Plunging Into & Out Of Ravaged Mining Stocks

Also: Coveted Guyana | Unexplained Move — Azimut-Exploration | G2 Goldfields | EarthLabs | Calibre Mining | Guanajuato Silver | Discovery Silver

 

[A Really Bad Gold-Payable Loan 
For Guanajuato Silver: below please *]

TCRs, thus far, I am on the early side of my gold-price (and platinum) prophecy. [See ‘broken record’  here please.]

A collage of miners seeking investors: Zürich

The froth is on my lips. A full head of steam ahead I believe for (further) December’s active physical bullion prices — the published spot and futures prices. Metals, metals equtieis and global markets WEDNESDAY continued to, in some cases, all time highs.

Still, aside from that always ill-advised forecasting (my No. 2 career professional mistake*), we all know the metals stocks are the genuine, 2023 woebegones. “Oh, let the woe be gone,” a miner-exec-engineer we all know  told me earlier this week. [Plunging into new names — below.]

My go-to analysis comes from longtime
Seabridge Gold SA founder and CEO Rudi Fronk 
and team, whom I have known for a decade. 
They run THE CASE FOR GOLD. 
“Gold broke to all-time highs at $2,147 
(in Asia). Volatility is high. We expect 
a brief retracement Monday in North America 
to the breakout area around $2,050 to $2,080 
an ounce, and then another move higher — which 
is the one that will bring an explosive move in gold stocks.”

Plunging: investors at last look (November influx numbers) were buying shares of the mining equity indexes, GDX and GDXJ (VanEck).

That explains some of the late-November buying of the big and not-so-big miners’ stocks in those two indexes. The ETFs get an influx (vs. a drawdown) of investor money and the money is used to buy more shares of the 35-plus stocks in the GDX big miner exchange-traded fund and the 10 or so in the GDXJ juniors one.

Still, the mining group as represented by the indexes need to catch the excitement of the gold price. The GDX is up about 6% for the year, some of that a November lift from rising commodity prices.

Gold vs. gold stocks

Non-sequitir: producer and cash-flow maestro Alamos Gold , by the way, is in both the biggie GDX and the weeny GDXJ funds.

Seeking cheap, I continue to add personally (here at home) to our The Calandra Report/TCR collection of ignored, obscure mining stocks; these include Osino Resources; Banyan Gold; C3 Metals; Newcore Gold; Orford Mining; Val-d’Or Mining; Xtra-Gold Resources; CanAlaska Uranium; Nuclear Fuels; West Vault Mining WVM; as you know, about 5 or 6 others. Most of those are below the $100 million value line in terms of their equity plus debt and (if fortunate) their cash.

Sold recently at a solid profit: Laramide Resources LAM. If uranium ever chills, that is the first name I will buy back.

Among the not-so-obscure, of course, owned here nt home: Ivanhoe Mines IVN IVPAF ($16 billion market value approx); Alamos Gold; Victoria Gold VGCX; Contango Ore CTGO; EMX Royalty.

I look to “plunge”  into a new name or three, as our reporting here has indicated this past week, what with the gruesome performance of mining equities. These likely will be chosen from Calibre Mining CXB CXBMF — I have sidestepped Nicaragua-Nevada producer-esplorer Calibre, alas, for far , far too long a time; Fury Gold Mines FURY — met its new CEO, Tim Clark; and tiny EarthLabs SPOT SPOFF (see previous reporting please), a predictive modeler/media hopeful/royalty owner based in Toronto and Montreal. And G2 Goldfields GTWO GUYGF, whose Oko project in Guyana is out with more high-grade results, albeit short intercepts, for an underground mine.

Pat Sheridan, G2 chairman, says the so-called vote by Venezuela voters to “annex” part of oil-rich, gold-laden Guyana, is much ado about niente.

Pat tells me from London, “I’ve seen this show several times over the past three decades.” (Argentina, Britain and the Falkland Islands is the best known attempted grab — although that was in 1982).

Bogus President Maduro has little support in Venezuela; his annex referendum for Essequibo, the coveted parcel of Guyana about the size of Greece, turned out 20% of the vote, according to news reports.

“Sabre rattling is a good distraction from the disastrous policies that have turned Venezuelans into beggars and refugees,” he says. “Chance of real invasion: 0%.”

 

Guyana is a strategic oil asset for the United States, “and it’s not in the Middle East.”

As for the gold, “There’s lots of that there, too.” 
Guyana map

See G2’s Oko assays please. I do not own the shares .. not yet, anyway.

Azimut Exploration: AZM AZMTF has disappointed many investors these past four years. Still, the stock today finally rebounded amid unexplained volume — that from a multi-year low. Still lots of promise, and yes, I am underwater after 4 or 5 years by 40% or more.

I hope to see the promise of its James Bay gold (Elmer) and lithium projects attract attention. Eric Lemieux, an independent geologist-analyst, tracks Azimut. He says, “Tide is rising.” Eric was with Azimut scientist-CEO-geo Jean-Marc Lulin in Zürich a week or so ago.

He says Jean-Marc’s visit got attention from family offices in Switzerland.

Guanajuato Silver GSVR GSVRF: doom in the financing cards for this small wanna-be Mexico miner. I have been trying to get a state-of-the-sinking-ship response from CEO James Anderson for months now, even running into him at a Colorado conference. Nothing.
James and the central Mexico explorer and partial producer posted another (in my view) red flag this week: a $7.5 million financing: https://www.gsilver.com/news/2023c/880-uanajuatoilverloses75illionreditacility20231205
If you take a look at the quarterlies, metric tons mined for all mines are down 20% from June.
Çosts are up, head grade for one mine, El Cubo (which I have seen) are significantly down, operational losses are up, payables up.
In November, an analyst told me, “With $3 million in the bank at Sept 30t, and consuming $6 million per quarter, GSVR looks  currently out of money. Probably we will see preparation for a large capital raising.”
Voilá.
This week’s announcement of $7.5 million of debt repayable over 30-months at 191 ounces of gold a month looks toxic.
The effective gold price is $1,300/oz for this transaction. At now-$2,000/oz, GSVR will be repaying $11.5 million (effectively $7 million of “interest” that represents an annualised rate of 30%-plus.
The lender, Ocean Partners, Ocean could wind up up taking control of a group of decent silver assets down there if or when the loan goes into limbo.
GSVRF shares since January 2023
At any rate, some $4.6 million of the $7.5 million loan will be used to pay down a current loan. Looks like a paying down of existing loans that are effectively using a $1,550 gold price from a new loan that uses $1,300 to calculate the number of ounces required to repay the debt.
I am not short $100 million GSVR GSVRF. I wish I had been.
This here is the USD chart for the shares since the start of 2023.

 

Anyway …

TCRs, more to come from a London 
investment banker and trusted, 
longtime subscriber with roots 
in Australia, UK and Italia.  
("Look at the torque 
in Discovery Silver since last week's 
lows -- up 30%.")
— Thom Calandra

 

 
 

Thom Calandra ​is a ​writer and an investor. Research and material are meant as editorial opinion.​ He is not a professional investment adviser. Please do not consider his reporting as a recommendation to buy or sell securities.