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Base Metals Energy Exclusive Interviews Junior Mining

NEVADA COPPER Company on Target to U.S. Copper Production by Q4 2019

Matt Gili the CEO, President, and Director of Nevada Copper (TSX: NCU | OTC: NEVDF) sits down with Maurice Jackson of Proven and Probable to discuss the value proposition of Nevada Copper, which is on target for U.S. production in Q4 2019. Mr. Gili, provides updates on the flagship Pumpkin Hollow Project, which hosts both an underground and open-pit deposits. We provide an overview on the supply an demand fundamentals on Copper, where a prudent speculator may position themselves to take advantage of the copper supply deficit.

VIDEO

AUDIO

TRANSCRIPT

Source: Maurice Jackson for Streetwise Reports  (3/18/19)

Maurice JacksonMatt Gili, CEO of Nevada Copper, talks with Maurice Jackson of Proven and Probable about his company’s progress in beginning copper production by the end of the year.

Pumpkin Hollow

Pumpkin Hollow
Maurice Jackson: Joining us for a conversation is Matt Gili, president, CEO and director of Nevada Copper Corp. (NCU:TSX), which is on target to U.S. copper production by Q4 2019.
Nevada Copper has a number of successes to share with reader. But, before you share the unique value preposition of Nevada Copper, Mr. Gili, for readers who may not be familiar with the supply and demand fundamentals regarding copper, please provide us with a 10,000-foot overview.

Matt Gili: When you look at the copper fundamentals, we see a very steady and predictable increase in demand of copper, modest amount, 1.5% per year. We see the move towards electrification of vehicles consuming more copper. We see other things that are offsetting that, but overall, a steady predictable 1.5% increase in the global demand for copper. Where the story really gets exciting, from the Nevada Copper standpoint, is with regards to the supply for copper. What we’re seeing is a lot of restrictions in future supply. We’re seeing a lot of difficulties on bringing on a future supply and backed up by work done by Wood Mackenzie and others, we’re projecting that by 2025, the world will be in a supply deficit of upwards of 6 million tonnes of copper per year. This just really supports what we’re doing in Nevada Copper in setting up the next copper mine.
Maurice Jackson: Now that we have an overview of the supply and demand fundamentals for copper, Matt, let’s discuss how someone listening may position himself prudently as a beneficiary. For someone new to the story, can you give us a very quick overview of Nevada Copper?

Matt Gili: Certainly. Nevada Copper, who’s Nevada Copper? We have an asset in Nevada called Pumpkin Hollow. This is our chief asset. It consists of two deposits: an underground deposit and an open-pit deposit for copper. We’re currently in the construction phase for the underground project with production from that underground project coming online later this year. I think we’ll talk more about that later. Regarding the open pit, we’re currently in the process of wrapping up the prefeasibility study for the open pit. You’ll see that being published in April of this year. Then, we have a regional land package of well over 15,000 acres that we are looking at really understanding, really unlocking the full value from that land package. That’s really Nevada Copper, building a copper mine coming into production later this year, with a lot of expansion into an open-pit mine, as well as regional exploration.

Maurice Jackson: Let’s provide readers the latest updates on Nevada Copper, as the company has been very proactive on a number of fronts. Please provide us with an update on the construction progress. I would like to begin with the multi-million dollar question, are we on track to enter production in Q4 of this year?
Matt Gili: Yes, Maurice, we are on track to enter production in Q4 of this year. We are very proud of that. The team’s doing a fantastic job. We have construction activities both on surface with Sedgman building the process plants, as well as underground cementation, both sinking shaft and doing lateral development on our main shaft. All that’s coming together very nicely. We are absolutely on track for commissioning of the plant in the fourth quarter of this year.
Maurice Jackson: As Nevada Copper is preparing for production this year, have you increased your staffing to meet the growing demands?
Matt Gili: That’s a really good question and yes, we have. We’ve increased our staffing. It’s an operational readiness question that you’re asking. This is where I want to stress to you and readers that this concept of operational readiness is foremost in our thoughts and how we’re planning for really becoming, not just building a great mine, but operating a great mine. When you look at the staffing, so far, our staffing, by design, is quite modest. We’re looking at a total workforce of Nevada Copper employees of around 30. That is because this is our model, a very lean, efficient operation. We utilize high-quality, expert service providers as necessary, to make sure that we are operating very efficiently.
Maurice Jackson: Is Nevada Copper still actively recruiting and if so, what positions?
Matt Gili: Yes, we are actively recruiting. Most of our positions open are technical and specialist positions, and would be part of the management team. I absolutely encourage anyone interested in what we’re recruiting for to contact the Nevada Copper website. You’ll see the complete listing of opening jobs there, as well as information on how to apply for any of these positions if you’re interested.
Maurice Jackson: Pumpkin Hollow is unique in that you have both an underground and an open-pit mine. Let’s discuss exploration and expansion potential. What initiatives is Nevada Copper taking to optimize the full potential of the Pumpkin Hollow project?

Matt Gili: We are in the process of constructing the underground, which has a large amount of upside potential. We’ll really only explore that upside potential when we’re underground, after we’re in production. We really look forward to updates on that front in 2020, and the reason for that is very simple. It’s just much more efficient to drill out the prospective areas of the underground from the underground; the holes are shorter. It’s just much easier. That’s really where the underground sits right now, in a holding pattern as far as expansion potential. When you look at the open pit, that’s where a lot of great energy is going into expanding the open pit, understanding the open pit better, really getting that ore body knowledge to allow you to build a world-class operation. That is part of the PFS, which is coming out in April of this year.

That PFS will include the drilling campaign that we completed in 2018, the 26 hole drilling campaign. It will include those results in the resource model. That’s going to give you an even better idea of the full potential of the open pit. The real excitement that we have is with regards to the region itself, a large region, relatively unexplored, but with large amounts of historical copper production, as well as great physical outcroppings of copper mineralization. This is really where we’re going to focus our efforts during 2019, to really get a chance, now that we’ve tied up this land package, to understand what we have.
Maurice Jackson: Speaking of the region, there was a regional survey conducted that led you to staking more land. Can you share the results with us?

Matt Gili: We staked a section a land that we refer to as the Teddy Boy Claims. This is about 5,700 acres of land to our northeast. We are very glad to have this in our portfolio. The criteria for that selection was we brought together experts on this region and experts in copper mineralization. They identified that as a really prospective area and where we should be really focused on. We’ve staked that land, secured it for our ability to explore over the next several years.
Maurice Jackson: Does Nevada Copper plan to drill the new area at some point this year?
Matt Gili: We plan on drilling this year. I really haven’t put out the entire drill program for 2019. We’re still pulling that together and analyzing where to best spend the monies we have available for exploration. We would like to drill that this year. Some more prospective holes, really not an in-depth blanket campaign, but probe a few really interesting areas over there and get a better idea for the drill campaign.
Maurice Jackson: It’s one thing to have tonnage and grade, but you must equally have astute business acumen to make the numbers work. Now, Nevada Copper is in discussions regarding an ECA-backed project finance facility to further optimize the balance sheet, as well as lining up a working capital facility and further offtake agreements to improve the economics of Pumpkin Hollow. Please provide us with the details.
Matt Gili: You kind of said it all. I can’t really provide you with any more details, but I can surely stress what you’ve just said, Maurice. We are in discussions with this export, credit agency style backed project financing. This is going to provide us the opportunity to substantially reduce the cost of our debt service, as well as attract strong and robust financial partners for potential future open-pit developments. Something we’re very excited about and it’s part of really creating Nevada Copper as a world-class company.
Maurice Jackson: Let’s get into some numbers. Please share your capital structure.

Matt Gili: The capital structure is well defined. We have $8 million in long-term debt. We have $153 million of cash or cash equivalents. When you look at the financing package specifically for the underground, we’re fully financed, including the working capital facility to take us through operation ramp up. The inputs into that are an equity raise that we did in the middle of last year, as well as a streaming deposit with regards to a stream arrangement on the precious metals strictly from the underground deposit. We also have a $25-million subordinated debt package. Really a standby loan facility that we can use if necessary.
Maurice Jackson: In closing, I have a multilayered question. What is the next unanswered question for Nevada Copper? When can we expect a response? What determines success?
Matt Gili: I would not classify our successful completion of underground construction and bringing them in operation as an unanswered question. That is going to happen, and I’m very proud of the activities that have happened so far. The real unanswered question for the investors out there, is what is the true potential of the open pit? There’s been a lot of great work done, a lot of exploration done, last year. That’s all been incorporated. I’m really going to be excited when the PFS is released and we can share the details of the open pit potential with the public. They are going to be very impressed and they’re going to see the picture. They’re going to see what we see when we get so excited about Nevada Copper.
Maurice Jackson: Speaking of the prefeasibility study, give us a timeline on that, sir.
Matt Gili: We’ll release that in April. I’m being careful. I don’t want to be too specific. It will be in April of this year. Next month.
Maurice Jackson: Mr. Gili, last question. What did I forget to ask?
Matt Gili: Maurice, forget to ask? You’re always very thorough, so I wouldn’t say you forgot to ask anything. What I would say is I want to reiterate something that we at Nevada Copper have been thinking about over the last month. Unfortunately, for the world, the last month has been a month marred with tragedies, with risk and with unexpected events. What we’re really stressing, with Nevada Copper, is the risk management of Nevada Copper. We are an operation that is on private land. We’re not waiting for any permits. We’re not waiting for records of decision. We’re utilizing EPC contractors, who have that fixed price nature, reduced risks. We’re building a dry stack tailing facility. We’ll never have a wet tailing storage facility at Pumpkin Hollow.  We’re doing this all with a proven, experienced team of mine builders and operators. Really wrapping that up, that concept of low risk, risk mitigation. We are going to build and operate the next mine and there’s very little risk to that execution.
Maurice Jackson: Matt, if investors want to get more information about Nevada Copper, please share the website address.
Matt Gili: Absolutely, www.nevadacopper.com. We love to get your input. You’ll see our investor presentationsthere in our latest news. Let us know what you think.
Maurice Jackson: For our audience, we wish to remind you that Nevada Copper trades on the TSX symbol, NCU, and on the OTC symbol NEVDF. For additional inquiries, please contact Richard Matthews at (877) 648-8266 or you may email RMatthews@nevadacopper.com. Nevada Copper is a sponsor and we are proud shareholders for the virtues conveyed in today’s message.
Last but not least, please visit our website, provenandprobable.com, for mining insights and bullion sales. You may reach us at contact@provenandprobable.com.
Matt Gili of Nevada Copper, thank you for joining us today on Proven and Probable.
Maurice Jackson is the founder of Proven and Probable, a site that aims to enrich its subscribers through education in precious metals and junior mining companies that will enrich the world.
Disclosure: 
1) Maurice Jackson: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Nevada Copper. 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 mentioned in this article: Nevada Copper is a sponsor of Proven and Probable. Proven and Probable disclosures are listed below.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click herefor important disclosures about sponsor fees.
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. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
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Precious Metals

MILES FRANKLIN Laws of Investing

Laws of Investing
Miles Franklin sponsored this article by Gary Christenson. The opinions are his.
Lance Roberts listed James Montier’s 7-Immutable Laws of Investing. They are:
  1. Always insist on a margin of safety.
  2. This time is never different.
  3. Be patient and wait for the fat pitch.
  4. Be contrarian.
  5. Risk is the permanent loss of capital, never a number.
  6. Be leery of leverage.
  7. Never invest in something you don’t understand.
Those sensible rules apply to gold and silver.
ALWAYS INSIST ON A MARGIN OF SAFETY: Don’t buy gold or silver on margin. Always take physical possession personally or in non-bank storage vaults. Trust that governments and the banking cartel will drive nominal prices far higher as they devalue currencies.
Problem: The gold and silver paper markets (COMEX and LBMA) are managed markets. The managers are incented to maintain low prices. This will change. I believe prices will rise, slowly and then rapidly in 2019 and 2020.
THIS TIME IS NEVER DIFFERENT: The banking cartel will “print” fiat currency units until they can’t. Governments will spend in excess of revenues until they can’t. The only question is how rapidly fiat currency units fall in value.
BE PATIENT AND WAIT FOR THE FAT PITCH. Trust the banking cartel to push fiat currency units lower and gold and silver prices higher. Central banks (not the Fed) are buying gold. Individuals should buy gold and silver.
BE CONTRARIAN: When others proclaim gold and silver are dead, then buy. When gold or silver prices have increased by a factor of five or ten, reconsider the risk and reward profile.
RISK IS THE PERMANENT LOSS OF CAPITAL, NEVER A NUMBER: Gold and silver coins and bars will always stay valuable. There is risk of permanent loss of capital with COMEX paper gold and silver, buying on margin, or trusting banks to hold your metals. Minimize risk!
BE LEERY OF LEVERAGE: The COMEX creates leverage with paper gold and silver contracts. Assets can disappear but debt remains.
NEVER INVEST IN SOMETHING YOU DON’T UNDERSTAND:
  • All fiat currency units devalue.
  • Many currency units have turned into waste paper and are no longer used.
  • The almighty dollar is now a mini-dollar, and soon will become a micro-dollar.
  • Propaganda and government statistics may delay the inevitable, but they cannot prevent an implosion or reset.
  • The banking cartel created too much debt. That debt will be repaid in devalued fiat currency units or defaulted.
  • Gold and silver do not default and have no counter-party risk.
  • Gold and silver stored in a non-bank vault are boring. Sometime boring is good. History will show that 2018 – 2025 was one of those times when boring investments in gold and silver were necessary.
These sensible rules apply to debt-based fiat currencies.
ALWAYS INSIST ON A MARGIN OF SAFETY: With fiat currencies a supposed margin of safety is automatic. The government makes pieces of paper legal tender and prints more paper as needed. Governments and central banks encourage fiat currencies because controlling the currencies benefits them.
Problem: Politicians, governments and central banks inevitably print too many pieces of paper. The currency loses value and is replaced, shunned or becomes worthless. The “bad money” drives out the good money (gold and silver) because few people want to exchange valuable gold and silver coins for soon-to-be-worthless paper currencies. Zimbabwe, Venezuela, Argentina and the list goes on…
THIS TIME IS NEVER DIFFERENT: Most unbacked currencies have disappeared into the trash heap of history. Remaining fiat currencies – dollars, euros, pounds and yen – are devaluing every year toward worthlessness. This time will not be different regarding the demise of fiat currencies.
BE PATIENT AND WAIT FOR THE FAT PITCH: A “fat pitch” in the fiat currency world is a profit mania from speculative trades. Buy Amazon stock at $6 in 2001 and watch it run past $2,000 in 2018 – a huge win for fiat currencies invested in Amazon.
Problem: How do you find the next Microsoft, Netflix or Amazon?
Problem: Don’t overstay the party. Remember Enron, Global Crossing, and hundreds of other high fliers that crashed into the dirt. The investment landscape is littered with debris from winners that turned into losers. Deutsche Bank and General Electric sell for small fractions of their earlier highs.
Problem: When you cash out, how much will the fiat currency units buy? The banking cartel and government deficit spending guarantee further devaluation of fiat currency units.
BE CONTRARIAN: A contrarian buys when “blood is in the streets” and sells when everything looks rosy. Remember the “permanently high plateau” story before the 1929 crash. A contrarian knows propaganda from government accountants and central bank Ph.D.’s has limited usefulness. The cheerleaders sell their story and hope the public will keep their misguided faith in fiat currencies.
Problem: The contrarians in the fiat currency world want to escape. They buy hard assets including gold and silver. The managers of fiat currencies discourage opting out.
Problem: People might abandon fiat banks and only use cash. Their solution: Make cash illegal and force people to use digital currencies.
Problem: People might lose faith in stock and bond markets after multiple scandals and crashes. Solution: Force interest rates to near zero or negative levels and discourage parking cash in banks.
RISK IS A PERMANENT LOSS OF CAPITAL, NOT A NUMBER: The real risk is that the managers will abuse fiat currencies, print too much, and devalue the currency so far that people rebel. It has happened in many countries and will occur again. What is your capital worth if you measure your paper assets in dollars or euros and both currencies fall to near zero value?
BE LEERY OF LEVERAGE: Leverage results from investment debt. Buy stocks on margin and watch profits soar in a bull market or shudder as bankruptcies expand in the inevitable bear market.
NEVER INVEST IN SOMETHING YOU DON’T UNDERSTAND: Advisors encourage buying for the long term. Did they explain the inevitable loss of purchasing power of fiat currencies?
Problem: Fiat currencies must devalue. People hope the nominal gains from paper investments offset the devaluation of the currency.
Problem: If people realized how rapidly currencies devalue, they would object to rampant price inflation. Solution: create a Consumer Price Index (CPI) and “manage” the results.
Problem: Devaluation and inflation run in cycles. Inflation was high throughout the 1970s while hard assets soared, and the stock market stagnated. During the “age of paper” from the early 1980s to 2000, the stock market soared, and hard assets languished. Stocks have bubbled higher since 2011 while the COMEX crushed silver prices. Cycles favor hard assets for the next several years.
Solution: If we use unbacked debt-based fiat currencies, the stock markets, gold, silver and real estate will rise exponentially over many decades. After extended moves, the risk – reward profile changes. Now is a risky time for stocks and a high reward time for gold and silver.
WHEN WILL THE PARTY END?
Per James Sinclair, the party ends in mid-2019.
My opinion: The fireworks begin in May-June 2019.
You may find value in the following articles:
Show Me The Money” by Christenson
Will It Ever End” by David Schectman
The Magic Money Tree” by Christenson
Miles Franklin at 1-800-822-8080 sells gold and silver bullion and coins. They are boring. Now is a time when boring is good.
Gary Christenson
About Miles Franklin
Miles Franklin was founded in January, 1990 by David MILES Schectman. David’s son, Andy Schectman, our CEO, joined Miles Franklin in 1991. Miles Franklin’s primary focus from 1990 through 1998 was the Swiss Annuity and we were one of the two top firms in the industry. In November, 2000, we decided to de-emphasize our focus on off-shore investing and moved primarily into gold and silver, which we felt were about to enter into a long-term bull market cycle. Our timing and our new direction proved to be the right thing to do.
We are rated A+ by the BBB with zero complaints on our record. We are recommended by many prominent newsletter writers including Doug Casey, Jim Sinclair, David Morgan, Future Money Trends and the SGT Report.
For your protection, we are licensed, regulated, bonded and background checked per Minnesota State law.
Miles Franklin
801 Twelve Oaks Center Drive
Suite 834
Wayzata, MN 55391
1-800-822-8080
Copyright © 2019. All Rights Reserved.
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Blog

KEVIN DOUGAN | MARCH MADNESS !!!

Original Source: https://ceo.ca/@mickeymantle/march-madness
For those who follow College Basketball, the next few weeks are some of the most enjoyable and exciting months on the sports calendar. For those new to sports or living under a rock,  March Madness brings together 64 teams in a single elimination tournament . The brackets get tighter with each round  64/ 32/ 16/ 8/ 4/  and finally a duke out between the 2 last remaining teams.  As the brackets dwindle down the contests have sub names ” The Sweet 16 ”  / “Elite Eight ”  / ” Final Four ” and the ” Championship Game “.

The games are usually very exciting often coming down to the last possession and consequently there are usually quite a few upsets on the Road to the Final Four. In this spirit I have decided to make my own March Madness Tournament with my favorite Juniors participating.

I complied a list of my favorite Junior Research Stocks in an article I entitled The 12 Days of Christmas  https://ceo.ca/@MickeyMantle/the-12-days-of-christmas

This list was comprised of 12 stocks that I have been following closely and own shares in. The list has been pared down to The Elite Eight for the brackets to work out. I am using the share price of the companies (on 12-24-18) when article was published as a benchmark. I have attempted to put companies with similar share prices paired against one another. After each round the companies that have the highest % gain will move on to the next round.  Simple enough now without any further ado …  Lets’ meet the Elite Eight.

Bracket 1) MUX vs. IRV

McEwen Mining – this under valued producer striving to get a listing on the S&P.  It’s  share price  is at the mercy of the price of Gold. It’s CEO, Rob McEwen draws a dollar a year salary. If the shareholders do well so does its leader.  What a novel concept !!I It was recommended on 12-24-2018 @ $1.79/ MUX

Irving Resources- this tightly held sleeper is headed up by Quinton Hennigh ,which almost guarantees big things. Permitting is now in place and this one time huge producing mine in Japan is now drill ready and ready to rock. “Q” knows how and where to position the the Truth Meter to get it to confess vehemently. Price when recommended was $1.80/IRV

Bracket 2)  JCO vs. FVAN

Jericho Oil – with steadily rising OIL prices… up over 30% in two months and located in the very friendly Oil state of Oklahoma in the prolific STACK region. It boasts having some mighty titans of the Oil industry as neighbors. It is only a matter of time before this gets legs and gains some well deserved attention. JCO/ 43 cents

First Vanadium – with a just released PFS report with staggering numbers, this tightly held stock needs to be revisited. The company just added 1.5 Billion pounds of Vanadium in very mining friendly Nevada which is currently going for close to $18 a pound. You do the math. Your head will spin. !!!  FVAN /77 cents

Bracket 3) SIR vs. ANX

Serengeti Resources – A newly released PFS revealed an overall increase in contained metal from the 2016 Indicated Resource estimate. Which included increases of 44% for copper, 32% for gold, and 52% for silver in the M+I categories. This stock was hammered mysteriously on these fantastic results. Somebody wants this stock on the cheap and for good reason. Rick’s Cafe lives on in the Junior Sector. !!! SIR/17 cents

Anaconda Resources– this stock was once the darling of PDAC in 2018.  My how much changed in a  year. The company keeps  putting out great news …  to crickets. Perhaps new blood at the top would pump new life into this sleeper and get it back on track. There has been a buzz about M&A’s  in the maritime and COB, Jonathan Fitzgerald is a cagey deal maker who makes great things happen.  ANX/ 22 cents

Bracket 4) AZS vs. PRG

Arizona Silver Exploration – continues to amaze. It is slowly coming back to life and I believe still has plenty of upside. Sharp management who put their money where their mouth is.  Share structure remains super tight, as they know how and when to finance without warrants. They have added 2 new highly prospective properties which are drill ready awaiting final permitting. This company is a blueprint for success on how to run a Junior Miner !!!  AZS/ 8 cents

Precipitate Gold – this is run by a very sharp , intelligent ,savvy CEO , Jeff Wilson. They have smartly recently acquired a property in the Dominican Republic which butts up next to Barrick’s Pueblo Viejo Mine. This acquisition and the highly anticipated future drill results could make Jeff Wilson a legend. It seems new government in the DR is much easier to work with than previous scoundrels. Having savant Quinton Hennigh on the board adds to the allure.  PRG/ 12 cents

A reminder we will check highest % gainers for my 12 Days of Christmas article and the price of each stock from the 12-24-18 benchmark to determine their performance in the tournament.

I am a fan of all of these companies and hold shares in each, some in great quantity in my own portfolio. So there are no losers among these companies only winners but somebody will prove to be a worthy champion in a months time !!!

This article is for informational purposes only. It is certainly not investment advise. It is also not encouraging any gambling or betting in any way. Please consult Gamblers Anonymous if you feel the need to waver on my tournament 🙂  Kevin Dougan (aka The Mick) runs a website Blue Sky Marketing which finds and promotes under valued and out of favor companies with much upside and potential growth. Many of these companies are clients and sponsors and I own shares in all of the companies mentioned in this article.  Please sign up for my free newsletter on my website for monthly picks and updates.              www.kdblueskymarketing.com

Categories
Base Metals Energy Exclusive Interviews Junior Mining Project Generators

(VIDEO) FISSION 3.0 Prospect Generator in Position for Uranium Turnaround

Ross McElroy the COO and Chief Geologist for Fission 3.0 (TSX.V: FUU | OTCQB: FISOF) sits down with Maurice Jackson of Proven and Probable to discuss the value proposition of Fission 3.0 and their Property Bank. In this interview Mr. McElroy provides the macro economics for uranium and how one may allocate their uranium holdings in a Uranium Project Generator with a Property Bank with projects located in high-grade uranium districts, with proven management and technical team that has a 20 year history of delivering success to shareholders.

VIDEO

AUDIO

TRANSCRIPT


Original Source: https://www.streetwisereports.com/article/2019/03/16/prospect-generator-in-position-for-uranium-turnaround.html
Maurice Jackson: Joining us for a conversation is Ross McElroy, the COO and chief geologist for Fission 3.0 Corp. (FUU:TSX.V; FISOF:OTC.MKTS): A Uranium Project Generator and Property Bank. Ross McElroy, glad to have you back on the program to share the value proposition of Fission 3.0. Before we begin, Ross, I’d like to begin with some basic fundamentals regarding uranium. For someone new to the uranium sector, what is uranium, and where is it used?
Ross McElroy: Uranium is really all about energy. The way we use uranium is for nuclear fuel. That’s basically the fuel that runs reactors.
Globally nuclear power constitutes between 15% and 20% of the electrical requirements. That’s really where the majority of the uranium is used. There is some uranium that’s used for strategic purposes on a country by country basis, more for the Department of Defense reasons. But really, the vast, vast majority of uranium is used to fuel nuclear reactors.
Maurice Jackson: Provide us with some metrics on how abundant uranium is in the Earth’s crust, and correlate that to the average grade that is found versus the grade that is needed to define an ore deposit in a future mine?
Ross McElroy: Well, uranium is actually one of the most abundant elements in the Earth. It’s kind of ubiquitous. You’ll see it throughout the Earth’s crust; there is trace amounts of uranium present primarily in volcanic and igneous rocks and sedimentary rocks.
On a deposit level, there’s actually a number of uranium deposits around the world, in every continent on the planet and in many countries. On a global basis, the average grade of a uranium deposit worldwide is around 0.1 to 0.15% U308.
Now, if you compare that to say, the deposits in Canada, they’re orders of magnitude higher grade in Canada. We’re talking orders of magnitude that are 10 to 20 times that of the global grade.
Although I’ve given you the average grade, most of those deposits at those lower grades, the average grades are really uneconomic deposits. We need grades that are generally much higher than the 0.1%–0.15% if it’s going to be an economic deposit. And that’s what Canada has. Canada has very high-grade deposits, so the economic metrics are just that much more attractive in Canada.
Maurice Jackson: Now that we’ve identified uranium’s utility, what can you share with us from a supply and demand perspective?

Ross McElroy: Well, it’s fairly simple to understand what the demand for nuclear energy is, in other words, uranium. We can just multiply the number of reactors around the world that are currently operating, and the known fuel consumption rate for a 1000 megawatt reactor is just under 500,000 pounds of uranium a year. If we look at the global reactors, there are around 450 reactors around the world. You can see that the need for uranium on an annual basis is around the realm of almost 200 million pounds of uranium.
Maurice Jackson: How does the nuclear plant in Fukushima, Japan, fit into this narrative?
Ross McElroy: Japan historically, up until the Fukushima event in 2011, was one of the main users on a country basis worldwide. Japan I think consumed almost 20% of the world’s nuclear power, in other words, 20% of the world’s annual production of uranium was used to run the Japanese reactors.
In 2011, of course, we had the magnitude 9 earthquake followed by a tsunami, and that’s what damaged the Fukushima facility. Interestingly enough, even with that magnitude of an earthquake and the soon-to-follow tsunami, the reactor still did not breach. The housing that surrounded the reactor was damaged, and this is where some of the radiation leaks came from, but the reactor itself actually held, and so the damage was actually very, very limited and manageable.
What happened is overnight, Japan shut down all of its nuclear reactors, in other words, all 52 reactors I think they had working at that time, went offline. That caused disruption to the supply/demand situation globally.
What’s happened since then is Japan is slowly coming back on. Japan’s alternatives for power are pretty limited as the country doesn’t have very much of its own resources, if any at all. It imports whatever energy that it needs, be it in natural gas now, in nuclear.
It’s important for Japan to be able to operate these factories that they’re running. I mean, it’s an exporting country around the world, so it does have high energy requirements. It also has the requirements for inexpensive power.
Japan is coming back on to the scene as far as nuclear power. There are eight reactors that are currently back up and operating, and 17 reactors that are in the near-term licensing for approval to get them restarted again.
I think the bottom line is, prior to Fukushima, Japan depended on nuclear energy for at least 25% of its electricity demands. I think by the time 2030 approaches, Japan is supposed to be right back up to those same levels. The country is coming back on, it has always been an important major consumer of nuclear power. I think we’ll see it right back to the equation again in the very near future.
Maurice Jackson: Uranium, next to gold, is known as the other yellow metal, and here’s why. Ross, let’s step back to the bull market in uranium. If one was selective with the uranium holdings, they would’ve had generational changes in their portfolio. What was the spot price during the last bull market?

Ross McElroy: Well, in 2002, uranium was around, I don’t know, about $15 a pound. This is on the spot market. That’s what uranium was trading for.
In 2003–2004, we really saw the lift off of the price of uranium. In fact, it peaked at 2007 to around $140 a pound. It went almost a 10-fold increase in the price of the commodity between 2003 and 2007. The peak at 140 didn’t last particularly long, but it had a slower decline until about 2008—2009, it stabilized, and then it peaked back up again.
Really, it was holding steady. I guess this is the point I would want to make, is that we were starting to see a steady state price of between $50 to $70 a pound, and then the Fukushima event hit that we talked about in 2011, and that really threw the whole pricing structure right out the window. We’ve been working on our recovery ever since.
Maurice Jackson: What is the spot price for uranium today?
Ross McElroy: Currently we’re about $28 a pound for uranium. It has recovered; we’re off the bottoms of $17, $18 a pound just a couple of years ago. Uranium is making its way back.
Maybe the important point here to note is we’re still at prices that the majority of mines around the world are not profitable. Even the lowest cost producers are really not operating in an environment where they can make money with uranium prices what they’re at right now.
What we’ve seen is that the supply is starting to be restricted as the producers are taking a lot of that uranium off market; they’re not supplying it to the utilities at this cheap price, because it’s not a working business model to lose money in the long run on the mining of the commodity.
We are seeing an improvement in the price of uranium, and it’s been about a year and a half in the making. It’s gone up from the $18 that I mentioned to about $28 a pound, but it certainly has a lot more room to move upwards even before we can start to get production back online to meaningful levels.
Maurice Jackson: What is that spot price that companies right now, uranium companies I should say, for them to earn their cost of capital? Is the number around $60 for a spot price of uranium?

Ross McElroy: I believe you are correct. We’re seeing prices that globally, they have to be in the $60 to $70 a pound really to bring on any meaningful production.
One of the clues that I look at when we look at the best uranium mines out there, the lowest cost producers, those would be McArthur River deposit in Canada’s Athabasca Basin in Northern Saskatchewan. That is one of the best uranium mines in the world, certainly the largest highest-grade operating mine. Cameco took that offline because of the prices of uranium where they were at, they weren’t making any money on the mining of this deposit.
There are some indications that Cameco won’t turn that mine back on into being a producer until the price of uranium is somewhat north of $40, maybe $45. Something in that realm.
I don’t have an exact number there, but it does tell you that if you’re going to even bring back the best of those deposits, you really need prices that are something of $40 to $45. As we mentioned earlier, the price for many of the other deposits around the world are probably closer to $60 or $70. You can see, there’s still lots of room for improvement.
Maurice Jackson: The current price of uranium does not support the fundamentals. What correlations do you see today that may exceed the returns from the last bull market?
Ross McElroy: Well, it’s sort of an elastic situation. I think that the longer that we keep depressed prices, yet the demand is still there and growing, reactors are being built, the need to fuel these reactors, that’s not stopping.
In fact, it’s growing. You have the primary suppliers of uranium, i.e., the mines that are not supplying it, the longer that the prices are low, the more rapid that climb will be in the price of uranium when it does correct.
I think there’s a possibility, as I’ve heard some analysts call it, a violent reaction upwards to the price of uranium. I think we’re going to see some substantial price increases within some short vision of time, maybe a year or two or three. Something in that realm that I think will be quite meaningful.
We’ll see what happens, but the longer it stays depressed, the more likely and quicker the rise will be when it does come.
Maurice Jackson: Ross, you’ve provided a compelling case on the fundamentals for uranium. I know readers may be asking, how will all of this demand for uranium be met? Mr. McElroy, please introduce us to Fission 3.0.
Ross McElroy: Fission 3.0 is a uranium explorer. This is a company that we spun out of Fission Uranium Corp. (FCU:TSX; FCUUF:OTCQX; 2FU:FSE), our larger company, back in 2014 when we bought out our partner on the Patterson Lake project, and in so doing with that process from that arrangement, we spun out our non-core assets, the more grassroots exploration projects.
We’ve been able to build up an exploration portfolio, primarily focused in the Athabasca Basin. Remember, the Athabasca Basin is Canada’s only producing uranium field. That’s where the McArthur River deposit is, this is where Fission Uranium has the Triple R deposit. There’s some fantastic deposits out there.
That’s what we’re exploring for in Fission 3.0. We’re looking for the next high-grade uranium deposit in the Athabasca Basin.
Maurice Jackson: You referenced that you’re a project generator. There’s a lot of ambiguity regarding project generators. Please share the virtues and why Fission 3.0 took on the project generator business model?
Ross McElroy: Project generators are really all about sharing the risk. In our case, what we do very well is pick ground. We’ve been able to strategically stake ground in the Athabasca Basin, we’ve made discoveries on two of our properties, the first one in the company called Fission Energy that we made the discovery at our Waterbury Lake property, and later on in Fission Uranium Corp on our PLS property.
That have been situations where we’ve had joint-venture partners sharing the risks, sharing the costs with others. To use the model, what we do is we use our brands and other peoples’ money. That’s really what we’re good at, that’s basically the model that we have.
We have a very highly trained technical team that’s exceptional at picking out high-quality projects. We attract other people who are looking to get into the uranium business, looking to partner up with a team such as ours and join us for the ride to make a discovery.
It’s really all about sharing risk. That’s really what the project generator model does. It’s our land, and we partner with good quality people that can fund a project, and that’s how they earn into it as well.
Maurice Jackson: Do you currently have a joint-venture partner? If yes, who and what are the terms of the relationship?
Ross McElroy: We have had joint-venture partners in the past, and very successful ones. As I mentioned earlier on our Waterbury project, we had a partner with the Korean utility called KEPCO. It earned in by spending a certain amount of money on the property each year over the course of a three-year period.
What we did with that, we were able to make a discovery, using the money in that project, we made a discovery, built up the resource estimate on there, and eventually sold that asset. That was how our shareholders were able to take advantage of our monetizing on the property.
I guess we could say the same at the PLS project, which we now own 100% of it, but that was also a partnership. We shared in the risk early on and in the money early on with our partner. We eventually bought them out in 2014. That was another example of a successful joint venture partnership.
Each one of the deals would be a little bit different from each other. It is a model that we think works very well. I will note that in our property down in Peru as well, we have a partnership that we’re still looking to finalize the deal. This is one where another group has approached us, said it’s interested in the potential of a property down in Peru. It will spend a significant amount of money having us as the operator. Hopefully we’ll make a discovery down in Peru as well.
Maurice Jackson: Well, you’ve just alluded to my next question. Fission 3.0 has 18 projects in its project bank. Now, it is strategically located in premier, high-grade uranium districts in Canada and Peru. Mr. McElroy, introduce us to the Fission 3.0 Project Bank (click here).

Ross McElroy: We have 18 properties in the Athabasca Basin. Our properties, we think that everywhere in the Athabasca Basin has the potential to host high-grade uranium projects.
One of the keys that we seek to identify are deposits that will be shallow. In other words, the closer a deposit is to surface, the easier it is to build a case that this could be a project that could go into production. It’s an easier mine to develop the closer it is to the surface.

Really deep deposits are challenging. They still exist, but they’re challenging. Eventually they cost more money to find and cost more money to get out of the ground. They’re just another level of challenge.
If you look at our 18 properties, they’re all in and around the edge of the Athabasca Basin, where we’ve had a great deal of success finding near-surface mineralization.
Our PLS project that hosts the Triple R deposit in Fission Uranium is a great example of a near-surface deposit. The mineralization starts at 50 meters below the surface, so 150 feet below the present-day surface is where the high-grade mineralization starts. That makes it a potentially open-pit deposit, which is generally low cost and gives you a lot of flexibility.
This is the sort of thing that we’re looking for in Fission 3.0. We’ve got very good properties that are in known mining districts, conversely, we have a good portfolio of ground around the southwest side of the basin where our PLS project in Fission Uranium is hosted, and also NexGen’s Arrow deposit, it’s all in that same area. We have the significant land package that surrounds that area.

We also have a good strategic land package in and around the Key Lake area on the southeast side of the basin. This has been, and still currently is the hot bed of uranium mining in Canada right now. This is the side of the basin where the McArthur River and Cigar Lake deposits are located.

McArthur shut down for economic reasons waiting for higher uranium prices. It was an operating mine up until about a year ago, and Cigar still is in operation. You’ve also got the Key Lake mine.
It’s a strategic area to have a good land package. We think there’s lots of opportunities in and around land in that area to make a new discovery.

And probably third for us is the land package that’s up in the northwest side of the basin, in the old uranium city Beaverlodge district where uranium mining in Saskatchewan first got started back in the 1950s and was the going concern back in the ’50s and the ’60s, I think there were about 52 operating mines up in that area, pretty small scale most of them, but still lots of high-grade uranium. That’s an area where we think that there’s still plenty of exploration potential.
Between all those areas, we’re going to be active and we’re going to be looking for the next high-grade uranium deposit in Saskatchewan.
Maurice Jackson: Speaking of being active, is there active drilling going on right now in these projects?
Ross McElroy: There is active drilling. We did drill in the southwest side of the basin. We were drilling in January on our PLN project. That project is just immediately north of Fission Uranium’s PLS project.
You’re really talking about the same area where the latest discoveries have been found, where you’ve got the Triple R deposit, you’ve got NexGen’s Arrow deposit. These are two of the best new deposits that have been found in the Athabasca Basin in the last 15 years.
We have a package around there called PLN, and we did drill six holes in there earlier this year. It has the potential to host another one of these fantastic deposits, so we are going to continue looking there. We see all the signs present that tell us that this is where we’ll make that discovery.
As we’re speaking right now, we’re drilling over in the Key Lake area that I described earlier. This is over on the southeast side of the basin, about 200 kilometers to the east of the PLS drilling. That is a program where we’ll drill probably eight or nine holes, just south of the Key Lake Mill and the old historical Key Lake deposits. There’s areas of activity there. We’ll continue drilling throughout the rest of 2019 on a number of our projects.
Fission 3.0 is active. We were able to raise some significant money early in the year, in late 2018. We’re going to be active. This is how we’ve been successful in the past, is by being aggressive, looking in places where people probably haven’t looked for a while or never even thought to look, and putting our technical team to work. Yes, you’ll see pretty good news flow out of Fission 3 this year.
Maurice Jackson: Ross, let’s expand the narrative on the project bank portfolio and go south into Peru. What can you share with us there?

Ross McElroy: Peru is a really interesting area. Where our projects are is called the Macusani Plateau, located in southern Peru, near the Bolivian border. The Macusani Plateau has shown at least over 100 million pounds in near-surface uranium deposits.

There’s a company down there that’s quite dominant called Plateau Energy. Plateau has been able to stake a lot and consolidate a land package in the area, and consolidated all these old deposits. It has amassed around 100 million pounds of uranium in these uranium deposits.

However, even more significant, Plateau made a discovery of high-grade lithium in the same area, and in fact, that’s within five kilometers of our southern property boundary on our Macusani plains. Not only do we have the potential now to host near-surface uranium deposits, and we have shown in fact that we do have mineralization on our property for uranium, we’ve mapped it, we’ve drilled, we’ve trenched and found high-grade uranium, but now the potential’s there for hosting high-grade lithium.
This is really a new dimension that we have down in that area, that we wouldn’t have had say, two or three years ago when we were last down drilling. You’ve got uranium, and now we have lithium. It’s a very interesting up-and-coming area as well.
Maurice Jackson: Switching gears, Fission 3.0 has the right projects in the right place at the right time. But that’s only part of the story. Equally important are the people that are responsible for increasing shareholder value. Mr. McElroy, please introduce us to your board of directors.
Ross McElroy: Thank you, and I appreciate that. We do have a very successful team. Our founder of Fission 3.0 is also the same CEO and founder of Fission Uranium, and previously Fission Energy before that, and Strathmore.
Dev Randhawa has been involved in this company right from the get-go in its first iteration back in 1996, and also heading up Fission 3.0. Dev is the longest running CEO in the uranium sector.
Myself, I’ve been involved with Dev 12, 13 years now. We’ve had a great successful relationship. We’re able to raise money, raise attention, put that money to work, make discoveries, and basically build shareholder value right from the bottom up.
This is the group that I think, we’ve been able to deliver in the past, and we’re going to be able to deliver shareholder value as we move forward in this much improving uranium sector.
A lot of the same players that we’ve had all the way along, still keep also in the Fission 3 group.
Maurice Jackson: Who is on your management team?

Ross McElroy: The management team is composed of our CEO Dev Randhawa and chairman. I am the chief operating officer, and also the chief geologist. We have maintained the same structure that we have in Fission Uranium, is the same that we have in Fission 3.0. It’s a fairly lean team. Phil Morehouse is president of Fission 3.0. We kept a pretty lean mean machine in Fission 3.
Don’t forget, we’ve had up until just recently in the last six months, it’s been a very quiet company, there hasn’t been a lot of exploration activities in the uranium sector. I think as we start to ramp up, with our level of activity increasing, we’ll start to draw more and more people into roles and developing roles within the company as we begin to be active, get out and start marketing the story more, get on the ground and back that up with real results, we’re going to continue to build our team.
Maurice Jackson: Before we move on to your impressive technical team, in the natural resource basis, why is it wise to follow proven winners? Ross, you alluded to it earlier, you and CEO Dev Randhawa have a proven pedigree of success. How were shareholders rewarded as far as returns for their loyalty to sticking with your team?
Ross McElroy: Well, if you owned the original company at the beginning, which would’ve been Strathmore Minerals, and you’d held on it to all the way throughout, over the last 20 years since about 1996, 97, you’d probably own about five different companies right now.
What’s happened is we’ve moved on to a new phase, we’ve made discoveries, advanced projects, sold different projects to different groups. What we’ve been able to do is form new companies, split off new companies in what they call a butterfly transaction.
You have shares in the new company, still maintain your shares in the old company, so you would’ve received essentially what would look like dividends in the way of different shares for five different companies since that time. The shareholders that have been loyal and sticking with us would’ve succeeded quite handsomely all the way along.
Maurice Jackson: Your technical team is exceptional. I had an opportunity to meet them in the summer of 2016 at the site visit there. Please, introduce us to them.
Ross McElroy: We’re very, very proud of this group. This has been the team we’ve had, the same core group of people with us since 2010. With that same group, we were able to make our discovery on the Waterbury Lake project, and then followed up in 2012 with the discovery of PLS. It’s the same group that is very core and important to us in Fission 3.0.
I do head up the team and the technical group, so I would be the team leader or chief geologist for the technical team. My right hand guy is Raymond Ashley, he’s the VP of exploration. Ray is an excellent geoscientist who I’ve had the pleasure to work with for over 30 years in this sector, so we’ve been working pretty close together. Definitely a proven mine finder.
We’ve basically held the same group of people together on the project managers, all the structural scientists, geochemists. We’ve kept the same core group together over the last almost 10 years or so.
To me, that’s really the key. You want a team that works together well, good chemistry with each other, the ability and the environment to think outside of the box. Really, the goal for each and every one of us is to responsibly make world-class discoveries. That’s what we’re all about.
We’ve got an excellent team. All the key people are listed on the website. You’ll be able to go there and see the roles of the various groups there in the technical team, but there’s about seven or eight of us that have been able to be what I consider the core team for the last decade or so.
Maurice Jackson: Let’s get into some numbers. Please share your capital structure.

Ross McElroy: In Fission 3.0, we have 142 million shares outstanding. We were able to raise a significant amount. We have just under $7 million in the treasury right now, that’ll allow us to be active over the next two years or so.
Maurice Jackson: What is your burn rate?
Ross McElroy: The burn rate, because it’s exploration, it’s pretty discretionary spending. We have $7 million that we have in the treasury right now, that’ll certainly carry us over the next two to three years of pretty aggressive exploration spending on our key projects. We can dial that kind of number up, and we can dial it back as conditions warrant. That’s the benefit of being in exploration.
The burn rate is actually pretty minimal. In other words, we run a pretty lean shop as far as the number of management and corporate costs. Really, the majority of the costs are exploration spending, which is really entirely discretionary.
Maurice Jackson: How much debt do you have?
Ross McElroy: We have no debt. We’ve not taken on any debt. Basically, the money that we raise have been through equity share offerings. No debt in Fission 3.0.
Maurice Jackson: Who are your major shareholders? What is their level of commitment?
Ross McElroy: When we spun off Fission 3.0 back in December of 2014, it was the same shareholders that were shareholders of Fission Uranium, were the same shareholders in Fission 3.0. We would’ve had a lot of the same loyal, large shareholders, including JP Morgan, even investment from others that we’ve had along the way. It’s been the same loyal group.
We have significant new shareholders now with the financing that we did back in 2018, which was led by the Sprott Global Resources Group out of California. I think we have some new players back to the game, but we have a lot of shareholders that have been with us over the long haul.
These are people that have a good vision of the uranium sector. They know that the good times are around the corner. It’s a point that we believe really strongly, and we think that the sector is improving a great deal.
This is how our loyal shareholders are going to be rewarded, by being a much better market with an aggressive team like Fission 3.0, and the new shareholders will probably be long term loyal shareholders too if we’re successful and able to build value for them as well.
Maurice Jackson: What is the float?
Ross McElroy: Fully diluted, we have 227 million shares. We’ve got shares outstanding, we’ve got options and warrants that we’re a part of financing as well, so 227 million shares out in total. We trade around 240,000 shares a day, I think that’s our average volume.
Maurice Jackson: Multi-layered question. What is the next unanswered question for Fission 3.0? When can we expect a response? What determines success?
Ross McElroy: Well, we are going to be successful through work. We know that a better market should buoy the price up of everybody involved in the nuclear sector. They’re starting to get some life back in the exploration world.
Really, we’ve always built value by our success. We’ve been successful with making discoveries. We now have the money, we have the team, we’re putting them to work. I would look to us as being one of the most dynamic uranium explorers out there. That’s something that I think people can follow, they can see our news release cycle, they’ll see how we’re marketing our story, and just look at the results. I think they’ll speak for themselves.
We’re looking at our projects, we’ll be active throughout the calendar year. I think the news flow will be very strong and steady. People that are interested in following the company will always see that there’s a continuing narrative out there. We want to take advantage of this and improve the uranium market, the fact that we are well financed, and we have the properties that we want to explore. I think there’s a very good opportunity for readers to look at Fission 3.0 as a sector leader in the uranium exploration business.
Maurice Jackson: Mr. McElroy, last question. What did I forget to ask?
Ross McElroy: I think we’ve covered a lot of ground here, and a lot of important ground. One of the takeaways that I want readers to know is we really do believe in the nuclear sector. We think that we have turned the corner and that conditions are improving.
If people are looking to invest in the uranium sector, I think it’s important for them to look at a group that has done it before. Your track record is very indicative of what your future has the potential to look like. I always find myself, when I’m investing, I like to back teams with a proven track record.
We have that in our group. We’ve got an exceptional management team. We’ve done it before. We’ve been able to capitalize on our discoveries by selling assets. We have a unique technical team that has the ability to make discoveries.
So better sector, very good team. Strong management. Those are the ingredients we need to be successful.
Maurice Jackson: Ross, for someone listening that wants to get more information about Fission 3.0, please share the website address.
Ross McElroy: Our website address is www.fission3corp.com.
Maurice Jackson: For direct queries email ir@fission3corp.com, or you may call (778) 484-8030. Fission 3.0 trades on the TSX:V, symbol FUU, and on the OTC, symbol FISOF.
For audience, we’ve been proud shareholders of Fission 3.0 since 2014. Last but not least, please visit our website, provenandprobable.com, for mining insights and bullion sales. You may reach us at contact@provenandprobable.com.
Ross McElroy of Fission 3.0, thank you for joining us today on Proven and Probable.
Maurice Jackson is the founder of Proven and Probable, a site that aims to enrich its subscribers through education in precious metals and junior mining companies that will enrich the world.
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Precious Metals

MILES FRANKLIN Do You Know Where China Gets Its Gold?

David’s Commentary:
I am on vacation this week and next, but there are a few articles I want to get out to you that are very worthwhile.
It’s early Friday morning, but gold and silver have popped back up, with gold once again taking out the important $1,300 barrier and silver is following suit, up $0.19 to $15.34. I would like to see gold hold above $1,300 going into the weekend.
Are you disappointed with the price of gold? Do you know that Gold is now as cheap as it was in 1970 at $35 and in 2000 at $270. 
David’s Commentary(in blue font all below):
From its bottom at $35, gold rose to $850 and from its bottom at $270 gold rose to $1,900. What does that suggest going forward from the current price of just below $1,300? 
Thursday was another day of quietly engineered price declines in gold, silver and palladium and, as ‘da boyz’ always do, they started their attack in the very thinly-traded overnight market in the Far East — and once the sell stops got hit, then the price decline becomes self sustaining. But when it stopped or reversed a bit for whatever reason, the powers-that-be were there to sell whatever contracts it took to resume the downward price path. That was in full force yesterday.
Ted Butler likes to point out that the only thing that really matters in determining the price of gold and silver is the net long or short positions of the Managed Money traders. The Commercials (i.e. JPMorgan and buddies) dupe them into buying and selling, which controls the price. Here is what Ed Steer wrote last night.
Here’s a 5-year chart courtesy of Nick Laird. It shows the gold price plotted against the net long or short positions of the Managed Money traders. This graph should leave no doubt in anyone’s mind that it’s only what they do…or what the commercial traders trick them into doing that controls the gold price.
 
Check out the correlation between the gold price — and the net positions held by the Managed Money traders, appears to be well in excess of 90 percent.  That’s why Ted Butler says that it’s only what the Managed Money traders are up to, that is the controlling factor in the gold price. The chart for silver is very similar.
 
The top half of the chart shows the gold price in blue — and the thin black line [on both the upper and lower charts] shows the net long or short positions of the Managed Money traders.  
Do you know where China gets its gold? Well, it keeps all the gold that it mines, and most of the rest comes from Swiss refiners. They, along with India (and even Russia) are accumulating all the gold that they can get their hands on. They will not sell it, they are the ultimate “strong hands.”
 
2018 Swiss gold exports = 46% of global gold production (Lawrie   Williams)
 
We have often in these pages recounted the importance of gold refined or re-refined and exported via Switzerland in terms of global gold flows, and the latest figures out of the small European nation serve to emphasise that point despite 2018 being perhaps a weaker year for the nation’s overall gold trade. In terms of gold imports the country took in some 1,500 tonnes of gold during the year and exported 1,473 tonnes – mostly to Asia where Mainland China was the dominant recipient. Indeed if we add exports to Hong Kong to the Chinese total, given that most of this will have been fabricated and re-exported to the Chinese mainland, the flows to the Asian giant alone amounted to around 729 tonnes of gold last year.
 
Switzerland has a batch of major gold refineries which specialise in taking doré bullion from mines, scrap gold and large refined gold bars – the latter primarily from the U.K., probably the centre for global gold trade – and producing high purity gold in the small kilobar sizes and wafers most in demand in Asia. The amounts flowing through Switzerland have probably fallen in recent years due to the building of new gold refineries in Asia and the Middle East (some owned by by the Swiss refiners) but nevertheless the amount of gold routed through Switzerland remains substantial. In 2018 it amounted to around the equivalent of nearly half global new mined gold. Indeed if one takes Chinese gold production (which all remains in China) of around 400 tonnes out of the equation, Swiss refineries handle an amount of gold equivalent to some 50% of global new mined non-Chinese output.
 
The other statistic which can be gleaned from the Swiss gold export figures for all of 2018 is that around 1,266 tonnes — or close to 86% — flowed to Asian and Middle Eastern nations. This serves to again emphasise the continuing flows of gold from West to East, with the Eastern holdings seen as being in stronger hands and less likely to flow back into the markets.
 
This 1-chart gold-related article from Lawrie was posted on the Sharps Pixley website yesterday-
Egon von Greyerz always has very interesting things to say about gold. And the following article is no exception. Sorry to be the bearer of bad tidings, but the party is over. We are very close to an inevitable global mega-bubble. When it pops, it will be worse than anything that came before.
We must understand that the world has never faced risk of this magnitude ever. We are now in the very final seconds of the global mega bubble, the likes of which the world has never seen before. What will happen next will be worse than the fall of the Roman Empire, much worse than the South Sea and Mississippi Bubbles and will create a disaster that will dwarf the 1930s Depression.
The problem is easy to define. It is all about debts and liabilities. Global debt is up three-fold since 2000.
Instead of worrying about the cause, now is the time to focus on how to protect yourself financially.
Gold has throughout history been the solution to a mismanaged economy based on deficits, debts and money printing. But it must be physical gold, stored outside the financial system in the safest jurisdictions and vaults. It is essential to have direct ownership of the gold and direct access. ETFs, futures, or part ownership of bars are not proper wealth preservation.
How high could gold and silver go?
A recent KWN article by Lundeen projects $3,000 silver and $30,000 gold. Those are not unrealistic targets and are probably based on normal inflation. With hyperinflation, the future gold price is likely to have many more zeroes.
But first, gold must move past its key resistance at $1,350. That’s been the impenetrable barrier for the last six years.
Once through resistance at $1,350, it will go very quickly all the way through the old high of $1,920. Remember that this high has already been broken in many currencies, so it is not a major hurdle to clear.
Egon von Greyerz
3 DOZEN REASONS TO HOLD GOLD
 The world financial system has been in a euphoric state since 2009. It seems that the Keynesians, like Krugman or the Modern Money Theorists (MMT) are right after all. All asset markets are near the highs and show little sign of changing direction. As Treasury Secretary Mellon said in September 1929: “There is no cause to worry. The high tide of prosperity will continue.” All that is required is more of the same medicine, more credit, more money printing to make a virtuous circle of eternal prosperity.
Clearly the Cassandras are all wrong with their pessimistic forecasts that never happen. The Greek Princess had the ability to forecast the future but her curse was that nobody believed her accurate predictions. (Cassandra article)
We modern Cassandras are in the same position. We are certain that the theories based on spending and borrowing yourself out of the biggest debt bubble in history are totally fallacious. We know that a debt problem cannot be solved by more debt. No one defined it more succinctly than Albert Einstein: “We cannot solve our problems with the same level of thinking that created them.”
THE PARTY IS OVER
But sadly for the world, Cassandra will be right this time also since the party is over. The Time Bomb below says it all. Contained in the red bomb are all the explosive elements that will change the history of the world. Any single one of these risks is sufficient to trigger a collapse of the world economy. The combined explosive nature of all the risks will not only disprove MMT but also create a world, which will be a lot less pleasant to live in.
This cleansing of a sick financial system and a morally decadent world will be totally necessary to create new green shoots based on real, sustainable values. But the transition will create great suffering for the whole world.
THE WORLD NEEDS STATESMEN
In the final stages of a major super cycle, there is normally a total lack of clarity in the thinking of world leaders. But not only that, there is also a total lack of leadership. Right now this is exactly what we have. Countries normally get the leaders they deserve. The world is in desperate need of statesmen who can take uncomfortable decisions to get the world out of the mess it is in. But looking around the world, there is no statesman in any country. There are countries with strong leaders like Putin in Russia and Orban in Hungary but real statesmanship does not exist anywhere.
Look at France where Macron becomes more unpopular by the day. Soon every Frenchman will wear a yellow vest and it is already spreading to other countries. The French economy and financial system are weakening and the inequality between the rich and the poor has the seeds of yet another French Revolution.
Germany has been the biggest beneficiary of a weak Euro but in spite of that, the German economy is now deteriorating rapidly. Merkel’s socialist policies will have disastrous effects on the German economy in coming years, exacerbated by an immigration policy, which will create a major economic and social disaster.
When Deutsche Bank (DB) collapses, which is probable, which will have repercussions not only for German banks but for the global banking system. DB’s derivative book of EUR 50 trillion is 15x German GDP. When counterparty fails, the Bundesbank and the ECB will need to print more Euros than during the hyperinflationary Weimar Republic. In addition, the Bundesbank and the German financial system are the biggest guarantors of the ECB and the Target2 lending to Southern European countries which are all likely to default on their commitments.
The UK leadership is extremely weak. Theresa May’s government is irresolute and divisive. They have spent 2 years solely trying to extricate itself from the EU. This issue has totally dominated UK politics at the expense of the economy. With 2 weeks left to Brexit-day, the UK is nowhere nearer an agreement with the Brussels elite who have consistently frustrated the process.
The US is bankrupt with a currency, which is living on borrowed time. Trump had good intentions but has been shackled by the Deep State. When the biggest economy in the world collapses, it will have major repercussions on the world.
Every major country or continent in the world has got problems of a magnitude that will bring the country down. In addition to the above nations, this includes Japan, China, South America and many more.
FINAL SECONDS OF A GLOBAL MEGA BUBBLE
We must understand that the world has never faced risk of this magnitude ever. We are now in the very final seconds of the global mega bubble, the likes of which the world has never seen before. What will happen next will be worse than the fall of the Roman Empire, much worse than the South Sea and Mississippi Bubbles and will create a disaster that will dwarf the 1930s Depression.
GLOBAL DEBT UP 3X SINCE 2000
The problem is simple to define and is all based around debts and liabilities. At the beginning of this century, global debt was $80 trillion. When the Great Financial Crisis started in 2006, global debt had gone up by 56% to $125 trillion. Today it is $250 trillion.
Thus, in this century global debt has more than trebled. So far MMT seems to work. Just print and borrow more money and the economy will take care of itself. Einstein said it won’t work and the laws of nature also tell us that this is a saga that will have an unhappy ending.
PROTECTION IS CRITICAL
Rather than trying to figure out what the exact trigger will be, it is much more important to focus on how to protect yourself financially.
Gold has throughout history been the solution to a mismanaged economy based on deficits, debts and money printing. But it must be physical gold, stored outside the financial system in the safest jurisdictions and vaults. It is essential to have direct ownership of the gold and direct access. ETFs, futures, or part ownership of bars are not proper wealth preservation.
$30,000 GOLD AND $3,000 SILVER
The Krugmans and MMT fans will now get more than they ever asked for. Because the world will soon start the biggest money printing bonanza in history. Bearing in mind that total debt and liabilities, including derivatives are over $2 quadrillion, we could easily see similar or higher amounts of money printing. A recent KWN article by Lundeen projects $3,000 silver and $30,000 gold. Those are not unrealistic targets and are probably based on normal inflation. With hyperinflation, the future gold price is likely to have many more zeroes.
We must remember that we are holding gold primarily to preserve wealth since it is the best store of value and represents stable purchasing power. But gold is likely to do better than to maintain purchasing power for the simple reason that there will be a massive shortage of physical gold when the gold paper market blows up. This is why it is critical to hold physical gold, bars or coins.
I wrote about the Gold Maginot Line a few weeks ago which is at $1,350. This line has stopped gold since 2013. After a first attempt to break through 3 weeks ago, we are now in a small correction and gold is building momentum to break through the Line. Once through, it will go very quickly all the way through the old high of $1,920. Remember that this high has already been broken in many currencies, so it is not a major hurdle to clear.
3 DOZEN REASONS TO HOLD GOLD AS INSURANCE
For anyone who doesn’t understand the necessity of owning gold, just go through the list of risks in the Time Bomb. And once you have gone through it, go through it again and again and again. The list includes 3 dozen reasons why you need to hold physical gold as protection or insurance against unprecedented global risk.
Anyone who doesn’t own gold today mustn’t wait for the next move up to take place. That could be too late. Once the real move starts, it will be very difficult to get hold of gold at any price. At some point there will no physical gold on offer. The paper gold positions of banks and futures exchanges will see to that.
Central banks will also have major problems. Most of them have covertly sold their official holdings. And most of what they have left, they have leased to the market. That gold has gone to China, India and Russia and all the central banks have left is an IOU from a bullion bank that won’t be honored.
CHINA’S INSATIABLE APPETITE FOR GOLD
With a guaranteed absolute mess in the world financial system, resulting panic in the gold market now is the very last chance to be protected.
Gold is today as cheap as it was in 1970 at $35 and in 2000 at $270:
I find these types of comparisons of little use, but they sure are interesting. Will history repeat? It wouldn’t surprise me.
Did you ever wonder why no bankers ever go to jail? Eric Holder and President Obama pushed through legislation that saw to it that it would not happen.
Ever Wonder Why No Bankers Go To Jail?
“The sovereign in the U.S. is supposed to be ‘We The People’- first three words in The Constitution. It’s not ‘We The People.’ The sovereign power of the U.S. is a criminal global banking cartel. Period. Full stop.”
“Criminal immunity is tantamount to Sovereignty. Any entity that has criminal immunity has Sovereign power. For example, you don’t need the Constitution to coin money and regulate the value thereof. You can simply counterfeit money and rig markets. And in fact, rigging markets is what they did.”
“Collateral Consequences.” It was a term introduced to the Executive branch of Government, which includes the Justice Department by Eric Holder during the Clinton Administration. This paved the way for Justice Department prosecutors to let bankers off the hook for obvious criminal behavior.
In a 1999 memo entitled “Bringing Criminal Charges Against Corporations” (section IX on page 9) written when Holder was deputy U.S. attorney general, Eric Holder argued that government officials could take into account “collateral consequences” when prosecuting corporate crimes. By this he meant prosecutors should take into account the effect prosecuting a corporation or corporate individual will have on “innocent third parties.” That principle right there gave the keys to the kingdom to the banks. It also explains why the SEC is so reluctant to prosecute Elon Musk.
This “consider collateral consequences to innocent 3rd parties” is what led to the bailout of the banks in 2008 and the absence of any criminal prosecutions against bank executives despite the overwhelming evidence of culpability. Oh by the way, Eric Holder just happened to be appointed Attorney General in 2009 by Obama to make sure that Section IX of Holder’s 1999 memo held up during the period of time when the banks and their CEO’s should have been held accountable and sent to jail.
Peter Shiff says once the dollar bubble is pricked, the record debt will bring everything tumbling down. We are in total agreement with him on this. QE will return. This is just the calm before the storm.
I think the world is going back to gold. . . . $5,000, $10,000 (per ounce) who knows how high it’s going to go. There is no real ceiling on the price of gold because there is no floor to the value of the dollar and other fiat currency. . . . Gold is going to skyrocket.”
Shiff says that silver will outperform gold. The last time silver took off, it went from $4 to $50. It will do better this time around.
Greg Hunter USA Watchdog
Money manager Peter Schiff says even though there is “record debt everywhere,” the Fed thinks the economy is fine. Schiff explains, “The actual amount of money the government is borrowing is much larger than what they pretend they are borrowing with the official budget. I think the national debt was up around $1.5 trillion in 2018. . . . It’s probably going to be even greater in 2019. . . . We have the biggest annual trade deficit ever in 2018. We’re going to beat that record in 2019. So, we have the twin deficits going off the charts. None of that worries (Fed Head Jay) Powell. We have record corporate debt, record individual debt, record student debt, auto debt, credit card debt and none of that concerns Powell.  We have record debt for state governments and municipalities. We have underfunded pensions in both the public and private sector. We also have interest rates rising. They have risen quite a bit from a few years ago, and all of that is an added cost on an over-leveraged economy. The reason the Fed did this about face, the reason they are now ‘patient’ and the reason they stopped raising interest rates . . . is all about the United States. . . . It’s all about the enormous debt we have. The Fed inflated a bubble where you had all this debt. It’s impossible to normalize interest rates in this scenario. So, they came up with an excuse to stop, but what the markets still don’t realize is it is not enough. The Fed is ultimately going to go back to 0%. The Fed is not going to shrink its balance sheet. They are going to blow it up bigger than it was before they started to shrink it. There is no way to stop the recession and no way to stop the bear market. They are going to have to go back to the QE, but I don’t think the Fed is going to succeed in blowing a bigger bubble.”
Schiff goes on to say, “I think when they start to try to reflate the assets in stocks, real estate and in bonds, they are just going to prick the dollar bubble, and that’s when we have a real crisis. . . . The dollar is going to collapse, and America’s days of living beyond its means is going to come to an end.”
On gold, Schiff says, “I think this is the calm before the storm. People don’t really perceive it. Maybe it’s like the Wile E. Coyote who has just run off a cliff, and he just hasn’t looked down yet. He doesn’t realize where he’s standing. . . . Gold shorts are going to lose an incredible amount of money. That’s probably one of the most foolish things you can do.
There are a lot of great things out there to short. Gold is the last thing you should be shorting. For central banks, gold is the safest reserve asset. It’s the only asset that is not somebody else’s liability. . . . I think the world is going back to gold. . . . $5,000, $10,000 (per ounce) who knows how high it’s going to go. There is no real ceiling on the price of gold because there is no floor to the value of the dollar and other fiat currency. . . . Gold is going to skyrocket.”
And silver? Schiff says, “Look at last time. Silver went up to $50 per ounce from $3 to $4 an ounce in 2000-2001. Gold went to $1,900 per ounce, but silver went to $50 per ounce. It was a much bigger percentage gain. . . . If I am right about gold going to $5,000 to $10,000 (per ounce), I am sure the percentage gain in silver will be even bigger.”
Join Greg Hunter as he goes One-on-One with money manager Peter Schiff, founder of Euro Pacific Capital and Schiff Gold.
Watch the yield on the 10-Year Treasury. It is the most important bond in the financial system. Lately it’s broken a multi-decade downtrend to the upside.
 
When bond yields rise, bond prices fall.
 
When bond prices fall, debt deflation hits the financial system.
 
When debt deflation hits the financial system, the financial system BLOWS UP.
THIS is why the Fed is in a panic. It’s why the Fed has stopped hiking rates. And it’s why the Fed is desperate to launch even MORE extreme monetary policy as soon as possible.
 
David Brady says a return to QE is inevitable. I absolutely agree with his assessment. The big banks know it and they are waging a last big assault on gold to squeeze as much money out of it as possible before the big move up. He says, “This could be the last buy-the-dip opportunity we get, courtesy of the Bullion Banks.” 
 
Sprott Money
 
Bullion Banks Appear Ready to Slam Gold Imminently
 
 
The big picture remains the same: When the Fed reverts to QE and the dollar tanks, Gold and everything else will soar. I believe a return to QE is inevitable at this point.
 
If the stock market dump in the 4th quarter has taught us anything, it is that the markets cannot survive without ever-increasing stimulus, just like any Ponzi scheme. Meanwhile, U.S. deficits and debt continue to soar, with unfunded liabilities about to hit en masse next year. At the same time, economic activity and tax receipts are falling. This means more and more treasury bonds are being issued when the Fed is still reducing its balance sheet and foreign buyers have gone on strike. There is only so much the domestic market can soak up before becoming saturated, forcing yields to rise and debt interest costs to explode. The Fed will be forced to revert to QE to prop up stocks and bonds (keep yields down), and will sacrifice the dollar in the process.
Now, I don’t want to get into a whole discussion about the manipulation of the metals market, but this is downright obvious. There is no justification for such a massive increase in open interest, especially after such a tiny move up and with Funds holding a relatively small long position, other than the Bullion Banks are loading up on the short side to prevent Gold going higher and planning to make a sizeable profit in the process, as always.
 
The bad news is that this likely means that we are going lower, perhaps up to $100 lower.
 
The Banks are clearly going to attempt to squeeze almost everyone out of the market before the massive rally to come, in my opinion. The good news is that in each of the prior cases this has occurred, most notably 2008, the price rebounded to new highs after the sell-off. This could be the last buy-the-dip opportunity we get, courtesy of the Bullion Banks. 
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Junior Mining

Rudi Fronk | Seabridge Gold – Leverage Play To Rising Gold Prices

Mar 14, 2019 02:37 pm

By Remy Blaire

Rudi Fronk, Chairman and CEO of Seabridge Gold.

GOLD ILLUMINATES MATERIALS SECTOR

Gold recovered the $1,300 level and came off lows of the month as the dollar weakened and as Brexit jitters permeated investor sentiment. After regaining its highest level in two weeks the precious metal tested a resistance level of $1,307 an ounce. Spot gold for April delivery managed to settle above $1,309 an ounce in midweek trade but retreated below the $1,300 level as the U.S. currency strengthened on Thursday.

Concerns about the slowdown in global growth and the outcome over the U.S.-China tariff dispute are ongoing. Yet the broader market has come off recent lows and recovered from the Christmas Eve bear market of 2018. The Federal Reserve’s “patient” approach to interest rate hikes and the possibility of an “adjustment” to the unwinding of is balance sheet have supported the market turnaround.

It’s been a wild ride for gold and now the yellow metal may be past the inversion phase of the recent rollercoaster ride. U.S. economic data is lukewarm but supportive of the Fed’s current position on rate hikes.

On Wednesday, the U.K. Parliament rejected a no-deal Brexit. In a close decision, MPs voted to reject leaving the EU without a withdrawal agreement. On Thursday, MPs will vote on delaying Brexit and request an extension to Article 50. If the vote passes and the EU agrees – the U.K. will not leave on March 29.

On this side of the Atlantic, U.S. equities continued to recover with the DJIA eyeing the so-called “golden cross” chart pattern. The benchmark equity average could see its 50-day moving average (DMA) cross above the 200-DMA. While the technical indicator could point to a long-term bull market, the breakout pattern is a lagging one and never a guarantee of future performance.

SURVIVAL OF THE FITTEST IN GOLD MINING

Gold mining stocks can be an indicator of how the gold market is faring. The stocks are oftentimes seen as a way to get leveraged exposure to gold prices.

The biggest players in the sector are making headlines for mergers and venture announcements. Barrick Gold Corp and Newmont Mining Corp formed a joint venture in Nevada. Earlier this year, Newmont Mining acquired Goldcorp, creating the largest gold miner in the world. Several months ago Barrick Gold scooped up Randgold Resources.

In the aftermath of the 2011 commodity crash there were expectations of more mergers for the junior mining companies. The deals that took place among the gold miners in 2018 totaled over $59 billion but amounted to less than half the sum seen during the peak in 2011.

At the same time, there have been other notable deals recently including Newcrest Mining’s move into Canada. Newcrest and Imperial Metals agreed to a joint venture for a majority stake in a B.C. mine. Meanwhile, Newcrest also entered into a deal with Greatland Gold for a gold-copper project.

SEABRIDGE GOLD – IRON CAP GOLD AND COPPER RESOURCES AMPLIFIED

Seabridge Gold (TSX: SEA) (NYSE: SA)  is a development stage company based in Toronto, ON. The company’s main projects include the Kerr-Sulphurets-Mitchell (KSM) property in British Columbia, the Courageous Lake property in the Northwest Territories, the Iksut Property located in NW B.C.

Seabridge evaluates, acquires and is involved in the exploration and development of gold properties in North America and has other resource projects on the continent. The Snowstorm Project is located in Nevada at the intersection of the main gold trends in the northern region on the U.S. state.

The KSM project is one of the world’s largest undeveloped gold projects in the world. Seabridge Gold recently announced an updated independent mineral resource estimate for its Iron Cap deposit. This deposit is one of four gold and copper porphyry deposits within the KSM project. Worthy of note is that the project is 100% owned by Seabridge.

The company updated its resource estimate for its Iron Cap project that boosts the project’s indicated resource by 460,000 ounces gold and 177 million pounds copper. In turn the project’s inferred resource is expanded by 7.45 million ounces gold and 4 billion pounds copper.

Rick Rule, president and CEO of Sprott U.S. Holdings spoke with Seabridge Gold’s CEO, Rudi Fronk for a brief interview segment. After the latest Iron Cap update, Fronk remarked that the new estimate could lead to the company prioritizing the deposit ahead of others in the overall project plan:

The “exploration success at Iron Cap … gives us greater flexibility to optimize project economics. Iron Cap is closer to infrastructure than Kerr and Sulphurets and its development could be faster and less costly … Iron Cap clearly has the size and grade to justify early inclusion in the mining sequence.”

Fronk says the Iron Cap “resource additions … have met our annual corporate objective of increasing gold ownership on a per share basis. In 2018, our shares outstanding increased by approximately 3.6 million shares resulting from new financings to fund our programs plus other share issuances.”

Seabridge Gold has a market capitalization of nearly $1 billion.

Listen to Rick Rule’s interview with Seabridge Gold’s Chairman and CEO, Rudi Fronk. To hear Fronk’s thesis on gold and learn about Seabridge’s track record and global resources:

http://traffic.libsyn.com/sprottmedia/Seabridge_Gold_Rudi_Fronk.mp3
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Generally, natural resources investments are more volatile on a daily basis and have higher headline risk than other sectors as they tend to be more sensitive to economic data, political and regulatory events as well as underlying commodity prices. Natural resource investments are influenced by the price of underlying commodities like oil, gas, metals, coal, etc.; several of which trade on various exchanges and have price fluctuations based on short-term dynamics partly driven by demand/supply and also by investment flows. Natural resource investments tend to react more sensitively to global events and economic data than other sectors, whether it is a natural disaster like an earthquake, political upheaval in the Middle East or release of employment data in the U.S. Low priced securities can be very risky and may result in the loss of part or all of your investment.  Because of significant volatility,  large dealer spreads and very limited market liquidity, typically you will  not be able to sell a low priced security immediately back to the dealer at the same price it sold the stock to you. In some cases, the stock may fall quickly in value. Investing in foreign markets may entail greater risks than those normally associated with domestic markets, such as political, currency, economic and market risks. You should carefully consider whether trading in low priced and international securities is suitable for you in light of your circumstances and financial resources. Past performance is no guarantee of future returns. Sprott Global, entities that it controls, family, friends, employees, associates, and others may hold positions in the securities it recommends to clients, and may sell the same at any time.
 
 
 

Categories
Energy Junior Mining Oil & Gas

Energy Has A Little Gas Left In The Tank


Original Source: https://www.allpennystocks.com/allpennypro/article.aspx?articleid=27658
Thursday, March 14, 2019

As we evaluate different sectors, we consider a wide swath of factors, such as what they’ve done over the last year, how they typically perform in this type of political and fiscal policy environment and even if the particular time of the year has an effect. To be completely transparent, we considered utilities and REITS, which this week broke out to record highs. The technician in us says the breakout should carry those sectors higher, in part because they benefit from the Federal Reserve taking a more dovish stance on raising interest rates. Our only trepidation is that if we start seeing signs of greater economic strength, traders might turn their backs on these sectors, causing the run to turn over.
Rather than talk about what we didn’t select to discuss this month (apologies…we couldn’t leave out that commentary), we’d like to advise investors to keep an eye on the energy sector, which is a collection of stocks spanning energy businesses like oil, gas, consumable fuel, renewable/alternative, services and equipment. For starters, March has historically been a solid month for the Energy Select Sector SPDR (NYSE:XLE), the benchmark ETF for energy plays. According to CXO Advisory data, XLE has been the best performing SPDR ETF in March since the SPDR ETFs began trading 20 years ago. So far, XLE is up 1.12% this month, compared to its average return of 2.9%.
Even better, XLE is also the top performer in April at 3.7%. If that trend will continue, the energy sector will add to a solid 2019 to date, where it is ahead by about 15% through Wednesday. That’s a nice recovery after energy was the S&P 500’s worst performing sector in 2018 with XLE shedding 18.2%.
In fairness, a lot of the gain has been at the hands of Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM), as the two oil stalwarts cumulatively comprise more than 40% of XLE’s weight (XOM: 23.36%, CVX: 19.72%). Both stocks are up more than 10% in 2019, carrying XLE higher.
Since printing $107 in June 2014, spot oil prices fell off a cliff, plummeting as low as $26.05 in February 2016 before turning things around. The clear culprit for the steep drop was oversupply, a problem that looms globally today. On the strength of the Organization of Petroleum Exporting Countries (OPEC) and its allies going to great lengths to curb output and support oil prices, spot crude climbed back to a $40-$55 range for more than a year before making the next leg up in November 2017 to swell to a high of $76.90 in October 2018. Subsequently, another collapse occurred, driving oil back down to a low of $42.36 in December. Another recovery has ensued in 2019, lifting oil prices back to the upper $50’s.
While energy stocks are frequently bootstrapped to the price of a barrel of oil, we expect a little bit of a slingshot effect based on fundamentals, not oil prices, in the future. This is due to the fact that earnings actually grew in the energy sector in 2018, but the market failed to reflect the expansion. To that point, there has been no improvement in valuation metrics between current levels and when oil was bottoming near $26 a barrel in 2016. In fact, XLE trades at a slightly lower valuation than the 15x trailing 12-month earnings that it did back when oil bottomed in February 2016.
In addition to oversupply, there are other factors that have a choke hold on confidence in the oil and gas industry. Namely, regulation is a concern. Eldar Sætre, CEO of Equinor, Norway’s biggest energy company, acknowledged this on Monday at the CERAWeek by IHS Markit conference, noting that environmental issues threaten the industry and that O&G companies must unitedly take a progressive approach to combat emissions and pollution.
So, with a large shortfall in demand versus supply and environmental issues that can’t be rapidly corrected, why are we bullish on energy? The answer is: “just for right now.” We’re looking at the sector for the next six weeks of so and we’ll have to see what happens come summer (the driving season) and reassess gasoline inventories to get a better understanding on potential market direction. What we are also banking on is history and the fact that the energy sector has typically been an outperformer March and April.

This dive into the sector uncovered many beaten down companies in the small or microcaps space that have languished with the sell-off in energy at the end of last year. It’s fair to say that energy plays abound in the microcap space, but we recommend sticking to those generating revenue, whether it be a producer like the three below or a services company like Profire Energy (NASDAQ:PFIE).
Broadly speaking, there is no shortage of companies that can be argued as value plays given depressed valuations as Wall Street questions the energy sector at the moment.
Jericho Oil Corp. (OTCPK:JROOF) (TSX-Venture:JCO), is focused on domestic, liquids-rich unconventional resource plays, located primarily in the oil-prone Meramec and Osage formations in the Anadarko basin STACK Play of Oklahoma, a region trumpeted by some as the next great U.S. oil play. To that point, majors likes ExxonMobil, Chesapeake Energy, Sandridge Energy and Chaparral Energy continue to put considerable capital resources in and around Jericho’s STACK acreage position. Jericho has assembled an interest in 55,000 net acres across Oklahoma, including an interest in ~16,000 net acres in the STACK Play. The Tulsa-based company recently released preliminary 2018 full-year partnership production, which hit a record high of approximately 297,000 barrels of oil equivalent (BOE), up 33% from 2017’s total. Furthermore, Jericho cut operating expenses by 30% to about $17.00/BOE. At 42 Canadian cents per share, JCO is commanding a market cap of just $54 million.
Northern Oil and Gas, Inc. (NYSE American:NOG), which runs a non-operator model, also delivered record results in 2018. The company controls leasehold of approximately 157,000 net acres targeting the Williston Basin Bakken and Three Forks formations in North Dakota and Montana, and approximately 93% of its total acreage position was developed, held by production or held by operations. During Q4, production increased 117% over the prior year and 36% over the prior quarter, averaging a record of 36,258 BOE per day. Furthermore, lease operating expenses and general and administrative expenses were each down 26% per BOE from the prior year. For all of 2018, production increased 73% year-over-year, averaging a record 25,555 BOE per day. The company was profitable, generating net income of $143.7 million, or 61 cents per diluted share, reversing from a net loss of 15 cents per diluted share in 2017. Shares of NOG got more than halved from a 52-week high ($4.49) in October to an eight-month low at $1.87 in December. The stock is trying to make up some lost ground, trending back into the mid-$2 range as it closes in on a $1 billion market cap.
Lonestar Resources US (NASDAQ:LONE) is another that recently pumped out more oil than it had ever before in a quarter. Lonestar is an independent oil and natural gas company, focused on the development, production and acquisition of unconventional oil, NGLs (natural gas liquids) and natural gas properties in the Eagle Ford Shale in Texas. The company has accumulated approximately 78,193 gross (57,491 net) acres in what it believes to be the formation’s crude oil and condensate windows. For the fourth quarter, Lonestar reported an 81% increase in net oil and gas production to 13,152 BOE per day, compared to 7,272 BOE per day for the three months ended December 31, 2017. The company’s record production volumes exceeded its guidance of 12,600 – 12,800 BOE/D and were 80% crude oil and NGL’s on an equivalent basis. Lonestar reported net income of $75.2 million during 4Q18 compared to a net loss of $17.6 million during 4Q17, while citing certain non-recurring items in the big gain. Excluding those items, Lonestar’s adjusted net income for 4Q18 was $5.4 million, or $0.22 per basic common share. Lonestar has reiterated its previously-issued 2019 production guidance of 13,700 to 14,700 BOE per day for 2019, which equates to production growth of 27% over 2018 levels. Last July, shares of LONE traded as high as $11.24 before diving to a low of $3.41 in December. Shares are currently trading at $4.27, equarting to a market capitalization of approximately $105 million.
 

Categories
Blog

JAYANT BHANDARI East Asia: Future of Humanity

Irving Resources, etc.

I often wonder what the world would be like in the future.
I have written and spoken a lot about why the Third World (with the exception of China), erroneously known as “emerging markets”, is on its way back to the dark ages. These people representing 5 billion out of 7.5 billion human beings will fall into tribal units and then enter never-ending wars.
The West is stumbling. Cultural Marxism, an infiltration of the Third World ways—begging for free-stuff, sense of entitlements, etc.—have increasingly become mainstream in the West.
Today, one out of four Australians is an immigrant. Among the millennial, the US is rapidly becoming, and perhaps already has, a non-European majority country. This matters. One only has to look at how those from non-European background vote to understand that six years now, it will be virtually impossible for a person like Trump to win again. The wide chasm that exists between those who prefer liberty, freedom, free-markets and self-responsibility, and those who don’t means that at a certain point of time, in a not too distant future, the US will take a sharp turn left. The turn will be sharp, given the chasm.
That leaves Japan, Korea, Taiwan, Hong Kong, Singapore and possibly China as the only societies where the western civilization might survive. For now, it is thriving:

On investments…
Cory Fleck and I discussed three companies. They are all worth keeping a very close eye on. Irving Resources (IRV; C$1.90) has started drilling its very prospective project. Evrim Resources (EVM; C$0.30) is trading at the value of its cash and royalty ownership, offering a free upside on its projects and management capabilities. Core Gold (CGLD; C$0.24) has a massive arbitrage upside, but there are several unknown risks involved. The talk is linked here.
On other matters…
I am happy to announce that Fergus Hodgson will be speaking on the “Painful Truths about Latin America” at the next Capitalism & Morality. I am very fond of his deep understanding of Latin America. You can subscribe to his letter here.
I will be speaking at Mining Investment Asia in Singapore later this month.
Warm regards,

Jayant Bhandari

Associate: Rajni Bala

Disclaimer: All information found here, including any ideas, opinions, views, predictions, forecasts, commentaries, suggestions, or stock picks, expressed or implied herein, are for informational, entertainment or educational purposes only and should not be construed as personal investment advice. While the information provided is believed to be accurate, it may include errors or inaccuracies. The sole purpose of these musings is to show my thinking process when analyzing a stock, not to provide any recommendation. I will not and cannot be held liable for any actions you take as a result of anything you read here. Conduct your own due diligence, or consult a licensed financial advisor or broker before making any and all investment decisions. Any investments, trades, speculations, or decisions made on the basis of any information found on this site, expressed or implied herein, are committed at your own risk, financial or otherwise.

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IRVING RESOURCES Commences Diamond Drilling at its Omu Gold Project in Hokkaido, Japan