I’m ultra bullish on precious metals.

To me, gold and silver represent the best short-term opportunity to profit in the sector.

That is, if you pick the right companies.

I don’t think we’re at the point where the bullish tide floats all boats.

Maybe we will see that in the 2nd half of next year?

Even if the bullish tide in precious metals raises all boats, I strongly advise not buying mediocrity.

Stick to the best of the best companies.

It gives you the best chance of profiting consistently.

In reality, we’ve already seen the first push in the gold market  – Q2 2024.

For myself and Premium subscribers, we saw a doubling of the value of the portfolio.

Winners like G Mining (GMIN:TSX) and Montage Gold (MAU:TSXV) returned close to 200%.

These are HUGE wins to have early on in a bear market reversal.

Early moves in a bull market are all based on sentiment.

Typically, the metal price moves first.

Optimism about the future grows and money is deployed into the equities.

The best companies are the first to rise.

The early investors make the money and the FOMO of investors on the sidelines grows.

This is how a bull market begins.

While the move in Q2 was good, I don’t think it’s the big sentiment change that we’re waiting for.

That main reversal is still to come.

Being contrarian matters in the junior resource sector.

As Rick Rule puts it, “you’re either contrarian or you will be a victim”.

Wise words.

But being contrarian isn’t easy.

You have to be patient and, in many cases, courageous.

Buying companies in a sector that is hated is tough.

The gold markets of the last 10 years are a perfect example.

We had gold bull runs in 2016 and 2020.

Each one was only about 8 months in duration.

It was quick and a ton of money was made in a short time frame.

Heck, 2020 was the best financial year of my life.

But look at the duration of time in between bull runs, around 4 years between both.

For the investors who bought right and were patient, it was life changing.

I’m the perfect example;

In 2013, I sold my house and used 2/3rds of the equity to buy junior mining companies.

I had to wait 3 years, but in 2016, I was paid back – big time!

I left my career in steel manufacturing to pursue investing full-time and have never looked back.

Pick right and sit tight as they say.

So what’s the next metal to go on a bull run?

It’s a great question.

A question that all resource sector investors need to be asking themselves.

In my view, there are a couple of metals that are hated and ripe for a reversal down the road.

The first is the platinum group of metals (PGMs).

Rightly, PGMs are most associated with their use within catalytic converters.

Catalytic converters are used in internal combustion engine (ICE) vehicles.

They’re used to capture harmful metals from the exhaust of the fossil-fuel burning engines.

Essentially, they scrub the exhaust fumes, making them cleaner.

Very useful and necessary.

The problem is, there’s nothing more hated or negatively forecasted than ICE vehicle sales.

Hence, the demise of the PGM prices and equities.

The PGM prices have fallen off a cliff.

Especially palladium.

It has been a violent crash from its highs.

Source: TradingEconomics.com

 

While the PGM prices are down significantly, it’s nothing compared to the carnage in the equities.

In many cases, you have companies with resources that are selling for pennies on the dollar.

Single digit MCAPs.

It’s incredible.

These are the opportunities you find in a sector that is hated or forgotten.

Now, I’m not going to say that the PGM prices can’t stay depressed for months or years to come.

They can.

There is a bearish case for PGMs that will be hard to break.

The big barrier to break is investors’ outlook for electrification.

Mainly, the future adoption of EVs.

Your first thought might be, “that is going to be impossible”.

I disagree, to a point.

I don’t think the world is going to stop electrifying.

That’s something that should and will happen over time.

I just think that it’s going to take MUCH longer than expected.

Ideas of net carbon zero by 2050 are crazy.

It’s impossible.

There are 2 massive hurdles;

First, the cost.

Second, the time it takes to construct the infrastructure.

It will take trillions and multiple decades to accomplish.

It will be done, but we’re looking at 2100, not 2050.

I think investors will start to see the reality of electrification.

More importantly, I think they will see the importance of ICE vehicles to bridge the gap.

Especially in emerging markets.

Second and 3rd-world countries will become wealthier over time.

With that wealth will come the want and need for a vehicle.

ICE vehicles are the cheapest and easiest form of transportation to acquire and use.

ICE vehicle sales will fall over time, but it’s going to be multiple decades in the future.

Next, and this is a very short-term concern, a recession would impact the economy and hence demand for goods and services.

Any base or industrial metal would have its demand affected by a downturn.

That said, the government’s playbook for dealing with recessions is straightforward;

Lower interest rates and infuse money into the economy.

Rinse and repeat until the economic outlook turns.

If there’s a recession ahead, this is how they will deal with it.

2009 and 2021 are prime examples.

Both years followed a crash in the market and recession fears.

Both years ended up causing booms in metal prices.

If a recession or a crash is ahead, I expect the playbook to be exactly the same.

While the bearish case is still firmly in place, there are reasons to be optimistic.

One of the biggest reasons comes from PGM supply.

The bulk of the world’s PGM supply is produced in Russia and South Africa.

I don’t think it’s a stretch to think that the Russian supply could be in jeopardy in the future.

Tensions with Ukraine and the rest of the West seem to only be increasing.

Interruption to the Russian PGM production would be beneficial to the PGM price.

Finally, it all comes down to price.

The cure for low prices is low prices.

Low metal prices cause production to be reduced.

Lower production means that demand has to be met with inventory.

Falling inventory and mine supply can only go on for so long.

After enough time, the price must go up to encourage production.

In my view, this is where we are with the PGMs.

So how do you profit from the potential turn in the PGM market?

Good question.

You can buy the physical metal or invest in a trust or ETF.

Kitco and Sprott Money sell PGM coins and bars.

In terms of a trust or ETF, there’s the Sprott Physical Platinum and Palladium Trust (SPPP-U).

Or you can speculate in the junior PGM equities.

There aren’t a lot of them out there.

The key is to pick the right one(s).

Junior Stock Review Premium subscribers are always the first to hear my investment ideas.

In fact, I came up with the contrarian PGM idea a couple months back.

In the months since, I have narrowed my focus down to a couple companies.

Those companies are on the Premium Watchlist and may become a new pick soon.

If you’re interested in learning about the PGM companies I’m looking at, consider subscribing to Junior Stock Review Premium.

For a limited time, I’m offering 20% OFF Premium by using the coupon code: SAVE20 on both the quarterly and yearly subscriptions.

 

The Gignac Family

People, people, people.

It’s often cited yet not always adhered to by investors.

The business plan for a junior resource company must match the management team’s core competencies.

If you are exploring for minerals, you better have a strong geological acumen.

Conversely, if you are looking to build a mine, you better have the knowledge, skill and experience.

Mine building isn’t easy, there is plenty that can go wrong.

In both instances, finding the best people at exploration or mine development isn’t easy.

It isn’t easy because there just aren’t a lot of them out there.

Therefore, when you do find the right people, stick with them.

Over my investing career, this has been arguably my biggest strength.

Invest in the people that I know are trustworthy, competent and that I have made money with.

Today, I will introduce the Gignac family.

In my view, it all starts with Louis Gignac Senior.

Gignac Senior was the founder of Cambior Inc., back in 1986.

Over the next 18 years, Cambior grew into a mid-tier gold producer.

It reached almost 700Koz of gold production in 2004.

Eventually, Cambior merged with IAMGOLD and a new path was laid out for the Gignac family.

Gignac Senior started G Mining Services with his 3 sons, Louis-Pierre, Mathieu and Michael.

Since 2006, G Mining Services has been sought out for their technical mining services.

Their track record speaks for itself, as they have numerous examples of success around the world.

Take a look below and I’m sure you will recognize some of the mines they have built.

G Mining Services’ latest success story is the construction of the Tocantinzinho gold project in Brazil.

This time, the successful build means so much more, as it was for a new emerging mid-tier producer – G Mining Ventures (GMIN:TSXV).

G Mining Ventures is led by Louis-Pierre (LP), who is looking to follow in his dad’s footsteps.

LP’s vision to grow G Mining took a big step forward in July with the acquisition of Reunion Gold.

Reunion’s Oko West project is big and has the capacity to move G Mining into the multi-asset mid-tier producer realm.

Reunion’s acquisition was not only big for G Mining, but also brought some big attention to Guyana.

There is more M&A to come in the region.

To hear more about that and coverage on G Mining, subscribe to Junior Stock Review Premium.

For a limited time, I’m offering 20% OFF Premium by using the coupon code: SAVE20 on both the quarterly and yearly subscriptions.

 

Next Week’s Newsletter

Being contrarian is the key to being a successful resource sector investor.

This week, I gave my view on the PGMs.

Next week, I will give you a breakdown on another metal that I think is a good contrarian bet.

In addition to that, I will introduce you to another person who is making big waves in the resource sector.

It’s all about the people.

Stay tuned!

If you’re not already, consider becoming a FREE subscriber to Junior Stock Review Weekly by going back to the home page and scroll down the page until you reach “Free JSR Newsletter”.

Enter you email address and confirm it in Mail Chimp – you’ll never miss an issue!

 

MUST-see Media

• MSE Interview with Fund Manager Willem Middelkoop of the Commodity Discovery Fund
• Field Notes Episode #2 – FPX Nickel Corp. and the Future of Mining in British Columbia

Interested in becoming a Premium subscriber?

Use the coupon code: SAVE20 to receive 20% off a quarterly or yearly subscription.

Here are the answers to a few of the most commonly asked questions about the newsletter;

 

• Choose from a Quarterly or Yearly Subscription Option
  •  Choose what’s right for you, whether you want to test drive for 3 months or maximize your benefit with a yearly subscription.
• Weekly Market Updates are sent directly to your inbox with junior resource sector commentary and news on the companies in the Premium Portfolio.
• Get access to all prior issues of Premium and take full advantage of years of market research and commentary.
• Portfolio company rankings with buy at or below pricing, plus % allocations of each position.
• Q&A – I answer all of my subscribers’ questions!
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Subscribe to Junior Stock Review Premium

 

Still have questions? You can email me personally here: juniorstockreview@gmail.com

 

Perfecting your craft as an investor, especially in the junior resource sector, is a continual process.

For me, it’s something I’ve been working on full-time for the last 8 years.

One lesson that needs to be learned as quickly as possible is how important the people are to the success of a junior company.

Without good stewardship, a junior company is rudderless and doomed for failure.

Sometimes, the good people are overshadowed by the geology – exceptional drill results.

Investors forget that it was the management that picked the project and planned the exploration program.

Good people know what they’re looking for.

And, once they’ve found it, they systematically work at revealing its value.

But, the story isn’t done there, communication with the market is paramount – turns out the best people are good at that, too.

Currently, the resource market is littered with high quality management teams, with top-tier projects and are selling at a discount to the metal price.

This situation isn’t new to me.

I’ve been here before.

I had the patience and the know how to pick the good companies and, ultimately, changed the course of my life.

 

 

A Bull Market in 2024?

For me, the stretch of time between 2013 to 2016 is unforgettable.

It was the deepest bear market I had ever encountered.

I had sold my house and used ⅔ of the equity to buy a select group of junior mining companies.

Over those 3 years, I saw my portfolio fall by more than 30%.

It was tough, I often wondered if I did the right thing.

Turns out, I did – 2016 was incredible.

The funny thing is, I didn’t even see it coming.

Rick Rule has often told me, and I’m paraphrasing, “investors’ outlook is influenced by the immediate past.”

It’s so very true.

For 3 years, all I knew was a falling market.

Companies would release good news and the share prices would fall – it was a liquidity event.

Worried investors were using the good news to capture volume and sell down their positions.

Sound familiar?

It should.

2022 and 2023 were eerily similar to 2014 and 2015.

Much like that period of time, I think today feels a lot like early 2016.

For those who don’t remember or weren’t in the market at that time, 2016 was the start of a bull market that changed my life.

I had hand picked a select portfolio of what I thought were the best of the best junior mining companies.

That portfolio returned roughly 300% over that next year.

With that windfall of profits, I left my career in steel manufacturing to pursue investing full time.

It’s now been 8 years since I made the leap toward my own personal freedom and I could never go back.

When I look at the market today, my experience tells me we’re in for another one of those life-changing years in 2024.

Precious metals prices continue to trend upward while the junior mining companies are lagging behind.

This is where the opportunity is.

Just like in 2014 and 2015…if you can pick the right companies.

Speaking of picking the right companies, I will share with you the biggest win of my investing career so far.

It’s AbraSilver (ABRA:TSXV).

I first identified AbraSilver back in 2019.

It was selling for C$0.025/share.

The market hated it, completely disinterested.

But I saw something more.

I saw a company with a brand new management team – CEO John Miniotis and VP Exploration David O’Connor.

These men’s pasts were decorated with success and having met John in person, I knew he was the right man to lead ABRA and develop Diablillos into a future mine.

The people part of the equation was filled.

Next, I could see that they had a small but expandable gold and silver oxide resource.

Exploration potential captures market attention almost regardless of the overall market sentiment.

Having it is a huge plus for any junior mining company.

The project, Diablillos, is located in Salta, Argentina.

Rightfully, there are question marks surrounding Argentina and its mining investment attractiveness.

I don’t disagree.

But, when a company has the right people and project, and is selling for less than its worth, to me, it’s an opportunity.

Finally, I was able to recognize where precious metals prices were headed and how AbraSilver’s story would attract market attention.

I then bought shares in the open market and participated in their next 2 financings, which occurred in the heart of the Covid panic.

In just over a year, AbraSilver’s share price hit a high of C$0.82/share and returned the biggest win of my career so far – $0.025 to $0.82 = 32x!

Today, I still own and cover AbraSilver in Junior Stock Review Premium.

They now have 209Moz silver equivalent ounces in their Reserves and I think have the potential to add a lot more.

Not only this, but a major mining company, Kinross (K:TSX), just recently took a 9.9% stake in the company.

Without a doubt, AbraSilver is a top-tier acquisition target by all the senior precious metals mining companies.

Will 2025 be the year they get taken out?

I certainly wouldn’t be surprised if it were.

Precious metals prices look like they should remain strong and I think that bodes well for M&A.

Senior producers are continually depleting their reserves and, therefore, have to replace them.

In my view, AbraSilver will be at the top of the list when it comes to M&A targets.

To follow AbraSilver’s news flow and get my view on where things are headed on a weekly basis, subscribe to Junior Stock Review Premium.

For a limited time, I’m offering 20% OFF Premium by using the coupon code: SAVE20 on both the quarterly and yearly subscriptions.

 

 

Field Notes YouTube Video Series

Last August, I started a YouTube video series titled, Field Notes.

The series is all about my journey as an investor in the junior resource sector.

More specifically, I take you along into the field to the companies’ projects that I’m personally invested in.

Site visits aren’t something that every investor gets to do, yet they are incredibly useful and important in the process of picking good investments.

Seeing the lay of the land, meeting the locals surrounding the project and getting to spend extended 1 on 1 time with management can’t be beat.

Field Notes fills that gap for the investors who can’t make it to the site.

In Episode #1, I share my story and how I used the junior resource sector to gain the personal freedom that I enjoy today with my family.

Check it out and, if you like, please subscribe and support the channel.

 

 

MUST-see Media

 

• Rick Rule’s Keynote Speech from Precious Summit in Beaver Creek, Colorado
• Strategic Speculations: The Next 12 Months (MIF Vancouver, Sept.21st)

 

 

 

 

Interested in becoming a Premium subscriber?

For a limited time, I’m offering 20% OFF Premium by using the coupon code: SAVE20 on both the quarterly and yearly subscriptions.

Here are a few of the answers to the most commonly asked questions about the newsletter;

• Choose from a Quarterly or Yearly Subscription Option
  • •  Choose what’s right for you, whether you want to test drive for 3 months or maximize your benefit with a yearly subscription.
• Weekly Market Updates are sent directly to your inbox with junior resource sector commentary and news on the companies in the Premium Portfolio.
• Get access to all prior issues of Premium and take full advantage of years of market research and commentary.
• Portfolio company rankings with buy at or below pricing, plus % allocations of each position.
• Q&A – I answer all of my subscribers’ questions!
• The Diligent Speculator Video Series – A Bonus for Yearly subscribers only, learn about geology & deposit types, exploration techniques, mineral processing and metallurgy, balance sheets and much more.

 

Subscribe to Junior Stock Review Premium

 

Still have questions? You can email me personally here: juniorstockreview@gmail.com

 

What is the first thing that pops into your mind when you think about Argentina?

For some, it’s Lionel Messi or football (soccer for those in North America).

For others, it’s beef; I’ve been told that Argentina’s steakhouses are among the best in the world.

For investors, it’s most likely a thought about risk.

So why do investors associate Argentina with risk?

Since the 1930s, there have been issues with Argentina’s economy.

It has been a constant struggle to manage its national debt, control inflation, and now, within the last 20 years, deal with the consequences of a default on the national debt in 2001.

Going back to the early 90s, Argentina dealt with their inflation issue by pegging the peso, at par, with the U.S. dollar.

Further, the government privatized numerous state-owned and operated businesses to stimulate the economy and, of course, provide a much needed boost to the government’s treasury.

In 1998, however, things began to unwind, as debt continued to grow and the boom created by the privatization of the state-owned companies diminished.

Over the next 3 years, things progressively got worse, and eventually, it led to Argentina’s now famous default on their national debt in 2001 – roughly US$93 billion.

The situation spiralled out of control.

The peso took a massive hit.

Bank deposits were frozen.

The unemployment rate rose to over 22% and social unrest followed.

From this point onward, the country has never really been able to “right the ship†as they say.

To be honest, it really doesn’t surprise me, either.

As debt levels begin to rise and reach or exceed that of GDP, historically speaking, there is no turning back.

Not only is rising debt an issue from an economic standpoint, but socially, easy money becomes a part of the culture – it’s hard to break.

Applying this to Argentina’s situation, I really see no discernible changes in the obviously flawed government policy that led to this mess.

You can’t fix a debt issue with the same policies that created the issue in the first place.

Like so many countries, these days, governments have let their debt load rise to a point where they can’t even service the interest (at reasonable rates) on the debt.

Rather than default, governments or central banks choose to lower interest rates and begin the process of spurring inflation.

Inflation, however, like most things in life, is a double-edged sword.

Yes, you are able to inflate away your debt by de-valuing your currency, but it comes at a high cost.

First, you can’t control it.

Inflation isn’t like a light, you can’t turn it on and off at will.

Second, inflating away debt destroys the middle class, the very people whom government’s say they are trying to help.

SIDE NOTE: It’s estimated that Argentina’s annual inflation is an astounding 40%. Remember, the U.S. Federal Reserve has openly stated on numerous occasions now that it wants to trigger inflation within the U.S. economy. Inflation will devalue the USD and, over time, allow payback and the servicing of the national debt. I understand the intrigue of the idea, but the fact is, it can’t be controlled and, unfortunately, comes at a huge cost. Readers take note of the situation in Argentina and the numerous other examples we have seen throughout history. None of the situations are exactly alike, some worse than others. Bottom line, it doesn’t ever end well for the average Joe.

It’s a crazy, never ending loop.

While Argentina is particularly bad at managing its debt, it isn’t alone.

Most of the world, especially due to the Covid-19 pandemic, has elevated their debt levels to realms that are impossible to service at healthy or normal interest rates.

We are truly living at an interesting juncture in human history.

So, with this in mind, as resource investors I think that there are 2 main questions that need to be asked.

The Current Situation

First, from an economic standpoint, what is the current situation in Argentina?

Argentina continues to struggle with its current financial situation.

They have defaulted on their debt for a ninth time since 2001 and have an economy which is estimated to contract by 12% in 2020.

The latest default is linked to a US$57B IMF bailout in 2018, which, at the time, was coined as a ‘standby financing’ which would allow the economy to recover and put Argentina in a position to begin paying off their debt.

The economic recovery didn’t happen and the Covid-19 pandemic certainly hasn’t helped, but is hardly the main reason for the failure.

It’s obvious that this is a continuous loop of defaults, inflation and bailouts.

SIDE NOTE:  Argentina’s international credit rating with Standard & Poor, Fitch and Moody’s is ranked alongside countries like Ecuador, Venezuela, Lebanon, and Congo. These aren’t the countries you want to be associated with when it comes to economic prosperity.

In eerily similar fashion, today, Argentina is in the midst of negotiations with the IMF on restructuring their debt and delaying payback until 2024.

This is a key negotiation for both parties.

From the IMF’s view, they just want to get paid, and there’s nothing wrong with that.

My guess is that the IMF wants to find terms that don’t completely tie the Argentine government’s hands, but are stiff enough to prevent the chance of another default in the future.

As the Argentine government states, they don’t want to default on their debt and this is why they are looking for further wiggle room in the payback structure.

In my view, prevention of a future default on debt is inextricably linked to a cut in government spending – without a doubt.

With that said, given their past and the fact that there are midterm elections on the horizon, I find it highly unlikely that this will happen.

The government, however, has announced new stiffer capital controls, in addition to those adopted in 2019, which are aimed at stabilizing the country’s foreign currency reserves.

The foreign currency reserves, mainly their holdings of USD, are vitally important because their debt is denominated by USD.

Citizens are being dissuaded from purchasing USD and selling pesos, and at the moment, they can only acquire a maximum of US$200 per month.

Further, there’s a new 35% tax on USD denominated purchases, which is on top of the 30% solidarity tax that’s already in place.

Corporations, like Argentina’s citizens, are subject to similar controls that are aimed at diminishing the export of USD.

This mainly affects how companies distribute dividends, export goods and service their USD denominated debt, although new recent regulations were recently put in place to solve these issues, as mentioned below.

SIDE NOTE: The Peso is losing its value at such a high rate that nothing of significant value is priced in it – Real estate, vehicles or any other big ticket items are all priced in USD.

With rampant inflation and stringent capital controls, a black market for USD has sprung up.

The official exchange rate – 74ish Pesos to 1 USD.

The unofficial or black market rate – 150ish Pesos to 1 USD – and rising fast.

As you can see, for those looking to acquire more dollars or dollar denominated services/products, the cost is enormous.

Moreover, these restrictions, while bringing short-term stability to the foreign currency reserves, without a doubt, have cast further doubts about the investment attractiveness of Argentina.

Mining Investment Attractiveness of Argentina

So now, as resource sector investors, what’s the current mining investment attractiveness of Argentina?

This is a great question and the whole point of this article.

The fact is, if you just read the headlines surrounding the current risk in Argentina, you would be missing a big part of the equation.

As always, there’s never a ubiquitous answer to any question, it always depends.

In this case, it depends on:

• Type of Company – At the moment, junior mining companies that are exploring and/or developing projects are able to take advantage of the unofficial exchange rate between the Peso and U.S. dollar by completing what some of the companies call a “Blue Chip Swap (BCS)â€.

A BCS is when a company imports USD into the country and invests it into blue chip stocks on the Argentine exchange.

 After holding it for a period of time, they then liquidate the position and are able to take the cash out and convert it at the unofficial exchange rate – completely legal.

To note, all the companies that I spoke with use the official rate to set budgets.

For companies that only burn cash, this is a major plus.

For producing companies, it’s a little different.

As I stated earlier, there are restrictions on USD out flows – dividends, profits and debt payments.

With that said, the government has relaxed some of the restrictions in light of the importance of mining.

• Reduce the export duty for mining exports from 12% on FOB value to 8%
• Include mining activity in the strategic plan for the reactivation of the Argentine Economy.

Further, the Central Bank Of Argentina (BCRA) stated the following in ‘Communicacion A 7123’:

• Foreign currency brought into Argentina and liquidated into pesos by export companies will enable those companies to: (i) pay off capital and interest of foreign loans (provided that repayment terms are greater than one year) and (ii) repatriate capital, which we understand includes dividends, from investment projects once they have started operations.
• All this is subject to certain conditions (that the mining industry meets) such as the following: 1. The exports refer to productive projects that generate export goods and / or that allow substituting the import of goods; 2. The foreign currency from exports is entered into the country as from October 2, 2020; 3. Those who opt for this regime designate a financial entity that will do the follow-up. For those who opt for this regime, the amounts of foreign currency that they will be able to acquire for imports are also increased (50% of what is exported).

• Location – As they say in real estate “location, location, location,†and the statement applies to the junior mining world.

As I mentioned in Part 1 of the series, it’s key to understand the risks at the national level and work your way progressively down to the state or province then to the region or county, and finally, at the local town or city level.

As you progress toward the exact location of a prospective company’s project, you will uncover any hidden risks at the upper levels.

In terms of Argentina, it’s all about which province the project is located.

San Juan and Salta, in particular, are great provinces in which to be a mining company.

Both have the history, mining law and general positive attitude toward mining.

Here’s a look at how the Fraser Institute ranks mining investment attractiveness in Latin America.

Source: 2020 Fraser Institute Rankings

As you can see, San Juan and Salta are ranked #2 and #4 in Latin America and only trail Chile and Peru, which are widely considered some of the best places in the world for mining investment.

In Argentina, the provinces control the mining law and collection of taxes, which are capped at 3% of revenue.

Now that we have an idea of Argentina’s current situation and how it affects junior mining companies, it’s pertinent to explore risks that may occur in the future.

I think there are 3 main risk factors that we need to explore:

• Nationalization of Assets – The nationalization of assets is a very real risk.

Unfortunately for investors in the resource sector, it does happen and, more specifically with Argentina, it has happened once fairly recently.

In 2012, the Argentine government voted to re-nationalize the country’s largest oil company, YPF.

For context, YPF was once an entirely state-owned company until the spree of privatization in the 90s, which resulted in a large portion of the company being sold off to foreign interests.

 The YPF privatization was highly criticized in Argentina since other countries in Latin America kept their state-owned oil & gas companies (Petrobras in Brazil, Pemex in México, etc.) in order to maintain sovereignty over these resources.

At the time, Christina Fernandez de Kirchner (now VP under Alberto Fernandez) was President and justified the re-nationalization on the grounds that the private company didn’t boost the oil and natural gas production needed to keep up with local demand.

This move has and will continue to haunt Argentina moving forward.

So, are junior mining companies at risk of having their projects or mines nationalized?

No one can say ‘yes’ or ‘no’ without a doubt.

What I will say is that at least a portion of the risk is dependent upon the type of company.

In my view, the companies that are exploring or developing a project(s) in Argentina are less likely to see their projects nationalized than a producing mine.

Junior mining companies require both cash to burn and a niche skill set to effectively explore and develop projects.

 I highly doubt this is an appealing prospect to a government.

Second, while the risk is higher for producing hard rock miners, I still think that there are many barriers to making nationalization an appealing alternative for governments.

Why nationalize and have to operate a mine when you can just tax it?

Further, while YPF is a recent example of nationalization in Argentina, I wasn’t able to find an example of a fully private company that was nationalized by the government.

While I know the government is fully capable of stealing, I’m less inclined to believe that is the course of action they would prefer to take.

• New Tax Regime – It’s my contention that the greatest risk to mining companies within Argentina is the risk of increased taxes in the future.

A new tax regime could remove a good portion, if not all, of the profitability of a mine.

How likely is it to happen?

That’s a really hard question to answer.

There are a couple of scenarios that I think could make taking a larger chunk of the mining company profits tempting.

• A major spike in the metal prices – In my view, mining is one of the few sectors that I think will show major growth over the next few years. This growth will be driven by high metal prices.
• Brink of another default – As I mentioned, I don’t see any dramatic policy changes related to spending coming anytime soon. This is a problem moving forward as it appears that their current loop of borrow, inflate, and default will most likely continue into the future without a drastic change to how the country is run.

While the threat of higher taxes is a risk to mining companies in Argentina, it may only be a threat to future mines.

It should be noted that junior mining companies, by current law, lock in tax rates for 30 years of production once a Feasibility Study (FS) has been completed on their project.

Now, this doesn’t mean laws can’t be changed – they can be.

But I can’t help but think that the fallout of such measures would cause much more damage than any short-term gain.

Ecuador is a great example for Argentina.

Their institution of a windfall tax had devastating effects on the mining sector.

With a new government in place, the impact of the windfall tax was re-assessed and, with the help of Wood Mackenzie, Ecuador revamped their tax regime to better reflect best practices worldwide.

Low and behold, investment dollars from investors and major mining companies have begun to flow back into the country.

Ecuador is by no means a perfect jurisdiction for mining, but it’s getting better and has outstanding geological potential.

Mining is a huge part of Argentina’s economy, especially in provinces like San Juan and Salta where mining accounts for more than 80% of the province’s revenue.

They can hardly afford to lose it.

For perspective, for every US$1 that leaves the country because of mining, US$24 comes in.

Higher taxes on mining aren’t the answer to Argentina’s debt issues.

If anything, the government should make it a priority to enhance Argentina’s mining investment attractiveness, not further destroy it.

In the end, I think that the provinces that are pro-mining and have a history of upholding its mining law will remain that way.

With regards to the Federal government, it’s much harder to gauge.

Mining Companies in Argentina

Many of the biggest senior gold and silver miners have operations or are developing mines in Argentina.

Here’s a list of a few of them:

Pan American Silver (PAAS:TSX) – Operate their Manantial Espejo mine in Santa Cruz and owns the Navidad project in Chubut.

Fortuna Silver (FVI:TSX) – Recently spent US$300M in CAPEX to construct their Lindero Mine, which is located in Salta.

Barrick Gold (ABX:TSX) – Operate their Veladero mine and the Lama project and new exploration areas in San Juan.   In 2020, Barrick also entered the Salta province by signing an earn-in agreement on the El Quevar silver project.

SSR Mining (SSR:TSX) – Operate Puna which is comprised of the Chinchillas mine and Pirquitas processing facility which is located in Jujuy.

Newmont (NGT:TSX) – Operates the Cerro Negro mine in Santa Cruz.

McEwen Mining (MUX:TSX) – Operate their San Jose silver-gold mine in Santa Cruz jointly with the Peruvian company Hochschild, and also owns the large-scale Los Azules copper project in San Juan.

Yamana (YRI:TSX) – Operate their Cerro Moro in Santa Cruz.

Austral Gold (AGD:ASX) – Operate their Casposo mine in San Juan.

First Quantum Mineral Ltd. (FM:TSX) – Advancing their Taca Taca project in Salta.

Glencore PLC (GLEN:LSE) – Operate Bajo de la Alumbrera project in Catamarca, jointly with Goldcorp and Yamana Gold,  and also owns Pachon in San Juan.

A few junior mining companies that are exploring and developing projects in Argentina:

AbraPlata Resources (ABRA:TSXV) – PEA Level Project

JoseMaria Resources (JOSE:TSXV) – PFS Level Project

Filo Mining Corp. (FIL:TSXV) – PFS Level Project

Aldebaran Resources (ALDE:TSXV)

Golden Arrow Resources (GRG:TSXV)

Neo Lithium (NLC:TSXV)

Lithium Americas Corp. (LAC:TSE) – Under construction

Concluding Remarks

In my view, protecting your downside risk by investing in companies that are selling for less than their value is an essential part of making money consistently in the junior resource sector.

The higher the delta between price and value, the more downside protection you have.

I believe, therefore, that it allows for investment in opportunities in some of the riskiest jurisdictions on the planet.

Now, there’s a thin line here, you do have to understand what you are getting into and how the company you are investing in is going to navigate that risk and, ultimately, make you money.

There are going to be some situations that just aren’t worth the risk or the time commitment.

Personally, I think that I have a good understanding of the situation in Argentina.

There is risk.

With that said, I’m ready to make investments in junior mining companies operating there if they fit my framework for an investable company.

As always, the thesis starts with the people running the company.

Do they have the IQ, experience and backing to execute the action plan which they are pitching?

Second, if it’s the right people, is the company selling at a discount to its value?

The higher the discount to value, the more appealing the opportunity is.

Third, where is the project located?

Personally, I want to concentrate on San Juan and Salta.

I put my money where my mouth is and have put this framework to use.

Last year, I invested in AbraPlata Resources at $0.033/share.

It’s run by the right people.

At the time of investment, the company was selling for a steep discount to value.

Finally, their Diablillos project is located in Salta.

All the right ingredients needed to protect my downside risk, plus it had huge upside potential if the company executes on their plan.

Today, the share price is roughly $0.38, a more than 10 fold increase and, at the moment, a vindication of the original investment thesis.

Investing your money in countries like Argentina come with risk, but if you have done your homework and have applied a framework for decision making, it’s my contention that you have given yourself the best opportunity to be successful.

Finally, there’s nothing wrong with avoiding risky jurisdictions, just remember any country/government is capable of stealing your money.

Use the Coupon Code DILIGENT to get 25% off a subscription to  and get my best investment ideas and commentary first.

Until next time,

 

Brian Leni P.Eng

Founder – Junior Stock Review Premium

 

Disclaimer: The following is not an investment recommendation, it is an investment idea. I am not a certified investment professional, nor do I know you and your individual investment needs. Please perform your own due diligence to decide whether this is a company and sector that is best suited for your personal investment criteria

Our success in life is largely due to the quality of the decisions we make.

The more consistently we make good decisions, the better chance we have of achieving our personal goals.

So why do some people tend to make good decisions consistently?

This is a great question.

I think the answer is that some people have better frameworks for making decisions than others.

For some, these frameworks come naturally, it’s just the way that they think.

For others, it often requires a conscious decision to follow a framework for their decision making, which, of course, is influenced by what they want to achieve.

The more scattered or unfocused your goals, the weaker your framework is for decision making and the more susceptible you will be to emotional states of mind.

Be very specific with what you want in your life and, more pertinent to this article, what you want out of your investments.

This will dictate the ideal framework for your investment decisions.

It’s clear to me that the core reason I have lost money in the market, in the past, is directly related to the poor decisions that I’ve made.

Unfortunately, mistakes will happen, no one is perfect.

With this said, my personal goal is to both reduce the number and severity of the losses in the future.

Thus, as I’ve stated, I created and use a set of rules to anchor my thoughts and decisions regarding my investments.

My framework and adherence to that framework for decision making in the junior resource sector is better than the average investor.

I’m, therefore, able to minimize my mistakes and, consequently, am able to profit consistently no matter what market we’re in.

Today, I would like to discuss a particularly important subject when it comes to junior resource sector investment – jurisdictional risk.

Unlike many other types of businesses, mineral deposits or mines can’t be moved if a country suddenly becomes a place where it’s hard or impossible to do business.

The assessment of risk within a jurisdiction, therefore, is an integral part of a junior resource sector investor’s decision framework.

While it’s integral, in my view, it isn’t where you should start.

Personally, I think you begin your investigation with answering the following question; what is the delta between price and value?

Buying a company which is trading for less than its value is the overriding principle that must be followed continually to ensure success in the junior resource sector.

Once you have determined that a company is selling for less than it’s worth, you proceed to contrast that value proposition against the risk to investment.

Putting it together, if you personally think that the value proposition contrasted against the downside risk is acceptable, you should be a buyer.

It’s easier said than done.

Identifying and understanding the risks are a big part of being successful.

As I said, employing a system or framework for analysis can drastically improve your rate of success and, ultimately, minimize your biggest risk to your investment – YOURSELF!

Let’s take a closer look at some of the points to consider when constructing your framework for analyzing jurisdictional risk.

A Framework for Analyzing Jurisdictional Risk

Jurisdictional risk is a complex topic.

With that said, I think breaking it up into individual components is a great way to simplify the analysis.

For me, I think there are 3 main components:

• Mineral Potential
• Geography and infrastructure
• Political Risk
  • Law
  • Culture
    • Influences – dominant religion(s), genesis of the country, demographics, etc.
  • Geography
• Timing
  • Flow of Cash – Smart money is typically paying close attention to the timing aspect.

Mineral Potential

Why do junior resource companies explore for mineral deposits in some of the world’s riskiest jurisdictions?

The answer is straightforward; for the most part, all of the large, outcropping, easy-to-find deposits in tier #1 jurisdictions have already been found.

It’s, therefore, the probability of making a big discovery which drives exploration teams to take their drills to these far flung locales.

Further, mineral potential can be gauged by looking at historical discoveries in the region or by simply looking at a map and looking for areas with high geological activity, such as mountain chains.

The potential or the actual size and quality of the deposit should be at the forefront of every resource sector investor’s mind.

Taking it a little further, while the mineral potential is first and foremost, infrastructure can be a major hurdle to overcome, even for the best deposits.

Road access, power, water, and deep sea ports are all major factors contributing to not only the discovery of new deposits, but also the conversion of those deposits into mines.

Both the mineral potential and infrastructure quality are inputs for computing a project’s underlying value, which can then be contrasted against the company’s market price.

The delta between these values will allow you to understand the value proposition.

Political Risk

There aren’t many topics that get more complex or emotional than those focused on political risk.

Political risk breaks down further into a number of sub-topics:

• Law – The rule of law within a jurisdiction is very important as it should clearly outline the criteria for ownership, taxation and liability.  It’s important to research a jurisdiction’s past and current reputation for upholding the laws that it’s supposed to be governed by.
• Culture – This is where things get complex, as a country’s culture is formed over hundreds of years by numerous inputs. Inputs such as the dominant religions, demographics, how and when the country was formed, and much more. What you see is what you get. Don’t expect a cultural shift in your lifetime. Things may appear to be changing or shifting in a direction, but much like markets, there’s always a reversion to the mean.
• Geography – The location and terrain of a nation play a big role in its risk profile. For instance, if a country is land locked, this could be an issue for travel, the importing of exploration equipment, or future export of mineral concentrates. Further, if the country is located next to a high risk country which is dominated by a terrorist organization, civil war or a virus outbreak – these issues can plague neighbouring nations.

Timing

Much like markets, in my view, jurisdictional risk moves in a cyclical motion.

The risk is always there, but it can change briefly after extremes in risk are realized.

Such as after a civil war, the fall of a dictator or on the less extreme end of things, the mass exodus of mining companies due to a new and damaging tax regime.

As I have said many times, it’s impossible to time markets with any consistency.

Sticking with the comparison of markets to the cyclicality of jurisdictional risk, I think that it’s very hard to try and pick a bottom.

What I suggest is that investors don’t try and pick the bottom, let someone else do that.

Look for smart or big money entering a risky jurisdiction after one of those climax-like events happen.

Smart or big money can be named investors putting a large chunk of cash into a junior, or maybe it’s a senior mining company which is buying a project they’re looking to develop on the cheap.

It’s a really good sign for investors in junior companies when a senior mining company sinks big dollars into a project to turn it into a mine.

Fraser Institute

While certainly not being perfect or the definitive source, the Fraser Institute does a great job at quantifying jurisdictional risk in their annual rankings of Mining Investment Attractiveness.

I continually reference the rankings as part of my research into a jurisdiction.

They are free to access and review; I highly suggest adding this to your investor tool kit.

Concluding Remarks

Jurisdictional risk is a huge topic, one that actually requires much more depth than I covered in this article.

Further, I think to really understand the topic, you need to do more than just a desktop review, you really need to visit the country in question.

It isn’t until you visit a country that you can begin to understand the culture and the nuances that come with it.

Further, while much of the jurisdictional risk discussion revolves around countries, you must really drill down to the local level of the project.

Start at the country level and move down to state or province, then move down to county or region, and finally, move down to the immediate locale – town or city.

It’s here where you can find a whole other sub-culture, one which most likely has its own nuances.

With the knowledge gained from this article, you can begin to form your own framework for analyzing jurisdictional risk.

Creating the framework and doing the research puts you miles ahead of the average investor in the junior resource sector.

It’s that advantage which will give you a leg up when it comes to becoming consistently successful with your investment choices.

In Part 2 of the series, I will use the framework laid out in this article to analyze a specific country.

Stay tuned.

Get the e-book Junior Resource Sector Investing Success: The Risks, Rules & Strategies You Need to Know today, when you become a FREE Junior Stock Review VIP .

Until next time,

Brian Leni P.Eng

Founder – Junior Stock Review Premium

Disclaimer: The following is not an investment recommendation, it is an investment idea. I am not a certified investment professional, nor do I know you and your individual investment needs. Please perform your own due diligence to decide whether this is a company and sector that is best suited for your personal investment criteria

Prior to the 2019 edition of the Sprott Natural Resource Symposium, I mentioned that Rick Rule’s speech on Thursday August 1^st would be worth the price of admission – he didn’t disappoint!

The speech was entitled, Lessons, Re-Learned, In a Bear Market, and for good reason, as Rule covered many of the lessons that I have found so helpful over the course of my investing career.

Here’s a look at 2 lessons that, when incorporated into your investment process, in my view, will be key to your success.

1. The sequence of answering unanswered questions leads to high returns over time.

This lesson is the basis for share price appreciation across all sectors, but is particularly important in the junior resource sector.

So, given its importance, how does one identify a company’s unanswered questions?

The unanswered questions focus on the catalysts that will drive the share price in the future, for example, the most common unanswered questions surround drill results.

Invariably, the answering of these questions leads to more unanswered questions and, thus, the process really never ends until you get a “no” answer or you have attained an acceptable amount of profit (different for everyone).

Along with identifying the unanswered questions, it’s paramount that the investor evaluate the probability of attaining a “yes” answer to each of the questions and weigh it against the potential profit.

Evaluating the probability of success is rooted in the company’s fundamentals, aspects such as who is running the company, its share structure, its cash position, the geology of the property and the jurisdiction in which the company is operating – to name just a few. 

Examples of unanswered questions:

Question – Does the mineralization extend along strike from the existing deposit?

• If yes, how far and at what grade?

Question – Is the mineralization amenable to standard mineral processing techniques – crushing, grinding, floatation, magnetic separation?

• If yes, are there any deleterious elements contained in the concentrate?
  • If yes, what are smelter penalties?
• If yes, what is the metal recovery?

Share prices are driven by catalysts, and by focusing on these quantifiable answers, an investor can not only maximize his potential profit, but also minimize the effect that emotion has on their investments.

1. When the reason to own a stock goes away, the stock needs to go away.

Lesson #2 is closely linked with lesson #1, but is particularly important in my opinion because selling a losing position can be hard to do.

The basis of this lesson is rooted in selling a stock because of receiving a “no” answer to an unanswered question. In my experience, this is very wise advice, especially in the short term, as it most often takes time for a company to reset and recover after failure.

Additionally, I think you can parlay lesson #2 a little further.

For example, you may invest in a company for specific reasons, such as its business model, the involvement of a particular person, its focus on a particular metal, or maybe it’s an interest in a particular project.

Following the mantra of lesson #2, if any of these reasons change, it’s time to sell. For example, if a project generation company whose business model centres around using “other people’s money” to explore their properties changes to using their own money to explore, you may want to think about selling, as the risk profile of the company just changed.

In my view, these lessons are invaluable and, when practiced, easily justify the price of admission to a conference such as the Sprott Natural Resource Symposium.

With that said, it will be 2020 before you know it, and with it a chance to register for next year’s conference at a significant discount if done early. Watch for the links in the New Year.

Symposium Exhibitors

One of the many perks of attending the Symposium is its list of exhibitors, each of which has been vetted by the Sprott organization and owned in a Sprott managed equity account.

While this is definitely an advantage, it doesn’t mean that investors should freely invest in any company at the conference. No matter who recommends a company, each investor is obligated, in my view, to complete their own due diligence and determine if it’s an investment which fits their own personal criteria.

I met with 10 companies that were exhibiting at the Symposium and compiled a few notes on each of them. In no particular order:

Aethon Minerals (AET:TSXV)

MCAP – $5 million (at the time of writing)

Cash – Over $3 million

• Altius Minerals (ALS:TSX) spin out in 2018.
• Recently announced a merger with AbraPlata, whereby all of the issued and outstanding Aethon shares will be exchanged on the basis of 3.75 AbraPlata common shares for each Aethon share. This implies consideration of $0.248 per Aethon Based on the 10-day volume weighted average of AbraPlata shares $0.661.
• Currently, Aethon is trading at discount to AbraPlata.
• John Miniotis will be the new company’s President and CEO.
• Flagship asset – the Diabillos Project has a total indicated resource of 27,100 tonnes – 80.9 million oz of silver at 93.1 g/t and 732k oz of gold at 0.84 g/t and an inferred resource of 1,100 tonnes – 1.69 million oz of silver at 48.8 g/t and 29K of gold at 0.83 g/t.
• Diabillos Project – High grade precious metal exploration potential.
• Large Chilean land package which is slated for future joint ventures with senior mining companies. I expect to see a JV deal before the end of the year.

Hot Chili Limited (HCH:ASX)

MCAP – $44 million (at the time of writing)

Cash – Over $1 million AUD (will need to finance for Phase 2 drilling)

• Christian Easterday is Managing Director.
• 2 Projects: Cortadera Copper Porphyry Project and Productora Copper Project.
• Cortadera was optioned from a private Chilean mining group, SCM Carola, earlier this year.
  • Located 14 km from Productora Copper Project.
  • Initial 5,500 m drill program was highlighted by the discovery of a new high grade zone at Cuerpo 3, the main porphyry- CRP0013D – 750 m grading 0.6% copper and 0.2 g/t gold from 204 m depth, including 188 m grading 0.9% copper and 0.4 g/t gold.
  • Exploration potential – geochemistry and geophysics (ground mag and IP) have identified a North Target area which has never been drilled.
  • Exploration potential – Additionally, each of the 4 porphyry centres remain open at depth and laterally.
  • Phase 2 drilling to commence shortly.
  • Maiden resource on Cortadera to be released very soon.
• Productora Copper Project
  • Total Proven and Probable Reserves (JORC) – 166.9 tonnes at 0.43% copper, 0.09 g/t gold and 138 ppm molybdenum (at metal prices – Cu $3.00 USD/lbs, Au$1200 USD/oz and Mo $14.00 USD/lbs).

Altus Strategies (ALTS:TSXV)

MCAP – $16.9 million (at the time of writing)

Cash – roughly $1 million in cash and securities

• CEO Steven Poulton leads a team of geologists and mining engineers who have a history of success in the resource industry.
• Altus team has a long history of success in Africa.
• Insider Ownership – CEO Steven Poulton owns 14.2%.
• Strategic shareholders, which includes – Exploration Capital Partners (2012 and 2014) combined 13.2%, and Euro Pacific Gold Fund 3.8%.
• 18 projects, all located in Africa, encompassing a wide range of precious and base metals.
• Prospect generator business model.
• Targeting greater than $10 million USD per annum JV financed exploration expenditures.
• 9 projects in the “Joint Venture Ready” portion of their development – precious and base metals.

Millrock Resources (MRO:TSXV)

MCAP – $8.3 million (at the time of writing)

Cash – Over $2 million in cash and securities

• Greg Beischer is President and CEO.
• Millrock is mainly focused on mineral exploration within the Tintina Gold Province located in Alaska, but does have additional project interests in BC and Mexico.
• Prospect generator business model.
• No joint venture partners at the moment, however, this is likely to change in the weeks to come.
• Currently, the Goodpaster Project is a focus for the company, as they are targeting an extension to Northern Star’s Pogo mine.
  • Using CSAMT geophysics Millrock is targeting a deep shear zone to the west of the existing mine. Key to this program is the fact that they are using the same contractor as Northern Star did to complete the work.
  • Completion of the program will either be followed by a decision to drill or wait for a JV partner to fund the drilling of the prospective target.

Mundoro Capital Inc.

MCAP – $8.67 million (at the time of writing)

Cash – $3 million (Q1-2019)

• Teo Dechev is President and CEO.
• Prospect Generator business model.
• Exclusively in Eastern Europe, mainly Serbia and Bulgaria.
• JOGMEC JV – Currently in Phase 2 program – geophysics, with drilling to follow in Q3 2019 – JOGMEC can attain 51% of the project by spending $4 million USD in expenditures by March 2019 and purchase up to 80% of the project with the delivering of a Feasibility Study.
• Freeport JV – Currently in Phase 1 program – Alteration mapping and geophysics, with drilling to possibly follow near the end of Q4 2019 – Freeport can attain 51% of the project by spending $5 million USD in expenditures by September 2021 and up to 75% of the project by solely funding an additional $40 million in expenditures by 2026.
• Timok Project is up for Joint Venture, but no partner at the moment.
• Strategic Alliance In Bulgaria with JOGMEC.
• Large institutional holdings – 58%.

Ardea Resources (ARL:ASX)

MCAP – $59.44 AUD (at the time of writing)

Cash – $11.2 million AUD

• Andrew Penkethman is the CEO.
• Focused on both precious and base metals, with a primary push towards nickel-cobalt.
• Goongarnie Nickel Cobalt Project – PFS: 2.25 Mtpa, before tax NPV of $2.4 billion and IRR of 31%, CAPEX cost $918 million USD, Pressure Acid Leach (PAL).
• Large gold and nickel exploration land package totalling 3500 square kilometers.
• Possibility to spin out gold focused projects and make Ardea solely a nickel company as we move into what may be a strong nickel price environment in the years ahead.

Equinox Gold (EQX:TSXV)

MCAP -$843.6 million

• Christian Milau is CEO and Executive Director.
• Ross Beatty is a major shareholder, owing 12% of the company.
• Gold focused, with 3 advanced staged / mines in Brazil and California, USA.
• Aurizona Gold Mine poured its first gold in May 2019, 2019 production guidance is set at 75 to 90,000 oz Au at a AISC of $950 to 1,025/oz.
• Mesquite Gold Mine – in production, YTD 2019 – $70.8 million in revenue, 52K oz produced, $780/oz cost and a AISC of $907/oz. Production guidance updated to 125 to 145K oz at an AISC of $930 to 980/oz.
• Castle Mountain – 3.6 Moz Au reserves, 16 year mine life, $763/oz avg LOM AISC – construction to begin second half of 2019.
• Overal,l Equinox should produce 200 to 235K ounces in 2019, with a goal of attaining production over 1 million ounces per annum by 2023.

ISO Energy (ISO:TSXV)

MCAP – $49.9 million

Cash – $3 million

• Craig Parry is the President and CEO.
• Board of Directors is led by the Chairman Leigh Curyer, who is the CEO of NexGen Energy. NexGen owns arguably the best undeveloped uranium deposit in the world.
• Team has the background to be successful in the Athabasca Basin.
• NexGen owns 53.4%, Cameco owns 5.4%, Orano owns 2.0% and Institutional owns 19.2% – doesn’t leave much in the public float.
• Summer Drill Program – Hurricane Zone – 8 holes into a 16 hole program on their Larocque East Project, which is located in the eastern portion of the Athabasca Basin. Targets are hosted in Sandstone/unconformity. Drill program is expected to cost $1.5 million, leaving them with $1.5 million going into 2020.
• 3 other projects in their portfolio – Thorburn Lake, Radio and North Thorburn.

CanAlaska Uranium (CVV:TSXV)

MCAP – $11.24 million (at the time of writing)

Cash – roughly $1.0 million in cash and cash equivalents (April 2019).

• Peter Dasler is President and CEO.
• Prospect generator business model.
• 3 main Projects: West McArthur, Cree East and NW Manitoba.
• West McArthur is a JV with Cameco – Targeting a unconformity-basement uranium deposit.
• Cree East has no JV partner – 9 target areas across the property, possibility of both basement and sandstone hosted uranium deposits.
• NW Manitoba lies in close proximity to the Saskatchewan border and is similar geologically to Rabbit Lake, Collins Bay and Eagle Point Uranium mines which are within 90 km of the property.

Goviex Uranium (GXU:TSXV)

MCAP – $65.6 million (at the time of writing)

Cash – $2.8 million USD

Debt – $8.0 million USD

• Daniel Major is the President and CEO.
• 3 uranium projects, all located in Africa – Madaouela, Mutanga and Falea.
• Flagship Madaouela Project is at the definitive feasibility study stage of development. The Republic of Niger has signed a definitive agreement to jointly develop the project.
• After-tax NPV@8% – $340 million USD, IRR – 21.9% at a uranium price of $70 USD/lbs.
• Orano (formerly Areva) operates a uranium mine in close proximity to Madaouela, which is reaching the end of its mine life.
• “The State is to receive an additional working interest of 10% in exchange for approximately US$14.5 million of claims due by the Company to the State comprised of the final €7 million Madaouela I Mining Permit acquisition payment and settlement of previously challenged three years of area taxes (US$6.6 million) (collectively, the “Debt”) between the Company and the State related to the Madaouela Project. The Company is to receive a final, complete and unconditional release without reserves in respect of the Debt, upon the transfer the additional working Interest.” ~ News Release
• The company is working at optimizing its metallurgy and subsequently extract value from the other base metals that are present – nickel, cobalt and molybdenum. Gravity separation and floatation techniques are being tested for their ability to concentrate the metals effectively. If successful, these advances have the potential to positively affect the project’s economics.

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Until next time,

Brian Leni  P.Eng

Founder – Junior Stock Review

Disclaimer: The following is not an investment recommendation, it is an investment idea. I am not a certified investment professional, nor do I know you and your individual investment needs. Please perform your own due diligence to decide whether this is a company and sector that is best suited for your personal investment criteria.  I have NO business relationship with any of the companies mentioned in this article. I am a shareholder of Aethon Minerals.