Tales from the Covid Bunker: Day 20

End of the world Jukebox: William Shatner - Common People

Don’t forget: tomorrow at 16:00 GMT (09:00 PST) we’ll be hosting ‘Around the World with Corona’. A panel of our friends including Jorge Sanhueza, Paul Metcalfe (Auramex) and Tim Strong (Kangari) will discuss their regions of choice and how the current market downturn has impacted resource industries there. Register HERE.

Wednesday Widgets:

  • Riverside shareholders approve Capitan Mining spin-out - NEWS
  • William Gehlen strengthens Vangold board - NEWS
  • Dunnedin become Kodiak Copper - NEWS

Hi there!

Thank the Mining gods, I asked and they answered… Today was a lot more fun!

I’ve seen twitter talk of an increased carbon tax in Canada? Unsure if that’s true, or just more O&G paranoia…? I can see Global green energy up 1% and WTI Crude 3% down… But haven’t done much research into why yet, Come back to me at the end of the day!

My best move today was buying into Agnico and increasing my Green Energy ETF position first thing at open; my worst was an over-eager Argonaut gold order, which came in on its way down this afternoon. No regrets though, I’m happy holding producers in solid regions.

Today’s shapes at 16:00 in Germany were wonderful. Between 15:10 and 15:20 (Canadian pre-market), we got a semi-clear divergence from European prices, in an unusually large range of companies.

I have an odd feeling that this specific split could be a market tick (like a poker player looking down and left) for what’s to come and, who’ll perform under pressure. I’m going to call this ‘The Loony Bin’. I’ve tried to make sense of who moved where and why. Below is some of my relevant L&S Exchange ‘watch list’, accompanied by some hastily scribbled notes.

Group 1 - YAWN: Victoria Gold - The exception to every rule and to be ignored. They still haven’t moved in 3 months, since pouring their first gold bar. They represent the most boring mining stock on the TSX, ironically making them one of the most successful as, everybody else has dropped by 20-40%.

Group 2 - UP: Pretium, Skeena, BHP, Alamos, Galane, Osino, Oceana, Anaconda, Nouveau Monde, China Gold, Wesdome.

Simple, lazy picks. These companies have respectable production (or reliable production plans). Demand for their products won’t be hugely impacted by the downturn so, they remain strong enough assets. Nothing really exciting to come, in either direction.

Group 3 - UP: Riverside Resources, Tinka Resources

I would say these represent votes of confidence in the management to deliver through the drop, in Riverside’s case, with a funding agreement with BHP to pull them through and a spin-out to come in the near future.

Group 4 - DOWN: Troilus, Prime Mining, AMEX, Argonaut, Berkwood, Generation Mining, Auryn Resources, Fireweed Zinc, GR Silver Mining, First Quantum, Aurania, Mawson Resources.

I have to be careful not to p*ss anybody off when I say why I think they’ve dropped! Two of these companies I don’t know well enough to criticise (Troilus & Auryn) so, feel free to fill me in there...?

In brief:

  • Argonaut have left a dirty scratch on my slate for today. I picked the wrong side of this move completely, thinking they’d be gently rolling up after their merger with Alio. Apparently that party was over and didn’t change overall perceptions.
  • AMEX have a lot of high-grade hits, but not much wide engagement with their project, every news release is just about gold. Sometimes, people want more substance. Good performance last year, needs something more constructive to regain interest. Let’s hear more about their actual geology and resource potential…
  • Mawson Resources are one of my favourite companies and I still hold shares. Annoyingly, despite having significant names invested, a compliant resource in Finland and some important new acquisitions in a producing district in Australia, Mawson’s shares won’t behave for me! I really like the team and project, but I don’t think people understand their Australian purchases. I also think people are still scared of Europe… Something we’ll try to write up and correct over the weekend.
  • Aurania: Aurania have a very cool story, a reputable 43-101, secure licences and well-known management with successful history… I think personally, they are quite an expensive buy for their development stage, considering their cool story appeals best to retail and enthusiast investors who don’t get many digits for their €1.14 at this point. This is one of those terrible catch 22s in the industry…You do all the desk work and historic research possible, follow the crazy trails that every geologist and explorer dreams of, make a significant discovery, meet everybody at every conference and then when you come back to the market… The trading machines haven’t taken you seriously enough to hold. Regardless of the share price outcome, this is a truly unique and exciting project worth following.
  • Fireweed Zinc are another group stuck between a rock and a hard rock for the time being. At PDAC their regional government agreed to essentially pay for some of their mining infrastructure, bringing their deposit a huge step closer to real production, but zinc has not been a friendly space of late. Win/lose/unknown with another Canadian producer ceasing production recently. I don’t know if that helps or not?
  • First Quantum should (in theory) be performing strongly with shortages of copper and overall fundamentals looking good for production. Maybe they’re being tarred with the same public opinion brush as Glencore, Vedanta and Barrick in Zambia, as producers (except First Quantum!) argue about paying suitable taxes to the African state for their gold by-production.First Quantum are one of the most morally aware mid-major tier producers in the world. Their Guelb Moghrein mine accounts for 5.6% of the entire Mauritanian economy and employs 1400 local people, their newly producing ‘Cobre Panama’ project redesigned the way majors should be approaching community, land access and resettlement issues (more in this video).Being morally positive is rarely as profitable as extortion and forced access so, make of First Quantum’s price change Vs other regional producers, what you will. When they drop and their neighbours rise, it may be because people are choosing the dirty cheaper options.

Group 5 - Unknowns: Agnico, EMX, Matsa, Regulus, Tudor, VR Resources, Pan American, Osisko, B2Gold, Barrick, Barkerville, GT Gold, El Dorado, AntoFagasta, SolGold, Yamana.

Yeah, my 15:10 split wasn’t universal, some avoided judgement. Let’s see if tomorrow brings them into our loony bin. All I can say is, these splits continued up until now (19:00) without much change in price so, the European to Canadian split is real and may become a tradable pattern, at least for today...

Thanks eh!

Spotlight Mining

Posted in Tales from the Covid Bunker

Liam Hardy View posts by Liam Hardy

With a family background in African mining exploration and a degree in geology, Liam brings a mix of technical ‘on-the-ground’ ore hunting and suit-booted office experience to the team. Liam worked in Liberia with Hummingbird Resources and spent 4 years as a geochemical analyst, before focusing on streamlining communications and development in exploration businesses, through the founding of ‘Spotlight Mining’.