4.9500 -0.6900 -12.23%
            IPT.V IMPACT Silver Corp. 0.6300 -0.0800 -11.27%
            HL Hecla Mining Company 3.0600 -0.3800 -11.05%
            EXN.TO Excellon Resources Inc. 0.7400 -0.0900 -10.84%
            MYA.TO Maya Gold and Silver Inc. 1.9700 -0.2300 -10.45%
            AG First Majestic Silver Corp. 9.31 -1.06 -10.22%
            USAS Americas Gold and Silver Corporation 2.2800 -0.2500 -9.88%
            PAAS Pan American Silver Corp. 25.89 -2.80 -9.76%
            GPL Great Panther Mining Limited 0.4298 -0.0432 -9.13%
            EXK Endeavour Silver Corp. 1.9300 -0.1800 -8.53%
            FSM Fortuna Silver Mines Inc. 4.3900 -0.4000 -8.35%

            >> Silver Developers & Explorers

            VGLD.V Vangold Mining Corp. 0.1150 -0.0200 -14.81%
            AUMN Golden Minerals Company 0.3380 -0.0571 -14.45%
            ELEF.TO Silver Elephant Mining Corp. 0.2400 -0.0400 -14.29%
            SSV.V Southern Silver Exploration Corp. 0.1800 -0.0300 -14.29%
            BCK.V Blind Creek Resources Ltd. 0.0350 -0.0050 -12.50%
            KS.V Klondike Silver Corp. 0.0350 -0.0050 -12.50%
            DV.V Dolly Varden Silver Corporation 0.4550 -0.0650 -12.50%
            SVE.V Silver One Resources Inc. 0.4300 -0.0600 -12.24%
            BCM.V Bear Creek Mining Corporation 2.3300 -0.3200 -12.08%
            AXU Alexco Resource Corp. 1.9700 -0.2700 -12.05%
            AZS.AX Azure Minerals Limited 0.0740 -0.0090 -10.84%
            VIPR.V Silver Viper Minerals Corp. 0.3900 -0.0450 -10.34%
            AAG.V Aftermath Silver Ltd. 0.3100 -0.0350 -10.14%
            SIL.TO SilverCrest Metals Inc. 11.30 -1.23 -9.82%
            AUN.V Aurcana Corporation 0.5700 -0.0600 -9.52%

          • On June 12, 2020 at 3:06 am,
            Excelsior says:

            Impact and Excellon were both down 11%, Southern Silver down 14%, Bear Creek down 12%.

            Overall a brutal day in the Silver stocks, but I added to 3 of them (Coeur, Alexco, and Aurcana) as mentioned above, and considered adding to more positions, but want to see if this move down in the general equities and another sell everything event has any legs.

            If these miners continue selling off like this then DV Dolly Varden is one I’d definitely be adding more to.

          • On June 12, 2020 at 4:53 am,
            David says:

            Dolly. We are talking US v Canada. I am showing Dolly closed on 10th @ .388. At point it was 20% down it was around .31 US. By the time I got through checking news, I bought around -16% and it ended day on my printout -14.11%. It definitely hit -20% about an hour out, but may have been a US thing. (Schwab)

          • On June 12, 2020 at 5:04 am,
            David says:

            Dolly: checking google this morning it shows a close of .35 which Schwab didn’t at close. Must be after hours. Anyway it hit .31 on the Google site this AM. Time and space and markets.

          • On June 12, 2020 at 5:29 am,
            David says:

            Google showing .31 low this morning in reference to yesterday’s performance. Currently .352 or .35.

          • On June 12, 2020 at 6:04 am,
            Excelsior says:

            Oh yes, that makes more sense then, as the OTC listings can have more wild intraday swings than the primary tickers on the main exchanges.

            Yes I was talking about the main ticker for Dolly Varden (DV) which closed at $.4550 down 12.5% yesterday.

            As for the OTC (DOLLF) I show on Yahoo finance it closed down 9.5% at $.3520

            Yeah during the trading session many of the Silver miners were down more mid-day than where they closed at, and there were some good deals to be scalped in that process.

    • On June 11, 2020 at 6:03 pm,
      The Hedgeless Horseman says:

      David:

      Thanks! :).

      Yes, silvers sure are hot as hell hehe. I’m still too stubborn to pick up silvers since I dont think many are cheap really but oh boy what a ride they can give!

      • On June 11, 2020 at 6:19 pm,
        David says:

        You may be right on silver but it may not matter with your gold picks. I had a good run up with silver in 2016, so I am counting on them again. But, no guarantees in this market or world.

        • On June 12, 2020 at 3:09 am,
          Excelsior says:

          I agree with you David, and the Silver miners have had more torque than the Gold miners in their move up since March as well, and the Silvers will out perform the Golds once again in the moves to come.

          I’m not sure what it will take to get our stubborn friend the Hedgeless Horseman to realize this, as he still thinks they are expensive relative to gold stocks, but I feel just the opposite and that many of the gold stocks have already rerated over the last 2-3 years, and that the Silver miners have so much higher to climb on a percentage basis.

          Cheers you guys! 🙂

          • On June 12, 2020 at 3:13 am,
            Excelsior says:

            As noted above most of the Silver stocks were not hot as hell today, with many key stocks having a 10%-15% Clearance Sale on the day.

            Get them while they’re not hot… (lol)

      • On June 12, 2020 at 4:29 am,
        Excelsior says:

        Silver Tops Gold in May, Setting up a Summer Surge

        McAlinden Research for Streetwise Reports (6/10/20)

        “Silver and silver miners popped in May on the back of a rebound in industrial activity around the world. Ultra-low interest rates and expectations of a weaker dollar have compounded several political pressures that begun popping up at the end of the month. Though the gold to silver ratio has tightened a bit, it remains elevated and could indicate more upside for silver.”

        “Silver futures capped a gain of nearly 24% for the month of May, the largest monthly gain since 2011. ”

        https://www.streetwisereports.com/article/2020/06/10/silver-tops-gold-in-may-setting-up-a-summer-surge.html

  3. On June 11, 2020 at 12:20 pm,
    bonzo barzini says:

    Hi Erik, fortunately I sold 1/2 my NGD at the opening today and got 1.50. Now it is 1.37
    So now I have some cash to buy more Novo or White Gold. Do you own White Gold?
    How would you rate it vs. Novo? Danke.

    • On June 11, 2020 at 12:39 pm,
      The Hedgeless Horseman says:

      Hey Bonzo,

      I own a bit of WGO and the company recently became a banner sponsor of my site (thus I am biased). I think WGO is one of the cheaper companies out there when accounting for jurisdtiction, meat on the bones already (gold in the ground) and exploration potential (400,000 Ha). Kinross, Agnico and Sprott recently injected more money so it is a real and serious player. The downside would be the shorter field season compaired to some other jurisdictions. It will get better when the Yukon Gov are finished with the infrastructure efforts, but it is not done yet. All in all I think it’s a tier 1/2 stock when combining the people, margin of safety and exploration potential but Novo is the only stock I consider to be tier 0… Which means if I had to chose I would take Novo over any other stock I am aware of. With that said, no one should be all in on one stock and I think WGO is one of the better options out there in terms of quality. I don’t know if I answered your question that well but I am not comfortable giving “investmen advice” if you know what I mean.

      All the best,
      Erik

  4. On June 11, 2020 at 2:01 pm,
    bonzo says:

    Thanks, Erik. Glad to hear that Novo is your favorite. Lion One and Irving are good too.
    Did you see that Miramont is going to merge with a Peruvian silver company? What’s that all about?

    • On June 11, 2020 at 6:04 pm,
      The Hedgeless Horseman says:

      bonzo:

      I like em all! Yeah, that was a kinda left field NR. I thought we were gonna get a grass root gold exploration play. Not a near production silver play :P. I have done some crude calcs and if management is correct with their expectations for Kuya then MONT holders could get a really wild ride higher after the trading halt (assuming deal goes through)

    • On June 12, 2020 at 6:24 am,
      Excelsior says:

      (LIO) (LOMLF) Lion One Commences Drilling at Navilawa Tuvatu, Fiji

      June 11th, 2020

      https://liononemetals.com/2020/06/lion-one-commences-drilling-at-navilawa-tuvatu-fiji/

  5. On June 12, 2020 at 5:48 am,
    Excelsior says:

    (MAI) (MAIFF) Minera Alamos Update on Santana – 🎵 Oh So Smooth 🎵

    June 10, 2020 by EconomicAlpha

    https://economicalpha.blog/2020/06/10/minera-alamos-update-on-santana-%f0%9f%8e%b5-oh-so-smooth-%f0%9f%8e%b5/

  6. On June 12, 2020 at 8:03 am,
    David says:

    Walking back metals. Hope the afternoon is different then the same old thing. What they fail to realize is I don’t want to buy an airline or a Wall Street bank.

  7. On June 12, 2020 at 8:42 am,
    David says:

    Things I heard on CNBC this morning. Buy Apple and Facebook. Mnunchen said he is not going to provide information as to which corporations received $500 billion or more of tax payer money. I guess he his looking after our welfare…or stealing.