Hour 1 – A Look Ahead To 2020 For Central Banks and Specific Resource Stocks

December 14, 2019
Full First Hour

In what is going to be the busiest week before the end of the year in terms of news we actually saw markets fairly muted throughout it all. Be sure to go back throughout the week and listen to the daily editorials where we dive into everything from the Fed meeting, trade developments, and specific company news.

In this first hour we step away from the day to day market movement and look ahead to 2020 for central bank policies. We also spend a lot of time discussing certain metal stocks and noteworthy news evens for metals investors.

  • Segment 1 – Chris Temple kicks off the show with a look into 2020 for central bank policies. 
  • Segment 2 – David Erlfe, Founder of The Junior Miner Junky looks at some of the major news events for the resource sector over the past couple weeks. There have been some big M&A transactions as well as some significant bought deal financing. 
  • Segment 3 – Jayant Bhandari shares his insights on a coupole stocks that are performing well right now and a couple stocks he thinks are next to move. 
  • Segment 4 – Bob Wares, Executive Chairman of Osisko Metals wraps up the first hour by looking ahead to the big exploration plans for the Company next year. We also discuss the overall base metal sector as it pertains to running a base metals exploration Company.

Segment 2
Segment 3
Segment 4
    Dec 14, 2019 14:50 AM

    Defense Metals Drills 4.01% Light Rare Earth Oxide Over 58 Metres at Wicheeda Rare Earth Element Deposit
    Canada NewsWire

    VANCOUVER, Dec. 12, 2019

    VANCOUVER, Dec. 12, 2019 /CNW/ – Defense Metals Corp. (“Defense Metals”) (DEFN: TSX-V / DFMTF: OTCQB / 35D: FSE) announces assay results for the final two drill holes of the recently completed 2019 resource definition diamond drill program at its 1,708 hectare (4,220 acre) Wicheeda Rare Earth Element (REE) Project located near Prince George, Canada.

    Drill hole WI19-30 (-55o dip / 250o azimuth) was drilled to test the northern extension of the Wicheeda REE Deposit and intersected a broad zone of mineralization returning 2.59% Light Rare Earth Oxide (LREO; being cerium, lanthanum, neodymium, praseodymium, and samarium oxides (Ce2O3+La2O3+Nd2O3+ Pr2O3+Sm2O3) over a drill core interval of 130.8 metres; including an interval assaying 4.43% LREO over a drill core interval of 27 metres 1 (Table 1).

    Drill hole WI19-32 (-55o dip / 300o azimuth) drilled from the same collar as WI19-30 was the final hole of the 2019 resource definition program and northernmost drill hole testing the Wicheeda REE Deposit returned 4.01% LREO over a drill core interval of 58 metres; within a broader zone of mineralization assaying 3.63% LREO over a drill core interval of 75 metres; in addition to an upper mineralized intercept assaying 2.71% LREO over a drill core interval of 28 metres

      Dec 14, 2019 14:17 AM

      What is needed much more than the Light Rare Earths (which are plentiful) are the Heavy Rare Earth elements, but this sector has has had an ever so slight lift in awareness since all the trade wars between the US and China started.

      The companies that have the goods, and already explored and defined deposits are all still out there from the last Rare Earths cycle, so focusing on rare earth exploration at this point seems a bit unnecessary.

      Lynas, Neo Performance Materials, Alkane Resources, Arafura, Leading Edge Minerals, Ucore, Matamec, Medallion, Commerce Resources, Greenland Minerals, Frontier Rare Earths, etc… have PLENTY of Rare Earth resources already found, economic studies done into the complex processing, etc…

      The Rare Earths miners are a very similar market to the Uranium miners in that both have been crushed under the weight of sustained low prices, and there is an argument to be made in both that these are strategic resources that have supply chains with unfriendly countries (China, Kazakhstan, Russia, etc…) that if cut off could threaten energy grids, defense, technology & manufacturing.

      However the world is awash with known Uranium and known Rare Earth deposits and the world doesn’t need more exploration for these resources, it needs higher prices. Until that changes people can drill and spend money all they want, but they won’t be economic to bring them out of the ground.

        Dec 14, 2019 14:21 AM

        U.S. Army Will Fund Rare Earths Plant for Weapons Development

        Ernest Scheyder – December 11, 2019

        “The U.S. Army plans to fund construction of rare earths processing facilities, part of an urgent push by Washington to secure domestic supply of the minerals used to make military weapons and electronics, according to a government document seen by Reuters.”

        “The U.S. rare earths industry needs big help to compete against the Chinese,” said Jim McKenzie, chief executive officer of UCore Rare Metals Inc (UCU.V), which is developing a rare earths project in Alaska. “It’s not just about the money, but also the optics of broad support from Washington.”

        “Responses are due by Dec. 16. UCore, Texas Mineral Resources Corp (TMRC.PK) and a joint venture between Lynas Corp (LYC.AX) and privately-held Blue Line Corp are among the expected respondents, according to company officials and sources familiar with the matter.”

        Dec 14, 2019 14:45 AM

        Saturday Read: (MAI) (MAIFF) Minera Alamos is now fully funded for production at Santana

        December 14, 2019 – Caesars Report

    Dec 14, 2019 14:16 AM
      Dec 14, 2019 14:23 AM


      SprottGlobal – 13 Dec 2019 – by Aditya Pattanaik

      “We may be at an interesting turning point in the business cycle today with historic sovereign debt levels, negative interest rates in many countries, the risk of unfunded pension liabilities, increasingly protectionist economic policies and all-time highs in the general stock market. The economy and markets are operating under rules that are different from those of the past in many ways. There are many differing opinions about what will happen next but when something has not happened in the past, it is impossible to be sure about how it will end up. The charts below should stir up your imagination about where things could go.”

        Dec 15, 2019 15:19 PM

        Here’s some good news that Eric Sprott has a nice position in. I’ve got a small position myself.

        (PGM) (LRTNF) Pure Gold – Publication of Prospectus, Qualifying Shares for Trading on the LSE Related to July and August 2019 Share Issuances

        @nasdaq on 12 Dec 2019

        “Pure Gold Mining Inc. (TSX-V: PGM, LSE: PUR), a Canadian focused gold development company that owns the high-grade Madsen Gold Project in Red Lake, Ontario, is pleased to announce that its Prospectus dated 12 December 2019 has been approved by the UK Listing Authority and was published on 12 December 2019.”

    Dec 14, 2019 14:07 AM

    Thanks Cory, Big Al, and the KE Report contributors for another great week of interviews, daily editorials, and the weekend show. As always, it is appreciated.

    Looking forward to checking out the solid lineup of guests on this weekend show!

      Dec 14, 2019 14:10 AM

      Big Al appreciates your thanks greatly, Excelsior!

        Dec 14, 2019 14:18 AM

        Cheers Big Al! Hope all is going well sir.

          Dec 14, 2019 14:23 AM

          Things have truly become much better for me, Excelsior. For a long time peace was not a part of my life and now it is!

            Dec 14, 2019 14:24 AM

            That is encouraging to hear you arose from the dark night of the soul into a brighter place. Peace be with you my friend.

            Dec 14, 2019 14:19 AM

            And to you, Excelsior. Thank you and God bless!

      Dec 14, 2019 14:03 PM

      Regarding Segment 2: w/ David Erfle – I agree with his general outlook for Gold/Silver pricing, and focusing on PMs over Base Metals in the near-term, however, if there is the seasonal Q1 Run in the metals and miners, it may be prudent to trim some of those moves and store a percentage in the beat up Base Metals miners.

      I’d expect Copper, Zinc, Lead to have a better 2020 than 2019 as the broad commodity complex seems to have bottomed in 2018 and crept a bit higher in 2019 overall, but really the metals haven’t done much (barring Nickel which did truck higher). However the Base Metals miners seem to have really overperformed to the downside. Just look at most of the Copper and Zinc miners over the last 2 years = UGLY. 2020 may be the year to turn things around for these companies.

      Regarding the M&A, it is interesting that most of the focus in chatter from investors is normally around hot exploration stories (using Kaminak as their example), and there are endless debates on chat forums like, stockhouse, or hotcopper about which explorer will be next, when the reality is that explorers are very rarely taken over. I can’t think of many explorers that get grabbed before they are really a development-stage company.

      What is far more common in the M&A space is a Mid-tier producers buying a non-core producing mine from a Major (like the recent divestments from Barrick, Newmont, Randgold, NovaGold, etc…) for a cash or shares deal. There are a dozen or so of these each year, but since they are not a full company takeover, they don’t create the liquidity event of a full-on merger, and are easily forgotten.

      The next most common a Merger/Acquisition is for Mid-Tiers to take over either the “best in class” or conversely the “distressed” Producers because these companies already have active operations & permits in place.

      Lastly, there is always a steady stream of takeovers from the very advanced Developers with economic studies that show the payback period and a reasonable life of mine for a larger producer to sink their teeth into. Most companies don’t want the execution risks and unknowns of pure exploration plays though.

      There are 2 different tiers regarding the Producer takeovers we see:

      1) Very well run solid “best in class” Producers (like Claude, NewMarket, Lakeshore Gold, Richmont, Atlantic Gold, or recently Detour Gold) that were already being rewarded by the marketplace and became significant add-on assets for the larger producers. These are usually the easiest to spot in advance because they are obvious outperformers and they have great costs and make sense to bring under any miners fold, but they usually have to pay up for them after these stocks have already gone on a run.

      2) [my favorite subsector] the “Distressed” smaller Producers that are often still taken out at a 25-60% premium, but are the opposite of the best in class miners, so these takeovers usually happen closer to their lows. These takeovers are easier for the marketplace to forget about because there is little fanfare by the marketplace (because they are not nearly as widely followed, so there isn’t as much buzz or news generated and the dollar amounts are smaller). Think about all the distressed producers that have been acquired that most have likely forgotten about (Primero, Scorpio Mining, Metanor, Avnel Gold, Klondex, Beadell, Rye Patch, Marlin, Brio, etc..)

      Lastly there are always a number of acquisitions with the more Advanced Developers (like Reservoir, Kiska, Exeter, Dalradian, Gryphon, Amara, Savary, Mariana, Mod Resources, Trek Mining, Newcastle, Golden Reign, Pershing Gold, Doray, Crusader, Merrex, Levon, etc…)

      It would seem the best place to look for takeovers (aside from any best in class producers that are more widely followed – (Wesdome, Roxgold, Perseus, Fiore, GoGold, Alkane, Superior, etc…) would be in the areas of:

      > Distressed smaller to medium Producers – (Anaconda, Jaguar, Alio, Hummingbird, Harte, Blackham, Mandalay, Glen Eagle, Avesoro, Santacruz, Northern Vertex, Monarch, Orosur, )

      > Advanced Developers – (Sabina, Treasury Metals, Pure Gold, Orezone, West Kirkland, Falco, Gold Standard, Maritime, Bluestone, Orca, Sarama, Osisko Mining, Bonterra, Scorpio Gold, West African Resources, ATAC, Almaden, Midas, etc…)

        Dec 15, 2019 15:16 AM

        Re:base metals especially copper have a seasonality play as well….copper usually moves higher late December and hits its peak in April roughly….the fact that copper has moved up .10/lb already in the past few weeks with most of that move in the last week makes one wonder if this will be a big seasonal move this time around…

    Dec 14, 2019 14:10 AM

    Good chart from FranSix:

    @F6 Re: Gold Daily #charts

    “I felt I should re-iterate the gold daily chart because the previous posting had the previous shorter-dated version. The idea was to show the whole move from 1167. ”

    “The gold spot price is testing the top of the wedge, though we might see a re-test of the low, much as it had in the previous wedge set-up: ”

    Dec 14, 2019 14:55 AM

    HUI vs Gold just closed above its previous 2019 high for the third straight day:

    Dec 14, 2019 14:57 AM
    Dec 14, 2019 14:11 AM

    I am having trouble down loading audio could be a problem with your site?
    Big All you are the greatest.

    Dec 14, 2019 14:41 AM

    The gold stocks bottomed right where they should have.
    I’m sure I’ve posted this one before but its’ worth another look…

          Dec 14, 2019 14:00 PM

          Would you guess the odds are good that KTN pulls back down to that middle fork support and then rallies from there?

            Dec 14, 2019 14:25 PM

            My guess is that it will not pull back to that support despite the big daily chart gap in August that is still open.

            Dec 14, 2019 14:30 PM

            Thanks, yes during a bull market the pullbacks are not as severe as most investor expect, so I could see it thwarting the efforts of bottom fishers waiting for that level, only to watch it not do that and then run away from them to the upside. Looking forward to that because I’m mostly fully positioned at this point. I added to about a dozen positions in November & December and pretty much am ready to hang onto the bull’s gyrations moving into 2020.

            Dec 14, 2019 14:52 PM

            I’d say that the 36.5% pullback was severe enough. That’s more than a 50% retracement of the summer move and between the high grade drill holes this year and Sprott’s big investment, the cat is out of the bag with KTN.

            Dec 14, 2019 14:06 PM

            Yes, the cat is out of the bag with KTN


            Dec 15, 2019 15:20 AM

            Love the charts Matthew…..yes the chart for KTN looks great but I am always concerned with exploration plays…..not exactly sure how to word it but I guess I’m always Leary that the charts get blown up(both to the upside and downside) by the whims of a single drill result that over hypes the bulls or creates unnecessary huge sell offs…at least with developers or actual producers I feel like the technicals are telling the story so to speak…Sunday morning ramblings as I finally get a quiet one. 😀

            Dec 15, 2019 15:09 AM

            Wolfster – I’d consider KTN KOOYF Kootenay Silver a Developer at this stage, because it has spent years exploring to define resources at La Cigarra, Promontorios, and La Negra. The newer high-grade Silver project Columba is more of an exploration play for them, and all companies have the potential for exploration upside, but for all intensive purposes Kootenay has reached the development stage on some of their projects.

            In 2016 KTN took over Northair Silver to acquire their La Cigarra development project, so it is the most advanced stage development project they have, but it is lower grade and larger, so it needs a bit higher Silver prices to make sense to put it into production. They are still defining it but have put in 171 holes to define a NI 43-101 mineral estimate hosts 51.5 million ounces of silver so far. Their economic plan needs $22+ silver to make it work though (so more of an optionality play).

            Then on La Negra and Promontorio Kootenay had optioned those projects to PAAS Pan American Silver back in 2016 (more like a prospect generator model), and PAAS did sink some money doing the exploration, but just pulled out of the agreement in June of this year. Promontorio has about 90 Million ounces of Silver Equivalent ounces and received the lion’s share of the work from Pan American. It is more advanced at this stage, but was too small for PAAS to keep working on it, but at least Kootenay now owns the project completely again.

            La Negra has about 90 holes put in place and has a great deal of 100-200 g/t silver grades, which is good but not great, but will be economical at higher prices just like La Cigarra.

            Their recent focus has been switching over to more high grade at Columba, as the marketplace gets more animated by higher grades, but there is nothing wrong with the 3 other projects being lower grade/bulk resource types with open pit mining, as it really comes down to the unique economics at each project.

            Overall I’d say Kootenay is a diversified Silver/Lead/Zinc Developer with plenty of exploration upside left, but they aren’t in the same category as a grassroots Explorer Drill Play, hoping to find something. As a result their stock wouldn’t go parabolic on just 1-2 great holes, but conversely, won’t fall out of bed if they drill up some medium to low grade intercepts either.

            Dec 15, 2019 15:18 AM

            Wolfster, I agree with you but Kootenay is more than a pure exploration play in my book since it already has significant resources. The value of those resources will move up significantly (massively) as silver goes beyond 20-21.
            Now they’ve got multiple, not single, high grade drill results and are all cashed up. I’d say that the large move up in price this year is due to a lot more than the drill holes. I’ve been accumulating if for a long time “knowing” that it would catch a bid when silver was ready to move and it has.
            The biggest driver in my opinion is speculative money flowing in ahead of much higher silver prices because of those assets in the ground.
            I’ve preferred such specs to developers/producers because they have fewer risks if you buy them right. Developers can run into all kinds of unforeseen problems as can producers no matter how they are screened before buying.
            I agree that the technicals are telling the story and it is a compelling one.
            KTN is still up 115% since the June low despite the correction and sector-wide negative sentiment — and for good reason. The powerfully impulsive move up to its September high tells me that this pullback should be bought. The greatest risk factor right is the price of silver. If it stalls, KTN’s correction will probably continue.

            Dec 15, 2019 15:26 AM

            One area I’m unclear on by on Kootenay is their Prospect Generator model on some of their non-core projects like Silver Fox that is optioned to Antofagasta has been working on in BC, or the Cervantes Gold they have optioned to Aztec minerals. Then there was some exploration work done on Copalito Silver-Gold Project that looked very promising, but I haven’t seen much on this lately. Lastly there is the La Mina Project that they optioned to Capstone Mining that has Copper & Gold showings, but I’m not sure how that is going either.

            I guess Kootenay is a hybrid Developer/Explorer on one side, but then a Prospect Generator optioning properties out to other companies on the other side. There hasn’t been a ton of success on the optioned properties, except for the work the Pan American did on Promontorio & La Negra that really helped Kootenay move the ball down the field.

            Personally, I’d like to see them quit working on 7-8 projects and just narrow things down to a project that is going to make it to production (which is most likely the La Cigarra project). Also Sailfish Royalties holds a Net Smelter Royalty on La Cigarra, so I’d like to see it move into construction as soon as Silver makes it back up into the low $20’s.

            Dec 15, 2019 15:37 AM

            the 1% NSR at La Cigarra, which is held by Sailfish Royalty is on the Parral claims that surround La Cigarra. I guess it would take getting La Cigarra into production first before they expanded into the Parral assets around it. It is similar to the NSR that RZZ/GZZ hold around Malartic operated by AUY/AEM that need the main mine to expand into those resources to get payout.


            Dec 15, 2019 15:56 PM

            Wow….I got tag teamed by the top 2 contenders. Lol….Appreciate you both for setting me straight…. I’m convinced. It’s more than just an exploration play……now do I buy it or more USA which was my initial intent…might be a late night doing more research.

            Dec 15, 2019 15:51 PM

            Haha! Personally, I have positions in USA and KTN, but to each their own.

        Dec 15, 2019 15:03 PM

        Speaking of Sailfish Royalty Corp (FISH) – There was some good news out of (MKO) Making MIning this week on their improved metals recovery rates. (FISH) has a 3% Gold stream and 2% Net Smelter Royalty at San Albino.

        Mako Mining Announces Positive Metallurgical Test Results At San Albino With Optimized Overall Gold Recoveries Ranging From 86.1 To 96.9%

        December 13, 2019

    Dec 14, 2019 14:58 PM

    Bob Moriarty: We Are Entering A Gold Bull Market, The Likes Of Which Nobody Has Seen In Their Lifetime

    by Ceo Technician (@Goldfinger) – Dec 13, 2019

    > Goldfinger: “Okay, so turning to the junior mining sector, so you know we have talked about Novo already. Are there any other companies that you would like to mention that have really caught your attention? I know you like Lion One. We did discuss that in the past.”

    >> Bob Moriarty: “Lion One I’ve got to mention because they drilled some deep holes, these deep holes Quinton Hennigh suggested they should drill. They got ahead and did it. They found visible gold, they could have results out as early as this week. If it’s not released by the end of the week it won’t come out until January. It nevers makes any sense to release news after the 20th of December because of the holiday chaos.”

    “But Lion One could have extraordinary results coming out.”

      Dec 14, 2019 14:21 PM

      other interesting passages from the Bob M and Goldfinger article above:

      >> Bob Moriarty: “Some gold options trade because that’s what people are most familiar with, but the fact is the real issue is going to be subprime loans, just subprime auto loans and for subprime mortgages and student debt. Something like 61 percent of automobile loans are now subprime. The numbers are just staggering and I read that seven million Americans are more than 30 days behind on their car payments. The systemic risk in the financial system today is enormous. The government is out of bullets. Europe already has negative interest rates. That kills both savers and the banks. AIG was in effect selling puts for a nickel. Okay, but they were risking a dollar. It took the federal government to come in and bail out AIG and we should not have bailed them out. We should have let them collapse.”

      > Goldfinger: “Yeah, that was quite a racket that was going on back then.”

      >> Bob Moriarty: “It’s still going, it’s worse today.”

      > Goldfinger: “How do you know that it’s worse?”

      >> Bob Moriarty: “Because, all of the numbers are worse. If you take a look at the student debt, if you take a look at the subprime automobile loans, if you take a look at credit card debts, if you take a look at CLO’s, we have so much debt in the world, that’s not backed by anything. The $250 trillion in debt in that cannot get paid mathematically, period. You can argue, anyone can argue whatever they want. Maybe it will be written off in a jubilee but mathematically it can not be paid therefore, at some point it has to blow up. Now nobody talks about derivatives much anymore, but it’s still $500 trillion. It’s still totally out of control.”

    Dec 14, 2019 14:57 PM


    Dec 14, 2019 14:58 PM
      Dec 16, 2019 16:12 AM

      Boom! DT that is absolutely the big news of the day. EQX and LMC combining forces into one larger company. This looks to be an unpopular decision on the chat forums today, as people believe EQX got the far better end of the arrangement, since LMC has a much larger production profile.

      Ross Beaty and Frank Giustra combining forces into a much larger company here. Wild!


      Equinox Gold and Leagold Mining Combine to Create a Premier Americas Gold Producer

        Dec 16, 2019 16:14 AM

        “Gold production of 700,000 ounces in 2020, increasing to 1 million ounces annualized production during 2021 and beyond, based on analyst consensus estimates”

        “Diversified operating platform with six operating mines in USA, Mexico and Brazil”

          Dec 16, 2019 16:34 AM

          Equinox Gold, Leagold merger to create a top North American gold producer

          Allen Sykora – Monday December 16, 2019

          “Leagold shareholders will receive 0.331 of an Equinox share for each Leagold share held, implying at-market consideration of C$2.70 per Leagold share, based on closing prices of both companies on the Toronto Stock Exchange on Friday. At closing, existing Equinox Gold and Leagold shareholders will own 55% and 45% of the merged company, respectively.”

    Dec 16, 2019 16:50 AM

    does anyone know about TRIUMPH GOLD , it was suggested by several analysts as one of the best stocks, but it is going down recently…..

    Dec 16, 2019 16:00 AM

    GREAT BEAR: Funny all last week, I kept imagining why no one hasn’t made an advance to acquiring Great Bear. $.5 billion ain’t much money these days, that’s all it would take to double the market cap

    Dec 16, 2019 16:16 AM

    Avino Closes Sale of Bralorne Gold Mines Ltd. to Talisker Resources Ltd.

    Dec 16, 2019 16:48 AM

    BADA BING, BADA BOOM, palladium is up $53 today 1968, is that nuts or what? Got Platinum! DT

      Dec 16, 2019 16:00 AM

      Yes, it is nuts that Palladium is up that much while Platinum trades at such a discount to it and to Gold.

    Dec 16, 2019 16:16 AM
      Dec 17, 2019 17:28 AM

      Agreed, but the marketplace tends to shrug off good drill results for developer moving into production or even with most producers, and only seems to be animated by good results for earlier-stage explorers.

      Still, this only further underpins the high-grade nature of Pure Gold’s deposit in Red Lake and adds to confidence that they’ll continue to expand the size and scale of the deposit as things progress.