Erik Wetterling, Founder and Editor of The Hedgeless Horseman website, joins me to review the opportunities he sees in some of the new smaller PM producers ramping up growing revenues at time of record margins and extremely high underlying metals prices. Additionally, he is seeing compelling value in some of the gold and silver developers expediting their process through the 2nd leg of the Lassonde Curve, on the pathway to construction and production in the next couple years.
We review the continued strange dichotomy between surging precious metals prices and the lagging reactions in many junior gold and silver stocks over the last couple years. Then we look ahead to why we may see more capital start rotating down into the PM junior stocks that are actively pursuing revenue growth as this year unfolds.
We start off discussing just how much more profitable even the small producers are today compared to what the mid-tier producers with much larger production profiles could have achieved in cashflows 6-8 years back.
- This current environment has taken what would be considered small tier 3 projects and mines and now turned them into cash cows for companies. By generating substantial revenues, instead of purely diluting through market financings, these junior companies can then fund further growth and development of their other projects.
- Erik points to new producers ramping up production like Talisker Resources, Blue Lagoon, and Kuya Silver as companies that are garnering attention on relatively small production profiles, because of just how profitable spot PM prices are for generating new revenues.
- We highlighted some of the junior resource companies that we’ve reviewed in prior discussions that blazed this similar path over the last couple of years like Integra Resources, Heliostar Metals, Discovery Silver, and Magna Mining. These companies have been solid case studies of this business pivot, through transforming their business models by going from developers to junior producers, and then they were positively rewarded by the marketplace.
With regards to the junior developers, he sees opportunities in the companies that are expediting their move through the 2nd leg of the Lassonde Curve.
- He mentions Amex Exploration, which is working towards trial mining a large bulk sample over the next year, to then fund going into toll-mining process for the first 4-5 years; before eventually building a larger plant and operations on site in a multi-phased mining approach. This is a way to self-fund at least a big part of their future growth through much lower initial capex moves into production.
- Scottie Resources is also taking a very similar approach and already has completed their bulk sample at the end of last year, bringing in non-dilutive capital and learning a lot through that real world trial mining process to apply to future economic studies and the move towards Direct Ship Ore production.
* In full disclosure, the companies mentioned by Erik in this interview, are positions held in his personal portfolio, and also may be site sponsors of The Hedgeless Horseman website at the time of this recording.
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