Why Invest in Junior Gold Mining Stocks?
Gold was trading in the $1500 range when I first published this article in December 2019. Gold has broken ALL the bear market down-trend resistance lines on the non-log chart as shown below and managed to reach a new all-time high of $2073 in August 2020. This is just the beginning of a parabolic move in the gold price that could end up in at least a five to ten-fold increase in the current price as many gurus in the mining sector suggest. SDBullion and Sprott Money have indicated that gold, platinum and, silver are very likely to experience the same kind of parabolic moves as palladium and rhodium have seen in 2020. The fundamental reason behind the much-anticipated rise in the prices remains the same which mainly is a shortage of physical metals supply.
Since gold mining stocks, particularly junior ones, are highly leveraged to the move in the gold price, as history proves, the returns in quality junior gold mining stocks are going to be unimaginable this time.
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Gold Mining Companies Performance in 2020: Close to a 100% gain
I published this article in December 2019 and shared some of the gold mining stocks that I thought could potentially gain 100% or more in 2020. For readers’ inspiration, I am posting the latest performance of the ten Gold Mining Stocks since I started writing this article on December 18, 2019. As can be seen in the images below, gold mining stocks on average gained 94% since December 18, 2019, and about 192% from their March 2020 bottom. Looking at the daily price comparison of the stocks, currently, three stocks are showing more than 100% gain with Pure Gold Mining at 291%, Banyan Gold at 253%, and Gold Mining inc at 147% gain. However, seven out of ten stocks have met our target of 100% return in 2020 which is really good.
The stocks mentioned in this article (with the price on December 18, 2019) are:
- Euro Sun Mining Inc. (TSE: ESM) (23 cents)
- Cartier Resources (TSXV: ECR.V) (13 cents)
- American Pacific Mining (CSE: USGD) (7 cents)
- GoldMining Inc. (TSE: GOLD) ($1.18)
- Pure Gold Mining (CVE: PGM) (70 cents)
- Banyan Gold (TSXV: BYN) (7 cents)
- Karora Resources Inc. (TSE: KRR) (formerly RNC Minerals Corp @46 cents)
- Wallbridge Mining (TSE: WM) (84 cents)
- Walker River Resources (TSXV: WRR) (8 cents)
- Bluestone Resources Inc. (TSXV: BSR) ($1.35)
As you can see that the overall performance of these stocks is better than the VanEck Junior Gold Miners ETF (GDXJ). The share price of American Pacific Mining and Wallbridge Mining has dropped a bit, but the fundamentals of the companies have not changed.
Gold Mining Stocks Performance in 2016 Mini-Bull Run
As can be seen in the chart below, gold mining stocks started seeing early signs of recovery in 2016 when the VanEck Junior Gold Miners ETF (GDXJ) exploded up to 211% i.e. from 16.87 to 52.5 points within a few months. VanEck Gold Miners ETF (GDX) was up 141%. Physical gold in the same period gained about 30%.
The market has been appreciating quality gold mining stocks since 2016, e.g. Great Bear Resources (TSXV: GBR) went from 5 cents to CAD$9.57, an unbelievable gain of 190,40%. Observing the recent record-breaking gold mergers and acquisitions (M&A) wave and great focus on gold exploration, many experts believe that we have entered the gold bull market:
I think we are in the early stages of a precious metals market and earlier yet in terms of the precious metals equity. The precious metals markets have just begun to attract the generalist investor and the generalist investor is not in the precious metals equities markets yet. In fact, the up move that we have seen in the precious metals equities markets is as much a function of the believers not selling as they are additional buying pressure.
There are several macroeconomic and geopolitical catalysts that have contributed to the rise in the gold price and will send the gold to historically high levels as I mentioned in the previous article “8 Reasons to Buy Gold and Gold Mining Stocks“. Some of those reasons are mentioned here:
- Countries like China and Russia along with major Central banks are buying record amounts of gold. According to the World Gold Council report, in 2018 central banks bought a record of 651 tonnes of gold 71% more than in 2017. This is the highest level of net purchases since 1971 when Nixon closed the gold window.
- President Trump is pro-gold and is looking to stack the Fed with pro-gold people is unprecedented in recent history. It’s a positive development for gold – and the trend of gold’s re-monetization.
- Since gold lows in 2015, the takeover frenzy in the gold mining industry has resulted in 2019 to be a record-breaking year for gold M&A.
- Gold-Backed Cryptos are expected to bring a monetary revolution as they make owning and using gold easier than ever.
10 Gold Mining Stocks for 100% Return
Since the 2011 peak in physical gold and gold mining stocks, junior mining companies have been beaten up badly and lost about 83% of their value. As I have discussed above that gold mining stocks are showing clear signs of recovery so, in the recent market conditions, it is not a dream to expect a 100% return from quality gold mining stocks in a year.
I personally have been investing in gold mining stocks since 2016. I choose companies with good upside potential and have noticed that most gold mining stocks are now on a much healthier footing offering a great buying opportunity. In this article, I’ll share a few gold mining stocks. I believe these gold mining stocks will benefit the most from the rising gold prices.
N.B. The stocks I have mentioned below are not ranked in order of preference, you can see my current holdings in the disclosure at the end. Also, I am going to update the overview of these companies soon but most of these companies have made good progress over the past twelve months.
Euro Sun Mining
Euro Sun Mining Inc. (TSE: ESM) formerly called Carpathian Gold is a gold-focused junior late-stage development company with one mine in development in Romania. Their Rovina Valley Gold project is the second-largest gold deposit in Europe holding gold equivalent measured and indicated resources of about 10.11 million oz including 7.05 million oz of gold and 1.39 billion pounds of copper.
Euro Sun Mining was issued a fully permitted mining license by the Romanian Government in November 2018. NI 43-101 Preliminary Economic Assessment (PEA) Study was released by the company on February 20, 2019. In November 2019, Euro Sun discovered four new Gold-Copper porphyries adjacent to its Rovina Valley project. The assay results from rock chip sampling and grab sample included 1.39 g/t Au and 0.34% Cu porphyry-style occurrence and sample 25.9 g/t Au and 0.005% Cu epithermal vein style occurrence.
According to their latest corporate presentation published on October 15, 2019, Euro Sun Mining will start open-pit mining once they receive environmental and construction permits. In his recent interview on October 23, 2019, Scott Moore, President & CEO of Euro Sun Mining said:
We are not an explorer. We are a developer. We have got the 10 million ounces (of gold equivalent) in M&I. We have got the mining license granted by the government. So that significantly de-risks. It (The Rovina Valley Gold and Copper Project) will be a mine…It will probably move ahead in the construction phase in the next 12 months.
The company will be producing 139 Koz of gold per year with an ASIC of US$752 per oz which is at the lowest quartile of the industry average. The net present value (NPV) at US$1500 per oz gold is US$338 M, which is highly leveraged to both gold and copper.
Every 10 cents in copper is another 10 million dollars on the NPV and US$10 on gold another US$10 million on the NPV on gold
The stock price Euro Sun Mining closed at 24 cents on December 17th, 2019, and it had a market capitalization of $21.67 M. They have no debt and cash positive with recent financing. They have 89.3 million shares outstanding.
Cartier Resources Inc
Cartier Resources Inc. (TSXV: ECR), founded in 2006, is based in Val-d’Or, Quebec. It was trading at 13 cents on December 21, 2019, and had a market capitalization of $24.8 million with about 191 million shares.
It has 879,000 ounces (indicated and inferred) of gold at 2.5 g/t cutoff and about 1.3 million ounces of gold at 1.5 g/t cutoff. This one is going to very good for investors.
- The company has a strong cash position with more than $ 8.1 million, as well as a significant corporate and institutional endorsement including Agnico Eagle Mines, JP Morgan UK, and Quebec investment funds.
- The Company holds a portfolio of exploration projects located in the Abitibi Greenstone Belt in Quebec, one of the most prolific mining regions in the world.
- The company is focused on advancing its 4 key projects through drilling programs. All of these projects were acquired at reasonable costs in recent years. All are drill-ready with targets along with the geometric extension of known gold deposits.
- Exploration work is currently focused on the Chimo Mine property to maximize value for investors. The preparation of the next exploration work is underway to carry out drilling programs respectively on the Benoist, Fenton, and Wilson properties.
Their corporate presentation can be found here:
American Pacific Mining Corp
American Pacific Mining Corp. (CSE: USGD / FWB: 1QC / OTCPK: USGDF) is a gold explorer focused on precious metal opportunities in the Western United States. The company’s flagship property, Tuscarora is a high-grade, early-stage gold project located in a prime precious metal district in Nevada, only 35km northeast of the Carlin trend, 20km southwest of the Jerritt Canyon deposit, and 50km east-northeast of the Midas deposit.
The project was optioned from NOVO Resources Corp (TSXV: NVO) in November of 2017. American Pacific is Eyeing a Gold Discovery amidst gold’s next bull market.
Historic drilling intersected over 368 g/t gold in quartz-adularia veins at relatively shallow depths at Tuscarora. The company completed Phase 1 of an initial drill campaign to follow up on previous high-grade drill results. Following this, OceanaGold entered an earn-in joint venture agreement on Tuscarora and have now commenced a 4000-meter, or around 10 holes, reverse circulation (RC) drill program, announced on Sept 16, 2019.
The company, on December 21, 2019, was trading at 6.5 cents, it had a market capitalization of $4.08 million with about 63 million shares outstanding.
GoldMining Inc. (TSX: GOLD) is a junior mineral exploration company focused on the acquisition and development of gold assets in the Americas. Through its disciplined acquisition strategy, GoldMining now controls a diversified portfolio of resource-stage gold and gold-copper projects in Canada, the U.S.A., Brazil, Colombia, and Peru. Additionally, GoldMining owns a 75% interest in the Rea Uranium Project, located in the Western Athabasca Basin of Alberta, Canada.
- 9.5 million ounces of measured & indicated resources and 11.7 million ounces of inferred resources. On top of that, they have over 2 billion pounds of copper. The combined asset value is well over a billion dollars.
- No debt and has US$7 M cash.
- The average analyst 12-month target is $4.75
GoldMining Inc.’s share price, on December 21, 2019, was $1.18, market capitalization was $164.7 M. It has 139.6 million shares outstanding.
Pure Gold Mining
Pure Gold Mining (CVE: PGM) has the highest grade underground development project in Canada with 2.1 million ounces gold at 9 g/t, another 3.5 million ounces interpolated at depth. The project is fully funded, production at the Madsen Red Lake Mine is planned for late 2020.
In the 8 Zone at depth, this mafic-ultramafic contact boasts some of the highest grades ever drilled at Madsen including 466.0 g/t over 4.3 metres, including 3,262.5 g/t over 0.6 metres, and 342.4 g/t over 5.5 metres, including 4,739.3 g/t over 0.4 metres.
- Announced the expansion of 2019 drilling program to 20,000 meters
- Goldcorp produced 552,000 ounces at 77.1 g/t gold in 2004!
- Eric Sprott has a 10% stake in the company and has invested $20 million.
Pure Gold Mining ‘s shares were currently trading at 66 cents at the time of writing. It had a market capitalization of $261.68 M with about 358 million shares. Their corporate presentation can be seen here.
Banyan Gold (TSXV: BYN) is a junior resource company exploring and advancing precious metal opportunities in Canada. It has two gold properties in Yukon, the Hyland Gold Project, and the Aurex-McQuesten Gold Project.
The Hyland Gold Project has a National Instrument 43-101 Technical Report (NI-43-101) indicated mineral resource of 8.6 million tonnes grading 0.85 gram per tonne gold equivalent (AuEq) for 236,000 AuEq ounces with an inferred mineral resource of 10.8 million tonnes grading 0.83 g/t AuEq for 288,000 AuEq ounces at a 0.3 g/t AuEq cut-off. This resource is located in its entirety on what is known as the “Main Zone”, is open in all directions and at depth, and has the potential to host a multi-million ounce deposit.
They are expanding their resources through an aggressive drill program. There will be a steady flow of drill results for the next several weeks from their recent drill campaign. There are probably 2-3 more batches of results left to be announced.
Banyan Gold’s shares, on December 21, 2019, were trading at 6.5 cents. It had a market capitalization of $8.08 million with about 130 million shares.
Karora Resources (formerly RNC Minerals Corp)
RNC Minerals Corp (TSX: RNX) was originally focused on nickel mining with some small scale gold production until mid-2018, and was about to be bankrupted. The company’s fate completely changed when they found a massive gold deposit that produced 30,000 ounces from a rather small area including a huge 90 kg gold rock.
RNC Minerals has made great progress since late-2018:
- completed a 40,000-meter drilling program
- have released an updated resources estimate in June 2019
- have acquired Higginsville Gold mill with a massive land package in the heart of Western Australia’s most prolific gold mining region
- the company has recently been added to the GDXJ
They have been integrating a new pit on their newly acquired land called Baloo which will help top up ore production at Higginsville mill. Baloo open pit will produce an average of 2 g/t. The average grade at Beta Hunt currently is 3 g/t and could skyrocket as the company could hit pockets of high-grade gold at any time, but a base of 4-5 g/t is more than likely.
RNC Minerals has been producing around 8000 to 9000 ounces of gold per month at all-in sustaining costs (AISC) of US$1,150 – US$1,250 per oz with 42,000 – 49,000 ozs production target for the second half of 2019. The company is currently focusing on bringing the ASIC down and will benefit a great deal from the rising price of gold.
RNC Minerals shares, as of December 17, 2019, traded at 51 cents. The company has 606 million shares and has a market capitalization of $309.22 million.
Wallbridge Mining Company Ltd (TSE: WM) is a junior near-term producer mainly focused on the exploration and development of mineral properties in Quebec, Canada. Wallbridge Mining Company Ltd has 574 million shares outstanding and currently has a market capitalization of CAD$528 M. As of September 30, 2019, they had CAD$14.5 M cash. Eric Sprott beneficially owns and controls 124,354,063 Shares and 2,500,000 warrants representing approximately 21.2% of the issued and outstanding Common Shares of the Company on a non-diluted basis.
Wallbridge is currently developing its 100%-owned high-grade Fenelon Gold Project in Quebec with ongoing exploration and a bulk sample. The company is well-positioned to move rapidly into the producer category. In 2018 the company undertook a 33,000-ton bulk sample program that was produced from the original discovery area. In the process of mining the bulk sample, they have created enough infrastructures to seamlessly move into production as soon as the commercial operation is approved.
The grades from this discovery zone were very impressive, ranging from a low of 10.55 to 33.32 g/t gold and show economic viability. In total, the bulk sample produced 19,037 ounces of gold from 33,000 tones of ore with a reconciled average grade of 18.49 g/t. In addition to the bulk sample, the company has an ongoing 75,000 m drill program in place.
The drill program is proving the connectivity of Area 51 through the sediment-hosted Tabasco and Cayenne zones to the Main Gabbro and is continuing to expand the footprint and depth extent of the Fenelon gold system. If this area is further defined as a minable resource, Fenelon could eventually consist of both a high-grade underground mine as well as a large open-pit mine similar to that of Detour Lake which is on the same trend.
They are working on permitting and economic analysis to support production decisions on Main Gabbro Zone in the second half of 2020. In, addition they have planned 100-120,000 m in-fill drilling in 2020 in Tabasco, Area 51, Main Gabbro to expand footprint & depth and test other targets.
Wallbridge is also continuing partner-funded exploration on its large portfolio of nickel, copper, and PGM projects in Sudbury, Ontario, with a focus on its high-grade Parkin project.
Walker River Resources Corp
Walker River Resources Corp (TSXV: WRR) has multiple gold properties in Nevada, USA. The Lapon Gold Project includes Lapon Canyon, the Rattlesnake Property, the Pikes Peak Property; and the Garfield Flats Project.
The Lapon Gold Project is located within the Walker Lane shear zone, a 100-kilometer-wide structural corridor extending in a southeast direction from Reno, Nevada, and consists of 147 claims (2940 acres). Within this trend, numerous gold, silver, and copper mines are located, notably the historic Comstock Lode mines in Virginia City. Also, the past-producing Esmeralda/Aurora gold mine, with reported production of some one million ounces, and the Anaconda open-pit copper mine in Yerington, Nevada.
Walker River Resources Corp along with its partner, Nevada Canyon Gold Corp. has been busy in an aggressive drill program on this well located, highly prospective gold project. Their drilling so far has returned numerous higher grade structures ( 31.1 g/t Au over13.7 meters in LC18-29, 12.85 g/t Au over 9.2 meters in LC16-14, 48.02 g/t over 13.7 meters in LC16-10, among others, all previously announced).
Walker River Resources shares Closed at 8 cents on December 19, 2019. It has a market capitalization of 11 million with about 138 million outstanding shares.
Bluestone Resources Inc.
Bluestone Resources Inc. (TSXV: BSR | OTCQB: BBSRF), headquartered in Vancouver, Canada, is a natural resource company focused on advancing the permitted, high-grade Cerro Blanco gold project located in southeastern Guatemala; and the Mita Geothermal project, which is an advanced-stage renewable energy project, licensed to produce up to 50 megawatts of power.
Bluestone Resources updated resource estimate at Cerro Blanco. Increased Measured & Indicated Resources by 18% to 1.41 Moz at 10.3 g/t gold and 5 million ounces of silver. Darren Klinck, President & CEO commented:
Cerro Blanco remains one of the highest-grade undeveloped gold projects amongst its peers. Our infill drill program which was primarily focused on converting Inferred Resources was highly successful and exceeded expectations. Overall the program added approximately 208,000 additional ounces of gold into Measured and Indicated Resource categories that will contribute to the reserve base, and potentially extend mine life. Two key outcomes of the resource conversion drill program were: the identification of five new veins in the North Zone, and an increase in Measured Resources to 225,000 gold ounces. We believe this recent infill drill program which was focussed in the North zone and the drilling currently underway in the South Zone have the potential to contribute additional mine life based on previous mine plan conversion rates. Every additional year of mine life has the potential to add approximately US$60 to US$80 million in free cash flow using a gold price of US$1,250 per oz Au.
- US$230 M spent to date on the project, 3 km of underground development
- Feasibility Study complete | robust economics, rapid payback, AISC of $579/oz Au, the average production of 146 Koz Au/year
- Emerging Gold Producer: Construction anticipated to start in 2020
The share price of Bluestone Resources closed at $1.30 on December 20, 2019. It 81.9 million shares outstanding and has a market cap of $106.4 M.
Summary and Expectations for 2021
Since I have noticed the signs of recovery in the gold and gold mining sector, I am continuously and actively hunting for quality gold mining stocks. I shared some of the stocks in this article with a belief that these stocks will move significantly higher in longer terms but in a shorter span of time, a gain of 100% is not out of question. Here is the quick summary of stocks I mentioned in late 2019:
- Euro Sun Mining Inc. (TSE: ESM) 24 cents, market cap of $21.67 M
- Cartier Resources (TSXV: ECR.V) 13 cents, market cap of $24.8 M
- American Pacific Mining (CSE: USGD) 6.5, cents market cap of $4 M
- GoldMining Inc. (TSX: GOLD) $1.18, market cap $164.7 M
- Pure Gold Mining (CVE: PGM) 66 cents, market cap $261.68 M
- Banyan Gold (TSXV: BYN) 6.5 cents, market cap of $8.08 M
- Karora Resources Inc. (TSE: KRR) (formerly RNC Minerals Corp @51 cents, market cap of $309.22 M
- Wallbridge Mining (TSE: WM) 92 cents, market cap of $528 M
- Walker River Resources (TSXV: WRR) 8 cents, market cap 11 M
- Bluestone Resources Inc. (TSXV: BSR) $1.30, market cap $90 M
All the research indicates that we are still in the very early phase of the precious metals bull market. Expect to see huge volatility in 2021 and beyond but in the end, the only way for gold, silver, and other precious metals including palladium and platinum is UP!!!!! You can call me crazy, but I am fully invested in gold & silver mining companies. I also hold some palladium and bitcoin/crypto stocks because there are not many companies in those sectors.
Disclosure: I am/we are long TSE: ESM, TSE: KRR, CSE: USGD, and TSXV: WRR.
I wrote this article myself, I am not an investment adviser and it expresses my personal opinions. I am not receiving compensation for it and do not have any business relationship with any company whose stock is mentioned in this article.
I am never making any investment advice or recommendation to buy or sell specific securities. Investors in financial assets must do so at their own responsibility and with due caution as they involve a significant degree of risk. Before investing in financial assets, investors should do their own research and consult a professional investment advisor.