As metals investors early in a new bull market, we endlessly assess metal moves and worry that the market is going to fail. And so we should: critiquing one’s thesis is essential.
But I would point to two current market themes that suggest there is still a lot of interest in mining.
The first is price moves on discoveries. I can’t point to a zillion examples because discoveries, by definition, are rare. But if you haven’t seen it already, take a look at Camino Minerals’ (TSXV: COR) share price.
Yup, that’s a price that shot from $0.35 to $1.81 in three days.
The cause was a discovery hole at Camino’s Los Chapitos project in Peru. Known was a zone of oxide copper mineralization at surface; unknown was what lay underneath. Camino drilled through the oxide and through a layer of magnetite into 106 metres of sulphide mineralization averaging 1.3% copper.
Eighteen months ago, I would wager the exact same hole would have elicited nothing more than a yawn from investors. The market was dead. Today it boosts the stock six-fold. Investors are engaged.
The second theme is major moves, by which I mean moves by mid-tier and major miners. Lately we are seeing an announcement almost every week of a miner investing in or partnering with a junior explorer. The latest deals include Barrick putting at least $18 million into ATAC and its Yukon property (and as much as $63 million) and Kirkland Lake putting $10 million into Metanor Resources.
Three years ago Barrick was barely spending a penny on exploration. Capital conservation was the name of the game; taking risks on new assets was shunned after massive debacles at Pascua Lama and the like. Now this: a steady stream of strategic investments, moves by majors to get a foot in the door with good exploration assets and teams.
Not only do such deals provide confidence that the market is strengthening, they are making it possible for explorers to explore.
Discoveries like Camino’s don’t happen unless drills are turning. Drilling takes money. The market is far stronger than it was 18 months ago, but capital remains constrained.
In that context the cash that majors are injecting into explorers is multiplying the potential for success in the field, for companies to make discoveries, grow deposits, demonstrate economics, and create the market success that is the reason we invest.
In her letter, Resource Maven explains what she is buying and selling, and why. Maven has bought into several of the markets best - performing stocks well ahead of the curve. She regularly identifies exciting new exploration opportunities and manages the inherent risk by selling some into speculative gains. And the mine builder and operator stocks that form the basis of the portfolio give strong, ongoing leverage to the rising prices of gold and silver. She has your precious metal bases covered.
Great letter this morning Gwen. I am not "all aboard" with your picks but your understanding of how best to manage a high risk portfolio is second to none. And I did buy a lot of G when you made the call and sold it about a month later for a very healthy gain. Thank you very much!
As for "shiny ponies" that are moving on anticipation and will move big on good news, you need to get on the BAY train. Just sayin’..........
I'm one of your new subscribers (by way of investing.com) and just want to belatedly thank you for the recent sell recommendation that saved me quite a bit of money. (I also follow a few other mining newsletters, and, like so many other financial analysts, they were too hesitant and biased against putting out sell alerts.) And I find your newsletters very nicely done in general.