Hour 1 – Featuring Axel Merk, Mike Larson, Jesse Felder, and IsoEnergy – Let’s look big picture at the markets
This first hour is packed with extended interviews in each segment. I take a step back from the day to day noise in the markets to discuss what actually matter heading through the next couple years. I hope you all enjoy!
Please keep the emails coming to Fleck@kereport.com.
- Segment 1 – Axel Merk kicks off the show with a conversation on the markets and metals sector. We discuss the major catalysts that Axel sees down the road and where money is flowing in these markets from large institutions.
- Segment 2 – Mike Larson is next up with his recap of the Fed statement this week and the forward guidance that doesn’t fit the central bank’s inflation goal.
- Segment 3 – Jesse Felder continues the conversation about the Fed’s inflation targets and the tools it might use in the near term. We also look into the energy sector where Jesse is seeing some investing opportunities.
- Segment 4 – Craig Parry, President and CEO of IsoEnergy (TSX.V:ISO – OTCQX:ISENF) wraps up the first hour by updating us on the recent high grade drill results of over 12% U3O8 at the Hurricane Zone discovery.
Exclusive Company Interviews From This Week
- Aztec Minerals – Drilling update at the Tombstone Property
- OutCrop Gold – Company introduction and follow up on recent high grade silver results
- Maple Gold Mines – A complete exploration update for the upcoming drill programs
- Sun Peak Metals – A new gold and copper explorer in Ethiopia with 3 drills turning next month
- Inflection Resources – A new exploration Company focused in Australia with a large drill program already underway
- Skeena Resources – A focus on the new discovery announced yesterday at Eskay Creek
- Inca One Gold Corp. – The Retail Bullion Store is now live, here are the details
- Rupert Resources – A follow up on the recent drill results that yielded 3g/t Gold over 171 meters at the new Ikkari discovery
Who is Kim Goguen? that is the question
Kim Goguen is a nobody.
Thanks Cory & Big Al and to the KE Report contributors for another great week of daily editorials and the weekend show.
How Silver’s 50% Rally in 2020 Has Transformed The Industry
Sept 19, 2020
“The rapid rise of gold and silver prices have caused valuations from miners as well as their exploration budgets to expand, but the industry is yet to see its full potential as the lockdowns have prevented silver companies from generating free cash flow the way they should be,” said Darren Blasutti, CEO of (USAS) (USA) Americas Gold and Silver.
“From an industry perspective, we’ve seen market caps double and triple, especially for the explorers and the developers on more of the bottom end that aren’t producers yet. We’ve certainly seen their valuations come up,” Blasutti told Kitco News.
I hope Trump nominates Matthew to the court on Mon. Happy Rosh Hashana to all our Hebrew friends on this site, if there are any.
The company report from ISO was disappointing and a waste of time. Uranium is a dead industry so please spend this segment on companies that have a future.
Sorry you think that Terry. Outside of gold and silver, Uranium is the commodities that I get the most emails about. And Iso is one of the best performing Uranium stocks over the past year.
Scorpio Gold options their Mineral Ridge Mine to Titan Mining
Ex are you still invested? What is your opinion on this deal?
Hi Thomas. Yes, I still have a position in Scorpio Gold, but have mixed feelings about their latest announcement, and had mentioned it was a double-edged sword the day the news came out. Overall, I think it is more good than bad, and am just glad they finally did something transformative, as they’ve been treading water for many years now.
On one hand, it gets rid of their need for the impending financing, with someone else footing the bill now for exploration and development of Mineral Ridge, but on the other it robs shareholders of a great deal of the future potential for that mill and the surrounding exploration properties into a rising gold price. Basically Titan Mining, has more resources, and is going to be doing the work to unlock the value that Scorpio Mining was initially supposed to do, but Scorpio did create a higher value for this asset now, than they are currently getting credit for, so that is a clear win for current shareholders.
That potential upside at Mineral Ridge is precisely why Titan Mining has optioned the project for the 80% stake, and will likely end up buying it for the $35 Million from Scorpio, which means Scorpio shareholders get the short to medium term benefits, and the Titan shareholders will reap the longer term benefits.
In the short to medium term, Scorpio has landed a deal that gets them out of the economically fatigued and distressed position that they’ve been in for about the last 7-8 years, so that’s a win. Bringing in $35 Million on the 80% option to Titan of Mineral Ridge is a nice lifeline. SGN only has a market cap around $17 Million, so if Titan purchased Mineral Ridge for $35 Million that alone would double their M.C. through the sale (making it a 2-bagger from here), and they still have their Goldwedge mill & properties as upside that the market would need to assign value to.
Overall, it’s more good than bad, and likely why management decided to go the direction they did, getting them out of the need to raise the funds to explore, develop, and resume production at Mineral Ridge, and outsourcing the money and work to Titan, like a Prospect Generator would do. It really comes down to how much gold is really there to produce, and what that is worth at today’s metal prices. If there isn’t much more than has already been found, then Scorpio wins big, but if Titan finds a great deal more gold, then they’ll get the better of the agreement for the long game. The mining, infrastructure, and Mill and is already built as a sunk cost, and permitted to produce, so that is a big piece of the equation as that is not easy to get done and takes many years to get a mill up and running.
If for some reason Titan just keeps the 80% interest but doesn’t buy (which seems less likely, but time will tell), then Scorpio still has the 20% interest. That could still offer more future upside to Mineral Ridge, but I doubt Titan would do that if they really find something worthwhile. Either way, Scorpio is getting immediate to medium-term value from Titan, yet giving up partial or total control. That takeaway is that they monetized one of their 2 assets, and this is a FAR better outcome, than if they ran out of funds and had to liquidate their assets in bankruptcy, so that’s good, and derisks them
At Scorpio’s other asset Goldwedge,they are currently doing toll-milling processiong for other miners to generate some revenues, and they have the exploration properties around it that may eventually feed that mill. With the money coming in from Titan on Mineral Ridge, they can really focus on further exploring Goldwedge, and possibly pick up other prospective lands in near proximity. The question then becomes, how much economic to produce gold is there around Goldwedge, and what will that do to further drive value for Scorpio.
My plan was to wait for the Scorpio financing, assess the dilution to shareholders at that point and then average into a larger position. This news changes the calculus though, as the financial pressure has now has been resolved with Titan bringing the capital. For now, Scorpio is just a hold for me, I feel quite confident it will go up at least double but more likely 3-4 times in value from the current market cap.
As a result, I see no need to exit until the valuation reflects this deal and the large expenditure by Titan at Mineral Ridge for exploration and economic studies or the eventual all out purchase from them. I also want to watch to see if they can unlock anything meaningful at Goldwedge so it has more upside to be realized. However, there are other more active producing companies with exciting development upside, or other JR exploration/development stories that could produce 5-10 bagger scenarios that I’m be more interested pursuing with new capital.
I hadn’t checked on their news the last 2 weeks and just realized that they still are doing a $6 Million capital raise through a private placement, so they can advance Goldwedge exploration. This is still dilutive, but not as bad as if they had to do all the work at Mineral Ridge on their own.
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Scorpio Gold Closes First Tranche Of Private Placement
September 15, 2020
Scorpio Gold’s CEO, Brian Lock, comments, “The interest demonstrated by sophisticated investors such as the Augusta Group and Palisades Goldcorp is a clear vote of confidence in Scorpio Gold’s assets and in the direction the Company is taking. At Mineral Ridge, the earn-in agreement with Titan Mining will deliver an aggressive exploration program to build on our substantial mineral reserve and resource base. Gold extraction operations will continue at Mineral Ridge through December 31,2021, ensuring Scorpio’s operating team stays intact and will assist Titan where needed. At Goldwedge, the proceeds of the private placement will fund and drive an extensive exploration program at the Goldwedge Mine, the Keystone-Jumbo deposit area and the soon to be acquired, adjacent Kinross Manhattan property. An underground delineation drilling program is in progress at the Goldwedge Mine and planning for surface drilling on high-priority targets over the entire land package is underway.”
https://www.scorpiogold.com/news/scorpio-gold-closes-first-tranche-of-private-placement/
It will be interesting to see what they find through exploration on the Kinross Manhattan property once it is officially acquired.
So that will give Scorpio Gold 3 assets: 1) Mineral Ridge optioned to Titan 80/20 for exploration and potential purchase down the road. 2) Goldwedge for tollmilling and exploration 3) Kinross Manhattan for exploration.
While they are still doing some minimal residual heap leach production at Mineral ridge through the end of next year, and some toll-milling at Goldwedge, they are basically transitioning back to more of an exploration model, so it may get interesting depending on how that work goes.
Most of the pp is taken by the owner of Titan. They will own 20% of Scorpio after the placement and 30% if they exercise the warrants.
Yes, Richard Warke nabbed the lion’s share, which is encouraging, because Palisades that took a chunk of the PP is likely just in a for a quick flip, and then they’ll hang onto the warrants.
I had a look on Titan. They have huge debt positions ($37Mio capital deficit). Mineral Ridge might go back to Scorpio, if Titan is not able to finance their debt and their option payments.
That’s a good observation Thomas. Yes, it could be that Titan spends a bunch of money on Mineral Ridge only to struggle financially and Scorpio would then be the recipient of that work for free, if they got the property back. There are a few different potential paths with both companies, so for now I’m just holding my Scorpio Gold and watching to see how things develop.
(SGN) Scorpio Gold is one of the few PM stocks in the green during today’s selloff, up about 3% on the day. Nice!
SCZ-Santa Cruz is waaaaaaaaaaay undervalued in my books. Wait till they report their third quarter earnings and the increased price of silver begins to show higher revenue, the tiny market cap of less than 50 million CDN and stock now selling for .235 CDN should really catch investors by surprise! DT
Agreed DT. (SCZ) Santacruz is the cheapest Silver producer by market cap and a few other metrics, and now they own their largest and highest margin mine #3, Zimapan, outright. Yes, I believe when the Q3 production numbers come out, it will show just how profitable they can be with all 3 mines operating in the higher silver price environment. This should start to get them a bit more attention for a re-rating higher.
Ever Upward!
Ex, like Eric Sprott said in his latest weekly wrap, someday soon we could wake up and the price of silver at $35 will be staring back at us. Dang, that must be why he is a billionaire! LOL! DT
Yeah, $35 seems much closer to range than it did earlier in the spring when Silver was at $12. I have no doubt it will get there and make a run at the old highs in the next year or two.
Earlier this year I really thought Silver would face more resistance at the 2016 high of $21.23, and muddle along in the low $20’s for a few months and maybe get up to the $24 resistance or $26.30ish resistance. Instead, in a very short time frame, Silver just blasted past all that resistance up to $29+, which was a crazy move higher.
Silver has spent the last 2 months consolidating it’s gains in the $26-$27 range, which is far higher than most expected it to hold (as many technicians and pundits thought it would head back down to test that $24 or $21.23 level again as support. This is all quite bullish for Silver, and of course, the Silver miners that are producing at these higher metals prices.
Also, many of the development projects are looking quite robust in the mid $20’s versus the $17-$19 where their economics studies were done, so the developers should continue to get re-rated higher as the metals prices keep climbing.
Ah, and here is more of the correction today…
Silver down 10.5% down to $24.27
That is more what many technicians were expecting for a corrective move. We’ll see if this level holds, or if Silver needs to get all the way back down to test the $21.23 level.
An encouraging observation is that may of the Silver stocks are only down 3-7% today while the metal has been down around 9-10%.
The miners were under-performing the metal to the upside and now they are under-performing the metals to the downside.
Since most of the silver stocks didn’t price in the much higher metals prices anyway, then a corrective move down lower in price may allow for a more measured move higher in both the metals and miners on the next leg higher.
Santacruz needs to finance $20 Mio by December and has a large capital deficit?
They just purchased their 3rd mine, Zimapan whichi will be throwing off cash for years to come, so it was worth the candle. They also should be generating free cash flow in the 3rd quarter which will off-set that number some. I’m guessing they wait until the market digests that operations report from Q3, there will likely be a lift in the stock price, and then they’ll raise the capital in late October or early November.
It was a very smart acquisition by the Santacruz team, and far less money than trying to raise the capital to do all the earthworks and build a mine, permit the mine, get the social license, etc… at some new site.
Keep in mind the Silver price went into the gutter at the end of Q1, sinking to $12 in March, but was about $15-17 for the quarter, and then in Q2 Mexico shut down the mines from April-June due to Covid-19, which further constrained most of the Silver miners in Mexico.
Q3 will be the first quarter this year where things ran more “normal” and the silver price has stayed in the mid $20’s most of the quarter (likely around $25 average for July – Sept) so it will be a better gauge of performance for all Mexican Silver miners, Santacruz included.
$6 Mio PP for underground equipment
https://ceo.ca/@newsfile/santacruz-announces-6-million-private-placement-with
Right, for it’s Zimapan mine that they just acquired.
I think, at the moment is not a good time to invest, even if it is cheap
I expect another lock down in winter that will trigger a second sell-off
We maybe get a very special tax loss season this year in November/December
I invested long ago in Santacruz at much lower levels, and trimmed some back last year when it was the #1 performing Silver producer (going up over 300%), and then bought more earlier this year at lower prices and am just holding it for now.
They are going to be doing much better for operations in Q3 and finally be turning a profit, so I’m just holding for now.
Whether or not there is going to be another Covid 19 lockdown or not in the winter is hyperbole, and the Mexican government already reversed course in May/June and came to it’s senses that mining is an “essential business” so the miners won’t be shut down like they were in Q2 of this year.
As for tax loss selling this Nov/Dec, I’m not sure we’ll see as much as in previous years as most of the mining stocks are up 2-3 times or more this year, so there aren’t any losses. I’ve been scouring my list of old dogs to try and find candidates, but my capital gains are going to be way more this year than any losses I can offset them with, and most traders in the miners are likely going to be in a similar situation if they were at all active this year and took advantage of the spring sell down.
You luckily invested at the right time -:)
The next 6 months I think will be challenging
Yes, the time to be aggressively adding mining stocks was the end of 2018, the middle of 2019, and the spring of 2020. There were nice windows of 1-3 months with plenty of time for contrarian investors that follow the space to get positioned.
Hell there was plenty of time to get positioned before 2018 as well, all the way back to the end of 2015 and early 2016, but most generalist investors wanted to wait until Gold and Silver had doubled in price, and after the miners had gone up 200-400% to start getting positioned. 🙂
Anyone following this space got positioned long ago and thew everything they could at the pullback in March of this year, and didn’t cower in cash. For those that bought right, now it is time to hold and sit tight, and just add on pullbacks like we are seeing lately.
I’m sure the craziness around the US elections will create a great deal of turbulence, but they are also getting ready to approve Trillions more Dollars in stimulus bills, the Fed wants to see inflation heat up, while interest rates are zero, and real rates are negative. Every other Central Bank is playing the same losing game, as they’ve painted themselves into a corner, and can never normalize rates again to 5-7% with out being crushed by the massive debt loads on their backs.
Nothing fundamentally has changed, so despite any short-term volatility, the longer term picture is still as bullish as it has ever been for the precious metals.
“3 Awesome Gold Stocks you Need ASAP!”
0:00 Intro
0:23 AngloGold (Ticker: AU)
5:19 Kinross Gold (Ticker: HGC)
8:53 Gran Colombia Gold (Ticker TPRFF)
12:24 Outro
https://www.youtube.com/watch?v=yORt1hv4_m0
Scott Rubin
Whether one agrees with the analysis or not, what I like about this guy, is that he shows how his conclusion is derived. Great resource for those like myself, who never got a handle on proper balance sheet analysis.
I didn’t see it on this video, but on many of his other videos, he has a list of all covered companies in the description or a pinned comment.
CEO of nuthin, welcome to the Korelin blog, we like CEO’s here and we could use a few more! DT
The Next Buy Opportunity in Gold & Silver
Jordan Roy-Byrne @TheDailyGold on Palisade Radio – (09/20/2020) #Charts #TechnicalAnalysis
Gold futures down over 3.6% this morning down to $18.91
Silver futures down a whopping 10% this morning down to $24.42
There is quite a bit of carnage out there in the Gold, Silver, Copper, and other resource stocks today, but very quiet in here today. I guess everyone is licking their wounds.
Now that the $1923 support level (prior all time high from 2011) has been definitively breached, and gold is hovering in the low to mid $1890’s (it was $1891 now back to $1895 at present), it appears we are getting the next leg of the corrective move that started back in late July/early August.
It isn’t a big concern, even if Gold drops down to the low $1800s or Silver pulls back down to $21.23 (the 2016 surge high), because the larger uptrend is still very much intact. If we do see a pullback down to lower levels in the metals, that will be a good place to add to positions, so keep some powder dry to deploy ya skallywags.
Based on the additional investment by Eric Sprott in Freegold last week, I added. Based on the trading halt in Kairos, I was able to add in US. Waiting to see why it was halted. Noted Pioneer that is now named Essential Metals is up today. I do not know if these two are realted (Essential and Kairos), but they are all in the area of DeGrey and Novo. Based on the low price of Kairos and past activity of Novo and DeGrey, I am just placing a blind bet on the Kairos trading halt.
Almost forgot. Added to Precipitate to build share level before they report drilling results. I am anticipating something positive based on their sampling results, hiring Tom Weiss a former Newmont Chief Geophysicist, and their ties with Barrick in the area.
So far today I sold my Sokoman & Blue Lagoon at a profit, and my Platinum Group Metals for a tax loss, and plowed more into Jaguar Mining and Endeavour Silver as they pulled back, and kept the rest as funds to deploy if the selloff continues down lower.
I’m considering adding more to Impact today, but it is already way larger in position size in my portfolio than I’ve even had it, and still a profitable position, so I may just sit on my hands for the balance of the day. 🙂
That is interesting on Kairos. I used to own it for their Lithium project, and then added when the Pilbara area play exploded back in 2017, but sold it years ago.
As for Precipitate, I’m just holding what I have as it one of the larger Gold exploration positions I hold and I’m sitting on a nice profitable position still. I’m looking forward to their work at their 2 100% owned projects, while Barrick works on their JV project.
Hey Ex & or Matt,
I see that the HUI has NOT yet breached its August 11th low of 320. I imagine this move down will try to test or breach a bit to shake out the last of the weak hands. What is your take?
Hi confused. Yes, I see what you mean about the Aug 11th trough at 320. I believe this move down could definitely breach that level, but I’ll be looking for support at the 144 day EMA (currently at 296).
Conversely, if this is just a shakeout for a few days, and the 320 level is not breached, then I’d consider what we are seeing here very bullish for building a base to launch the next leg higher off of. We’ll need to see how the rest of the week goes for more clarity as one day does not make the market.
(SAND) (SSL) Sandstorm Gold Issues Clarifying Statement
by @businesswire on 21 Sep 2020
“Sandstorm Gold Ltd. is issuing this press release to clarify that terms of a transaction involving Sandstorm were inadvertently made public via Royal Gold’s website. No agreement has been reached. Sandstorm will comply with its timely disclosure obligations should an agreement be completed. There can be no assurance that an agreement will be completed on the terms inadvertently released or at all.”
https://ceo.ca/@businesswire/sandstorm-gold-issues-clarifying-statement
Whoops!!
(RGLD) Royal Gold Issues Correction
09/21/2020
(BUSINESS WIRE)– ROYAL GOLD, INC. announced today that terms of a potential transaction currently under negotiation with Hindustan Zinc Limited and Sandstorm Gold Limited were inadvertently made public via our website. No agreement has been reached regarding such a transaction, and there can be no assurance such a transaction will be agreed upon or completed.”
Watch “Kim Goguen Explain in detail how the World Financial System fuctions”
https://youtu.be/zBQgYCPzRfU