Miner Exceeds Estimates for Gold Produced in Q3/17

Source: Streetwise Reports   10/19/2017

BMO Capital Markets reported the preliminary Q3/17 production results for this senior gold producer.

According to an Oct. 16 research note, Yamana Gold Inc. (YRI:TSX; AUY:NYSE; YAU:LSE) produced 257 Koz gold in Q3/17 from six of its seven mines (excluding Brio). The quantity achieved surpassed BMO Capital Markets’ expected 240 Koz “based on better-than-expected production from Chapada, Malartic and El Peñón, offset by lower production at Minera Florida,” indicated analyst Andrew Kaip.

As for other metals, Yamana produced 37.1 Mlb copper, which beat BMO’s anticipated 33.9 Mlb, Kaip added. It generated 1.43 Moz silver, which was in line with BMO’s estimate.

About the Canadian miner’s Q3 performance, Kaip concluded that “incorporating the stronger-than-expected production results is expected to have a positive impact to earnings.”

Yamana’s gold production for the first three quarters of 2017 is 717 Koz, Kaip noted. This represents about 76% of its 940 Koz gold production guidance for this year. Although the company increased its guidance for gold once already in 2017, it is “currently evaluating whether or not to increase production guidance for gold, silver and copper based on year-to-date production and an expected strong Q4/17,” he wrote.

Kaip also noted that as of Sept. 30, Yamana had “approximately $125 million in cash.”

This metals producer will report complete Q3/17 operational and financial results on Oct. 26 followed by a conference call on Oct. 27.

BMO Capital has a Market Perform rating and $3.25 per share price target for Yamana, whose shares are trading at around $2.64 per share.

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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

Additional disclosures about the sources cited in this article

( Companies Mentioned: YRI:TSX; AUY:NYSE; YAU:LSE,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17779

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Columbus Gold Is Giving Free Shares Away

Source: Bob Moriarty for Streetwise Reports   10/18/2017

Bob Moriarty of 321 Gold discusses Columbus Gold’s imminent spinout of its Nevada properties.

I have followed Columbus Gold Corp. (CGT:TSX; CBGDF:OTCQX) since I first wrote about them in 2014. Their main gold project is in French Guiana and is part of a JV with a Russian company. It’s a great project with 2.75 million ounces of proven and probable reserves of gold. Columbus Gold owns 45% and Nordgold owns 55%. At $1200 gold the project has an after tax IRR of 23% and an NPV of $324 million US. Owning 45% should make CGT’s interest worth $145 million US or about $185 million CAD. Instead Columbus has a market cap of right at $100 million CAD.

And they own 14 projects in Nevada including one with a 721,000 gold equivalent ounce resource. Management realized they are not getting any value out of the Nevada projects so they are spinning them off into a new company named Allegiant. That’s where the free shares come into the deal.

Columbus is holding a special meeting the 20th of November for shareholders to vote on the spinout. Shareholders as of the Share Distribution Record Date will receive 1/5th of a share of Allegiant for every Columbus share held. The company anticipates the record date to be four business days after the meeting or the 24th of November. So if you own 10,000 shares of Columbus on the Record Date, you will be handed 2,000 shares of Allegiant.

That’s a hell of a deal for a couple of reasons. Andy Wallace is going to be the CEO of Allegiant. As a manager and now owner of Cordex, he helped the company find an incredible eight gold mine discoveries in Nevada including the five million ounce Marigold Mine, the twelve million ounce Lone Tree Mine and the Daisy Mine.

Allegiant plans on drilling ten projects of the fourteen in the first twelve months. Their two most important projects are Eastside with an existing 721,000 gold equivalent ounce resource and a historic gold resource of 270,000 ounces and the Bolo project northeast of Tonopah. Columbus recently drilled 14 RC holes at Bolo about 500 meters south of a historic hole returning 30.5 meters of 3.24 g/t gold, 12.2 meters of 3.05 g/t gold and 19.8 meters of 1.1 g/t gold. The company is not going to release the results of the drilling until after the spinout is complete. They anticipate assays being back about mid-December.

Columbus is in the process of setting up a non-brokered private placement with terms not yet disclosed. The shares will be free trading right out of the chute.

The spinout is brilliant for creating more value to both Columbus and existing shareholders. Columbus will get 13% of the new shares, existing shareholders will get 52% and new investors will receive about 35% of Allegiant. Allegiant will be well funded for a major 2017-2018 exploration program.

Columbus Gold is not an advertiser. I bought shares in the open market that I intend to hold through the record date and I am participating in the private placement. Do your own due diligence.

Columbus Gold
CGT-T $0.65 (Oct 20, 2017)
CBGDF-OTCBB 153 million shares
Columbus Gold website

Bob and Barb Moriarty brought 321gold.com to the Internet almost 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Columbus Gold. Columbus Gold is not an advertiser on 321 Gold. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned are billboard sponsors of Streetwise Reports: Columbus Gold. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

( Companies Mentioned: CGT:TSX; CBGDF:OTCQX,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17776

Trio of Firm’s Mines Log Strong Performance in Q3/17

Source: Streetwise Reports   10/16/2017

Analyst Andrew Kaip compared this silver, gold and base metals miner’s reported Q3/17 production results to the numbers expected by his firm, BMO Capital Markets.

In an Oct. 12, 2017 research report Kaip indicated that overall Q3/17 production was “strong” from three of Hecla Mining Co.’s (HL:NYSE) four mines: Greens Creek, Casa Berardi and San Sebastian.

This diversified company’s Q3 production of silver, lead and zinc exceeded BMO’s expectations, whereas that of gold reached the anticipated level, added Kaip. Actual versus estimated production was 3.3 versus 2.9 Moz for silver; 5.4 versus 5.1 Kt for lead; 14.5 versus 13.2 Kt for zinc; and 64 versus 63 Koz for gold.

The research note also detailed Q3/17 production for each of Hecla’s producing mines:

Greens Creek in Alaska performed the best during the quarter, thanks to its silver production. When compared to Q2/17, it was up, from 1.9 to 2.3 Moz, while gold production of 12.6 Koz was flat. Kaip noted that “production benefited from the mill operating at 2,391 tons per day, which is a life-of-mine record.”

Casa Berardi in Quebec produced 44.1 Koz gold, “slightly higher” than the 42.2 Koz estimate, wrote Kaip. He highlighted that “mining from the East Mine Crown Pillar pit continues to help supplement underground ore and fill the mill, which operated at 3.5 Ktpd in the quarter and set a monthly record in September at 3.9 Ktpd.”

San Sebastian in Mexico met expectations, Kaip indicated, “producing 881 Koz of silver and 6.3 Koz of gold.”

Lucky Friday in Idaho turned out “a nominal 88 Koz of silver,” said Kaip, which was anticipated due to supervisory staff members making on-site capital improvements. “We currently assume the resumption of operations in Q1/18. . .the strike at Lucky Friday is still ongoing,” he added.

As for Hecla’s Q3/17 cash and cash equivalents, they “increased by $3 million ($3M) from Q2/17 to $205M,” Kaip reported. The company will announce full Q3/17 financials on Nov. 7.

BMO Capital has a Market Perform rating and a $6 per share price target on Hecla Mining, whose stock is now trading at around $5.22 per share.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

Additional disclosures about the sources cited in this article

( Companies Mentioned: HL:NYSE,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17770

Silver May Pop and Drop in Setup for Upswing

Source: Clive Maund for Streetwise Reports   10/15/2017

Technical analyst Clive Maund charts the reasons silver bugs may have an opportunity for happier days ahead.

Like gold, silver gapped out of its downtrend last week, but volume was lacking on this move, which, given the now bullish outlook for the dollar, may turn out to be a “pop” that will be followed by renewed decline. This breakout was predicted in the last update, when it was pointed out that silver’s COTs were still far from outright bullish.

You are referred to the parallel Gold Market update to read the reasons why the dollar may be shaping up for a sizable rally back to the 97 area on the index, before turning and heading south again. Needless to say, this can be expected to knock gold and silver back down again.

On its latest 6-month chart we can see how silver gapped higher last week, after breaking out of its recent downtrend a few days before. As mentioned above, due to the immediate outlook for the dollar being positive, with a sizable “swan song” rally in prospect, this breakout by silver may well turn out to be a “pop” to be followed by renewed decline. How far might it drop? A logical target, given that gold would probably drop to the $1,200-$1215 area, would be somewhere in the vicinity of its July lows, i.e. somewhere in the $15 area.

maundsilver10-15

While silver’s latest COTs look rather better than those for gold, they are still a long way from being outright bullish—there is plenty of room for improvement, and thus plenty of room for silver to drop short-term. . .

maundsilvercot10-16

Like gold, silver is marking out a giant head-and-shoulders bottom pattern, but in silver’s case it is downsloping, as we can see on its 8-year chart below. This reflects the fact that silver tends to underperform gold at the end of sector bear markets and during the early stages of sector bull markets. Prolonged underperformance by silver is therefore a sign of a bottom.

This chart really does show how unloved silver is right now, but although the price has drifted slightly lower over the past several years, volume indicators have improved, especially this year—a positive sign. A break above the neckline of the pattern—the black line—will be a positive development, and more so a break above the band of resistance approaching the 2016 highs. Once it gets above this it will have to contend with a quite strong zone of resistance roughly between $26 and $28.

Silver is among the most unloved of all metals, a situation that is not expected to continue, partly because silver bugs are manic-depressive and they have been depressive for a long time, meaning that it surely won’t be all that long until they are on the rooftops singing Happy Days Are Here Again, although it now looks like they will have to put up with another retreat by silver first as the dollar stages a relief rally.

maund8year10-16

Clive Maund has been president of http://www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

Want to read more Gold Report articles like this? Sign up at www.streetwisereports.com/get-news for our free e-newsletter, and you’ll learn when new articles have been published. To see recent articles with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

Charts provided by the author.

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17769

Gold and the Dollar: Good News and Bad News

Source: Clive Maund for Streetwise Reports   10/15/2017

Technical analyst Clive Maund discusses what he sees as a “swan-song rally.”

We’ve all had people come up to us and say “Do you want the good news
first or the bad news?” I always opt for the bad news first, to get it
out of way and end on a lighter note. The bad news is that the dollar
looks set to stage a significant “swan-song” rally in coming weeks, which
will probably result in gold being beaten down again. The good news is
that once that’s done its toast—and that’s when the big gold and
silver bull market that longer-term charts are calling for will really
get underway.

The last update called for the dollar to drop down to mark out the Right
Shoulder of a Head-and-Shoulders bottom pattern, and for gold to break
out of its rather steep intermediate downtrend and rally, and that is
exactly what has since happened. On its latest 8-month chart, we can
see how the dollar has backed off to the vicinity of its flattened out
50-day moving average and the vicinity of the Left Shoulder low of the
base pattern, in order to mark out the Right Shoulder low. Three bullish
developments to be noted that result from the dollar rising out of the
Head of the pattern are the breakout from the downtrend, the break clear
above the 50-day moving average, and the big improvement in momentum
(MACD), which is swinging positive. If our interpretation that this is a
genuine Head-and-Shoulders bottom is proven valid, the pattern targets
the 97 area in coming weeks, probably by early November. Needless to
say, this will not be good news for gold and silver prices.

Our prediction made many weeks ago that the dollar would rally off the
lower boundary of its big bullhorn pattern shown on the 4-year chart
below to break out above its restraining Dome has proven to be correct,
and a projection has been drawn on this chart showing roughly what is
expected to happen. As we saw above on the 8-month chart, the base
pattern now approaching completion targets the 97 area approx. This is
the “swan-song rally”—the dollars last rally before it “hands in its
dinner pail,” and should present a wonderful last opportunity to
accumulate the better gold and silver stocks, before the dollar does an
about face, and breaks down from the large Broadening Top pattern into a
severe decline.

The Hedgers chart has been warning for weeks that the dollar will
reverse and rally, as has been pointed out repeatedly. The latest chart
shows the rally is still ahead of us—which is congruent with the
dollar being at the Right Shoulder low of its Head-and-Shoulders bottom.

Click on chart to pop up a larger clearer version.

Chart courtesy of http://www.sentimentrader.com

In light of the above it is logical to expect gold’s plucky little
breakout from the steep downtrend channel shown on its 6-month chart
below to abort, and if the dollar advances towards the 97 area on the
index, we would expect gold to react back, probably to the $1200–$1215
area.

Such a reaction back by gold accords with its latest COT chart, which
still looks more bearish than bullish, since gold’s COT structure
improved but little on its recent downtrend. There is still a lot of
room for improvement on this chart—and that probably means lower gold
prices dead ahead. . .

Click on chart to popup a larger clearer version.

On gold’s 8-year chart it continues to look like it is in the late
stages of a giant Head-and-Shoulders bottom pattern. The build up in
volume over the past 20 months certainly looks positive, especially over
the past several months, all the more so because it has driven volume
indicators higher, notably the Accum-Distrib line, which is not far off
making new highs—exceeding its level at the 2011 peak. Once gold
breaks above the resistance level approaching $1400 it will be on its
way, although it will then have to contend with another important band
of resistance in the $1510–$1560 range. A near-term retreat by gold to
the $1200–$1215 area in the face of a dollar rally will not damage
this long-term technical picture.

The Market Vectors Gold Miners, GDX, which functions as a gold stocks
index, is marking out a giant Head-and-Shoulders bottom that roughly
parallels the one completing in gold itself. A near-term decline to $20–$21 in GDX will be viewed as presenting another important buying
opportunity for the sector. The volume pattern during the build out of
this base pattern is very bullish, with big volume on the rise out of
the low (Head) of the pattern, tailing off steadily as the Right
Shoulder has formed.

A mistake commonly made by gold and silver bugs, especially those close
to or involved in the mining industry is to become “wed” to the sector
to the exclusion of most everything else. This habit has ruined a good
many investors in the Precious Metals sector in recent years. Investing
should be regarded as an “opportunity cost game,” where you seek always
to maximize your returns within a given time frame consistent with an
acceptable level of risk. This is the philosophy on clivemaund.com, which
is why we made a detour into the marijuana sector last year ahead of
the legalization votes, when it boomed, and why we have invested in a
variety of different sectors and stocks this year, notably the Biotech
and Medical sector. There is no need to wait around on the Precious
Metals sector to start a major uptrend, when, apart from individual
outstanding opportunities in the sector than can occur at any time, it
is possible to go with whatever is performing in the here and now.

We have had a number of outstanding successes in recent months and weeks
where we traded on the basis of some very clear and useful chart
patterns and signals, and a number of our stocks have produced some
classic examples of chart patterns involving different types of
candlesticks and price and volume patterns, often in combination, in the
recent past. There is one in particular that I would like to draw your
attention to in CHART SCHOOL – Gravestone Doji and Parabolic Blowoff calls a top,
where just on the one chart going back 4-months we see a dramatic
confluence of different factors—candlesticks, parabolic slingshot,
various oscillators and the volume pattern all calling a top RIGHT NOW
for a particular stock, and this also provides examples of breakaway
gaps and a Flag. We sold this stock on Friday. To take a look at its
chart, all you have to do is click on the link above, and for a good
measure a couple of other interesting chart examples that we traded are
included in this article, which is intended to be educational.

Hope you like what you see.

Clive Maund has been president of http://www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

Want to read more Gold Report articles like this? Sign up at www.streetwisereports.com/get-news for our free e-newsletter, and you’ll learn when new articles have been published. To see recent articles with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Clive Maund: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies referred to in this article: None. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this interview, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Reliq Health Technologies, Helius and Blue Moon Zinc, companies linked in this article.

Charts provided by the author.

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17768

Comfortably Numb: Surviving the Assault on Silver

Source: Michael Ballanger for Streetwise Reports   10/15/2017

Precious metals expert Michael Ballanger discusses the current state of the precious metals markets.

In the late 1960s and most of the 1970s, an English rock band named Pink Floyd dominated the world of progressive and psychedelic music with such memorable albums as “Dark Side of the Moon,” “Wish You Were Here,” and “The Wall.” One of their greatest hits was a song entitled “Comfortably Numb” and as I was listening to it the other night, the refrain in the middle of the song—”Gotta keep it going through the show; c’mon it’s time to go”—reminded me of the current state of the precious metals markets in the sense that the bullion bank criminals really are doing their utmost to “keep it (the price caps and interventions) going through the show”. That silver investors have been rendered “comfortably numb” by way of serial price assaults is a testimonial to the sentiment out there for silver equities, coins, and the like. In case you hadn’t noticed, sentiment for gold and particularly silver is outright putrid.

Ballanger1.jpg

Who Remembers THIS?

Surely, the competition for alternative investments such as Bitcoin, Eleutherum and other block-chain deals is fierce and with stocks hitting all-time highs literally every few days and with volatility at record lows, not many people have retained sufficient focus to concentrate on silver based upon the pure economics of demand and supply. Mind you, analysis of the supply-demand equilibrium for financial or non-financial assets is a useless exercise because the SUPPLY for items HATED by the central banks such as gold and silver is fabricated by way of swaps and loans and illusory WGC figures while DEMAND for items LOVED by central banks such as stocks and bonds is also fabricated by way of journal entries from sovereign treasury accounts or accelerated credit creation. Compounding this felony lies the moral hazard present in the elevated stock markets that have been largely buoyed by central bank largess as opposed to macroeconomic expansion on a global basis. Taking away the proverbial “punch bowl” now could be analogous to tightening credit in 1931, generally regarded as the major accelerant to the economic conflagration of the 1930s. At the least, traders are now unequivocally convinced that the Fed “has our backs,” a direct and total contrast to the dark days of 2008, when they were convinced that the Fed had erred in its role as an omnipotent watchdog over the banks. All it took was shuffling a few trillion in the direction of Washington and the “fix”, as they say, “was in.”

ballanger2.jpg

Everyone in the markets these days is “behaviorally trained” insofar as it pertains to the expectation of “outcomes.” This is especially true of the precious metals where fifty years of central bank interference was capsulized with a ten-year moonshot to $1900 gold and (once again) $50 silver back in 2010-2011. Silver has remained my absolute top pick for the balance of the year but in deference to calling spades as they would appear, I called the bottom in the PMs about ten times between 2015 and 2016 and each time I was beaten about the face and arms until I went skulking off into hiding. Here in the final few laps of 2017, it would appear that silver is beginning to awaken and as the chart below would infer, some long-term downtrend lines are going to be summarily vanquished if the silver price stays simply “flat” over the next quarter.

ballanger3.png

Speaking of being “comfortably numb,” former Fed Vice-Chair Stanley Fischer most certainly qualifies due to his reply to a question from Sara Eisen regarding the Fed’s “legacy” when he said that “their actions prevented a Great Depression from evolving.” Really? An organization owned by the major member banks in N.Y. and London that was supposed to oversee bank behavior sits by as it proceed to vaporize the system in 2007-2008 and Mr. Fischer lauds its actions because it bailed them all out with purchases of every toxic investment ever made by the perpetrators with taxpayer funds? That is like thanking the arsonist firefighter for dousing the flames from the fire he set in your living room.

CNBC lionizes these academic egghead clowns at every and all turns because the S&P 500 continues to hit record highs every day when all that this banker class have done for the past fifty years is ruin the purchasing power of your currencies and enrich themselves. I want an interview where Sara Eisen asks “Mr. Fischer, what exactly were you DOING when the bankers blew themselves up?” or “What exactly is on your balance sheet that someone else will buy?” If the toxic slime it bought from member banks in 2008-2009 was lethal then, how is it any less so now? The “normalization” of the central bank balance sheets will NEVER, EVER occur and they know it. They talk about it; they write about it; they think about it; but in the end that is all they will do. They made the blunders of the banker class simply “go away” and that means never to be seen again.

ballanger4.png

The chart posted above is a compelling optic for making a bet on the return of “vol” to the marketplace because there has been a palpable absence of any kind of corrective behavior since investors shrugged off the North Korean missile tests in mid-August. Not hurricanes nor missile tests nor mass murder in Vegas could upset the apple cart as the rampaging bull took out all resistance levels in this latest near-vertical ascent. One of the signs of an impending top in any market is when, after a prolonged period of slowly rising prices, the chart goes “vertical” (meaning “straight up”), which is nearly the case with U.S. stocks.

ballanger5.png

As is the case in this next example, the Nikkei 225 average did the same thing from 1980 to 1990 until the final exhaustion gap to the upside failed, rolled over, and solidified the “top.” However, while it is fairly easy to spot a top in terms of the x-axis (time), it not only impossible but also very dangerous to try to spot a top in terms of the y-axis (price). Any market that goes “vertical” after a prolonged period of gradually rising prices is a market on its last legs and while we have not yet gone truly vertical, the last few weeks have seen the S&P’s trajectory steepen and that is enough to invoke caution in this camp. This is a period for the S&P quite similar to the 1980s parabolic in the Nikkei 225, and before I hear the chorus of “Sour grapes!” and “But it’s different this time!” and “You are over the hill!”, I want you all to remember those fateful words of 2009: “As long as the music is playing, you’ve got to get up and dance.” (And we all know how THAT played out…)

ballanger6.png

The open interest in gold futures continues to decline so it is no surprise that the Commercials have covered again this week albeit by a relatively paltry amount. I wrote back in July that I expected accelerated demand from the Indian wedding season and the Italian jewelry trade inventory restocking to exert upside pressure on gold and silver prices in the months of September through November and thus far the rally ended in the beginning of September with a big jump in the Commercial net short position to roughly 270,000 contracts. That figure has now plunged to just under 230,000, which is to be expected. The tiny amount of covering by the bullion banks is explained by the “up” week we just finished and since we had a strong rally since the Tuesday COT cut-off reporting period, I see the number advancing next week. I have not replaced the SIL calls nor have I added to the JNUG position and that is just fine since I have a fully-paid-for position at around $13.37 and am using zero leverage.

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The first weekly rally in five weeks for the precious metals has left me less than invigorated so as we head into the fourth weekend since autumn began, I am thankful for the changing of the colors in the north woods, the relative calm on lovely Lake Scugog with the summer boating crowd now absent, and the company of my faithful Fido who has returned from five weeks of hibernation under the tool shed, safe from the rants and tantrums of this humble penman, but still sleeping near the exit and with one eye permanently open.

Smart dog. . .

Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger’s adherence to the concept of “Hard Assets” allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.

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Disclosure:
1) Statements and opinions expressed are the opinions of Michael Ballanger and not of Streetwise Reports or its officers. Michael Ballanger is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. Michael Ballanger was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
3) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

Charts and images courtesy of Michael Ballanger.

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17767

Future Upside Provides Excellent Entry Point for Fiore Gold

Source: The Critical Investor for Streetwise Reports   10/13/2017

The Critical Investor provides an update on Fiore Gold, which has just resumed trading after completing a business combination with GRP Minerals. critical investor pic1.jpg

Pan Mine, Nevada

After a lengthy trading halt since June 12, Fiore Gold started trading on October 2, having completed the business combination with GRP Minerals. This took quite a bit of time, as it was a fairly complex venture for both companies, with a lot of paperwork. I view this deal as an accretive one, as a lot of tangible value through much more advanced assets was added, up to an estimated Net Asset Value of about C$120 million in my view, and a lot of realistic growth potential. Apparently, not everybody had the same long-term view for Fiore Gold as is needed in this case, the company now morphing into a long-term growth production story instead of an exploration story, and a sell-off started immediately after opening of the markets:

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Share price; 10 day time frame

My suspicion is that there were some shareholders from both sides of the deal selling their shares, as the initial story changed significantly for both companies, possibly appealing to different kinds of investors, although the volume wasn’t really massive on the first day comparing to the last few days as the share price bottomed at C$0.70. As the share price closed at C$0.76 yesterday on healthy volume, it seems that the worst is behind us now. As I have calculated in an earlier article, I don’t think this selling is very much justified. According to my estimates, the Net Asset Value (NAV) comes in at around C$120 million, as there are:

  • the current exploration assets, of which I estimate El Peñon at C$1M and Cerro Tostado at C$4M
  • about C$25M in cash, zero debt
  • the Pan Mine with a C$65M NPV and ramping up production
  • the Gold Rock historical deposit and the exploration potential of both Pan and Gold Rock combined at C$20M
  • Golden Eagle at C$5M, bringing the total NAV at C$120M.

The current market cap comes in at C$69.2M, so as the usual market cap to NAV ratio comes in at a very global 1.0-1.5, this would already indicate undervaluation. The valuation of a producer is usually much better represented by the market cap to operational cash flow ratio (which varies from about 8 to 12 in good jurisdictions at current gold prices/sentiment), so when looking at this metric we get confirmation for more upside when the Pan Mine is fully ramped up to commercial production next year.

The annual pro forma cash flow for Fiore Gold is calculated like this for a $1215/oz Au base case scenario: 40,000oz Au in 2018 x $1215- $685 = EBITDA US$21.2M – US$4.5M estimated depreciation etc – US$2.7M G&A = US$14M net income. Corporate taxes are about US$2M annually on average per the Feasibility Study. Operational CF is EBITDA – G&A – taxes = US$9.3M = C$11.625M. This does not take expensed exploration activities, currency fluctuations and changes in working capital into consideration. The corresponding estimated market cap would range from C$11.625 x 8 = C$93M to C$11.625 x 15 = C$174.4M, with a still conservative ratio of 10 resulting in an estimated market cap of C$116.25M, which would mean close to a double in a year from now.

When Fiore Gold is compared to a few other junior gold producers (some data coming from Haywood’s weekly update the Weekly Dig) it can be seen that Fiore Gold is pro forma (as a ramping up producer) valued on EV/CF ratios comparable to the more adventurous jurisdictions like Turkey or Mexico. Another subject is the relatively very small market cap and EV of Fiore Gold, its peers provide a convenient outlook on future market caps based on the intended scenario for a 150,000oz Au per annum producer:

critical investor pic 3.jpg

And part II:

critical investor pic 4.jpg

It was actually difficult to find comparable producers/advanced developers as all heap leach operations in full production that I know are part of a large producer with multiple projects, so I resorted to smaller tier producers and heap leach start-ups, which have low values on CF multiples as they aren’t in full production yet so the markets are hesitant, or have teething issues to work through. The P/CF multiples are actually quite varying in this table, but on average when looking at many other producers, a P/CF ratio of 8-12 is industry standard for now. Richmont actually has a high number because of the friendly Alamos Gold takeover, btw, so my table isn’t a very good representation, unfortunately. Keep in mind that all companies have their own, very specific stories and valuations, so any peer comparison has its risks, but it illustrates an overview, and at least a quick impression of what’s out there.

Regarding market cap outlook, Fiore Gold itself aims even higher at the likes of Guyana Goldfields or McEwen Mining with market caps recently hovering around the C$1billin tag, with comparable production figures.

Here is a quick recap of the corporate strategy of Fiore Gold, per the news release of September 29th:
“Fiore’s goal is to build on the existing operations at the Pan Mine in Nevada to become a 150,000 ounce/year gold producer. To achieve this, the company intends to:

  • grow gold production at the Pan Mine from a planned 35-40,000 ounces in 2018 to between 40-50,000 ounces per year by 2019
  • advance exploration and development of the nearby Gold Rock project, with a resource update planned for late 2018
  • acquire additional production or near-production assets in Nevada and surrounding states”

    According to this news release, everything is going exactly according to plan, which isn’t an easy feat, as heap leach operations are notorious for delays and problems during ramping up. It really confirms the quality of the people running the show, in my view. As mentioned in my last article on Fiore, the company has overhauled the entire heap, restacked it, improved solutions management and has blended existing clay ore from the South Pit with new rock ore from the North Pit. As a consequence, problems with low permeability and ponding of cyanide solution experienced by the previous operators have not recurred.

    critical investor pic 5.jpg

    Pan Mine; leach pads

    Other things Fiore did were:

  • improving grade control sampling procedures
  • the commissioning and continued improvement of the onsite grade-control assay laboratory
  • assigning a geologist to oversee grade control and provide geological controls on mining
  • improving management of and partnering with our contract miner
  • improving operating procedures at the ADR plant

    Management already worked on a way to save initial/sustaining capital, as it is looking to defer on crushers (cost $16.8M), and instead focuses on a larger mining operation as the Pan Mine goes from a foreseen nameplate capacity of 10,000tpd to 14,000tpd:

    “In the fourth quarter, the mining team will be focused on assessing the equipment and manpower needed to achieve a sustained 14,000 tpd ore and associated waste stripping throughout 2018. Fiore is targeting a steady-state mining rate of 14,000 tons ore per day (tpd) by January 2018, with projected gold production of 35-40,000 ounces in 2018. The planned 2018 mining rate of 14,000 tpd of ore is higher than 10,000 tpd rate assumed in the 2017 SRK Technical Report. The estimate of 35-40,000 ounces of gold production for 2018 is based on this higher mining rate, and the 60% gold recovery value used in the technical report for run of mine ore. In conjunction with the increase in mining rates, construction of the Phase II Leach Pad expansion is currently underway with completion targeted by year-end. “

    Recoveries just based on run-of-mine methods come in lower (in this case estimated at 60% by SRK) compared to methods using crushers (72%), hence the increased production. I have no doubt that the trade-off was positive, as a lot of energy would be saved as well by deferring the crushers. As the throughput increase outscores the loss in recovery, I expect a higher production figure than possible according to the FS. Fiore does have to expand its reserves to maintain (and preferably increase) the Pan life of mine (LOM), but there appears to be enough exploration potential for this. The company acknowledges this too, and has drilling scheduled for Q1 2018:

    “Exploration work aimed at increasing the resource and reserve base at Pan is ongoing, with a number of drill targets identified proximal to both the North and South Pits. Drilling is expected to commence in early 2018 in order to minimize delays and increased costs associated with winter drilling.”

    Regarding the second most important project Gold Rock, which is fully permitted for exploration drilling, Fiore will be working towards a resource update in H2 2018 after a first full season of drilling.

    The company is concluding the Federal permitting process for a complete operation, and this permitting process was begun approximately four years previously under Midway Gold, and a decision on the Environmental Impact Statement for the project is anticipated in Q1 2018. As soon as this permit would be granted, Fiore can move forward with the Nevada state permits.

    The potential economics might be better for Gold Rock compared to Pan, as historical grade and potential size are very promising, and CEO Tim Warman pointed this out to me, telling that Kinross came in for a 9.9% stake, mainly for the exploration potential at Gold Rock.

    As a reminder, both Pan and Gold Rock have considerable exploration upside, which could extend both mine life and annual production. Key to the strategy is acquiring another near-production deposit of 800,000 to 1 million ounces Au, capable of producing at least another 50,000 oz Au annually. That would bring total annual production to at least 150,000 oz Au in 2020-2021.

    In the meantime, the company also continues exploring its former flagship assets in Chile.

    Diamond drilling generated verification results on Cerro Tostado, although nothing special yet: 1m @501 g/t Ag and 2.7m@ 381 g/t Ag, coming in below earlier SQM reverse circulation (RC) results (2m @943 g/t Ag, 3m@ 685 g/t Ag and 2m@ 413 g/t Ag). CEO Tim Warman is optimistic about his chances:

    “By drilling these initial oriented diamond core holes we’ve been able to confirm the north-south striking, steeply dipping nature of these high-grade silver zones. We’re also pleased to have intercepted a second mineralized zone beneath the alluvial cover to the east of the main Cerro Tostado hill. Planning is underway for the next phase of drilling to test these structures along strike.”

    To be honest, I don’t expect too much here considering these and past results, and consider this a little exploration wild card on a solid production story.

    Conclusion

    Fiore Gold had to deal with some selling first when it recommenced trading as objectives had changed for both GRP and Fiore investors, and as such, provides an opportunity to get in low on an undervalued production growth story, in my view. The combination of (potential) low-cost assets like Pan and Gold Rock, being cashed up, M&A around the corner, strong management, advisors and, last but not least, strong financial backing by the likes of founder Frank Giustra, who is too proud to have a company named after his mother going nowhere as this last intervention (RTO of GRP) proved, is an attractive one in my opinion. I’m willing to be patient here, as the projected upside is significant.

    I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter on my website http://www.criticalinvestor.eu, and follow me on Seekingalpha.com, in order to get an email notice of my new articles soon after they are published.

    Disclaimer:

    The author is not a registered investment advisor. The author holds a long position in this stock. Fiore Gold is a sponsoring company. All facts are to be checked by the reader. For more information go to http://www.fioreexploration.com and read the company’s profile and official documents on http://www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.

    critical investor pic6.jpg

    Pan Mine; waste dumps

    The Critical Investor is a newsletter and comprehensive junior mining platform, providing analysis, blog and newsfeed and all sorts of information about junior mining. The editor is an avid and critical junior mining stock investor from The Netherlands, with an MSc background in construction/project management. Number cruncher at project economics, looking for high quality companies, mostly growth/turnaround/catalyst-driven to avoid too much dependence/influence of long term commodity pricing/market sentiments, and often looking for long term deep value. Getting burned in the past himself at junior mining investments by following overly positive sources that more often than not avoided to mention (hidden) risks or critical flaws, The Critical Investor learned his lesson well, and goes a few steps further ever since, providing a fresh, more in-depth, and critical vision on things, hence the name.

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    from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/pub/na/17765