Awaiting PDAC 2020

A favorite time of the year for me is the beginning of March in Toronto where the weather outside is often miserable, but inside the Metro Convention Centre it’s always a rollicking good time as the miners hit town from every place imaginable on earth.

Toronto is the centre of the mining universe and its annual PDAC convention is the show. Thirty thousand boisterous participants all looking to sell, buy or tell their stories to whomever will listen. And, every year I invite you.

And, every year in this blog for some 15 years so far, I repeat my mantra that when the miners leave the dance floor, the party is over. Having attended the show pretty much every year since PDAC 1981, I speak from experience.

After PDAC 2011, in fact, I knew the miners were departing in droves and party would be over for a few years. Unfortunately, for me what followed was one of the best of calls but the worst of calls. As some of you recall, my firm employed four senior traders (plus me) and one junior trader at the time.

Well, that March, in my excitement at calling the cycle top for precious metals, I told my junior trader I would be selling everything. I thought he understand the word “would”. Not in my widest dreams did I think he would take my call literally and hit the sell button to simultaneously close all gold mining positions at the market, and we had many. As many of those stocks were illiquid, prices went no-bid. The young man had crashed the junior gold market.

If you want to look up the definition of fat-fingered trade, you will probably find me there. Yes, 2011 was the year I became celiac and for the next four years I suffered intense colitis to the point that I almost retired. What saved me eventually was early in 2013 I purchased the 60-foot Time&Space and drove that yacht up and down the east coast a few times over the next five years. That boat was a hole-in-the-water for money but was also a life saver.

Over the winter of 2016, I felt my life coming back together again and the gold market was clearly in bullish mode during PDAC that year. That’s when I tried a comeback with the WMA venture that failed a month ago but has let me once again prepare on my own for what I now see as the next Gold Bull.

Yes, PDAC 2020 ought to be a very important time and space for me once again and for investors and traders worldwide.

Before I comment on what I saw happening at PDAC 2019 and my follow-up to that, you might wish to review my March 13 post-convention articlehttps://www.billcara.com/market-analysis/mining-a-few-stocks-at-the-pdac/

Here is the Table of Companies and their stock prices as the convention closed along with their subsequent highs and the closing price this week.

As noted in the article, soon after PDAC 2019, Lorraine Copper merged with Sun Mining (TSXV:SUNM). Lorraine had been a good trader prior to the merger based on those excellent drilling results. The SUNM price performance did pop from the convention closing price of C$0.52 to C$0.60 but has subsequently dropped to a dismal C$0.20. However, management is tracking the target mineralization with more drilling and assay results are anticipated any time now. We will be spending time at the Sun Metals convention booth this March.

Prophecy Development (TSX:PCY)(PRPCF) Executive Chairman and major shareholder John Lee has now acquired the PULACAYO (Silver-Lead-Zinc) property. The Project is in Bolivia, 107 km northeast of Sumitomo Corp’s San Cristobal silver mine, 185 km southwest of Coeur Mining’s San Bartolome silver mine, and 139 km north of Pan American Silver’s San Vicente silver mine. John Lee, like Rui Feng of Silvercorp/New Pacific, is an expert in Bolivia geology. He is expected to spin out the new silver property from PCY into SpinCo, so we will be meeting the company again in March to discover what that’s all about. PCY closed the 2019 convention at C$0.19, later hitting a high of C$0.50 and presently is at C$0.32. Although I do not know the details, I believe that PCY shareholders will get a pro rata shareholding in SpinCo as well as retain their Gibellini (Vanadium) project in Nevada.

Bolivia is an interesting country for many reasons. This year Evo Morales was voted out of power after serving as President since 2006 and has fled to Argentina to avoid his arrest. He has been charged with sedition and terrorism, alleged to have promoted pre- and post-election violence that caused 35 deaths. In terms of direct investment in Bolivia, country risk has always been an issue. Even still, last year we were informed by several people that all was relatively safe, but there were issues. Today, many of our colleagues continue to believe the country is a stable one and that we should not be worried about the mining laws. Hopefully Bolivia will send government representatives to PDAC 2020. If so, I will be interviewing them because if the country risk is acceptable, then I do believe that Bolivia is worthy of in-bound investment. The geology is remarkable as noted by the very high silver grades discovered in the past and more recently.

Scandium International (TSX:SCY) owns a 100% interest in the Nyngan Scandium Project and in the Honeybugle Scandium property in NSW, Australia. ran into more difficulties after PDAC 2020 when a local landowner complained to the regulators that the mine would affect the nearby water supply and, moreover, the Company’s Mine Lease Grant pertaining to the Nyngan Project, previously issued by regulators in October 2017, was invalid. A replacement mine lease grant was issued on July 24; however, despite the “successful resolution”, the stock has not recovered and in fact has sold off. Financing has been difficult. At the convention close, SCY was C$0.175, but the subsequent high was just C$0.20 and the stock is now down to C$0.10. While many shareholders are upset with management, I have no opinion on the Company, which is why we attend the PDAC to make these determinations.

Asante Gold (CSE:ASE) is a tiny cap company (C$0.02 bid with a 2019 high of C$0.06) that has one exploration/development stage (the Kubi Gold Project) and four exploration stage projects in politically stable, gold-rich, Ghana, West Africa. Following PDAC 2019, Asante offers the same story of needing money for fill-in drilling. No opinion as the Company is too small for me to follow even though I very much like Douglas MacQuarrie, the main owner, and hope he succeeds there in Ghana as he has in the past.

Marathon Gold (TSX:MOZ) (MGDPF) has been a winner. The stock at the close of the PDAC was just C$1.00, but Franco-Nevada had made an important investment in the Company’s 100%-owned Valentine Gold camp in Newfoundland, Canada, so I was looking on this one positively. Following the convention MOZ lifted to C$1.76 and is now at C$1.60. With MOZ, I’m thinking take-over, and will stick with the evolving story, perhaps as an investor. Click on https://www.marathon-gold.com/ for an interesting 3D presentation of their flagship Project.

New Pacific Metals (TSXV:NUAG)(NUPMF) was my big story of PDAC 2019, and I was right to present it that way. NUAG closed the convention at C$2.25 and later zoomed to a high of C$4.96, presently at C$4.89. This one is hot. Bolivia will pay off for Rui Feng, a geologist and businessman who I respect for knowing how to bring in mines and create wealth for all the stakeholders. Previously I have invested in NUAG and in the control company Silvercorp (TSX:SVM)(SVM), which Rui Feng also operates; however, I had been out of both for a while. After PDAC 2019, however, I stepped back into SVM on the NYSE at US$2.00, which I later sold at a good profit while retaining a piece, now at US$5.39. SVM was my choice because I had decided that with the Bolivian election coming up, and the residents becoming unsettled at the time, the country risk for New Pacific was too much. The easy road was in buying shares of SVM, which controls NUAG. SVM closed the convention at C$3.37 (US$), subsequently went to a high of C$7.69 (US$) and is now C$7.01 (US$5.39). A big success. Btw, in the article, I boldly claimed that New Pacific would be a billion-dollar company and as things stand today, the market cap after the stock price more than doubled in under ten months is already about C$760 million.

Alamos Gold (TSX:AGI)(AGI) along with Wesdome Gold and McEwen Mining were all holdings of mine during PDAC 2019. Of these three, I still own Alamos Gold (AGI), but sold most of my position at a good profit a few months ago. AGI was C$6.38 at the convention close, subsequently going to a high of C$10.12, and then falling back to C$6.87. I await the timing for re-entry because I like this Company a lot and I think 2020 will be a good year for the Goldminers. For Alamos Gold, management is guiding a period of softness in 1H2020 before a supposedly exciting 2H2020. I am sticking with it, ready to buy the dips.

Wesdome Gold (TSX:WDO)(WDOFF) has been a great investment success for me. I first bought the stock a couple years ago at around C$1.75. At the 2019 PDAC close, WDO was C$4.61, subsequently rising to C$9.66, and presently closing the week at C$9.36. While I know I have been saying that I’ll hold WDO until a take-over, I had to be practical in my Natural Resources portfolio this year, which has had a most challenging Bear market to contend with. At this point over the past 1-year that portfolio is up +19.4%, and I must admit that a good part of that was in my selling a large Goldminer position this Summer, thereby realizing profits, to where I hold a minuscule one today. I did sell WDO and some AGI too early; but profit is profit. Having said that, I shall re-enter a WDO position probably this Spring because this company continues to excel. I will meet their team again in March to learn more about their two producing gold mines at the Eagle River Complex in Wawa, Ontario as well as their brownfields asset, the Kiena Complex in Val d’Or, Quebec.

Finally, there is McEwen Mining (TSX:MUX)(MUX). Yes, at this year’s convention I got to hold a gold bar from the Company’s Gold Bar mine in Nevada; but, alas, I later sold my entire position after holding that position for several years. MUX closed the convention at C$2.335, subsequent lifted to C$2.84, but then ran into underground mining operational problems at their Black Fox Mine in Ontario, causing the stock to plummet. It’s now at C$1.45 and that is a bump from the C$1.35 intraday low this week as the latest promotion has started. I will meet them again in March, as I always do, because Rob McEwen is a remarkable human being and a friend. In the end, I believe Rob will turn his McEwen Mining company into a winner like he did with Goldcorp. I see there is some new management and some encouraging drill results. Click on the website https://mcewenmining.com/ for a virtual tour of their three operating gold and silver mines. Although I am now on the sidelines, I will probably re-enter the stock on a gold price upside break-out, which I anticipate in 2020. I’ll be there because Rob and TV go together like a miner’s pick and shovel.

In closing, I can assure the reader that while my present weighting of the Goldminers in the Natural Resources portfolio is at a historic low for me (at just 0.4%), by the time of the convention on March 1, I will be more heavily weighted. For Natural Resources, I presently hold over 22% cash and will have funds available for a couple new picks to be discovered at PDAC 2020.

I hope to see you there. With people from 130 countries attending, there is no reason you could not be among them. If you do manage to attend, I’d like to meet you.

 

TSXV:SUNM

 

TSX:PCY

 

TSX:SCY

 

TSX:MOZ

 

TSXV:NUAG

 

TSX:SVM

 

TSX:AGI

 

 

TSX:WDO

 

TSX:MUX


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