Are junior mining stocks posed to outperform

By Staff Writer / October 15, 2020 / Article Link

September saw high volatility across the markets for all asset classes. The stock market fell from record highs with gold correcting since reaching a record high in early August. The same trend followed silver followed although both precious metals picked up steam on the downside in September when faced with the potential for risk-off conditions in markets.

Lower gold prices and silver prices are seen by market experts as part of the bullish trends in the gold and silver markets. Over the coming years, we are likely to see a continuation of bull markets in the precious metals sector. Consecutively, mining stocks of junior miners and mid-tier exploration companies are likely to outperform the prices of gold and silver on a percentage basis on the upside.

A quick look at junior gold miners shows they have far outpaced even gold’s returns. In some cases, investors were able to make 19 times their investment in just 5 months. That’s what some mining stock has done already this year.

Naturally, not all junior miners are created equal and if you want to buy gold stocks, some due diligence is required.

Peloton Minerals (CSE: PMC; OTCQB: PMCCF), is one of the junior miners that stand out at its CAD $10M valuation. The company owns 100% of its Golden Trail Project, located just 50 km north of Newmont’s Long Canyon mine with no royalties and comprises an 880 acres. Independence Valley is Peloton’s third Nevada project, this one located on the southern extension of the world-renowned Carlin Gold Trend. It’s the largest concentration of gold deposits in North America, with over 40 deposits discovered along the 64 km-long trend.

Among the junior miners operating in Nevada is Also operating in Nevada is Nulegacy Gold Corp. (TSX-V: NUG; OTC: NULGF), whose market cap has soared to CAD $103M in recent months. The company holds a 100% interest in the Red Hill project, located on the prolific Cortez Trend, which hosts three of Barrick Gold’s largest and highest-grade Tier 1 Gold deposits: Pipeline with 21M oz. at 2.5 grams/tonne, Cortez Hills with 15M oz. at 4.1 grams/tonne, and Goldrush with 10M oz. at 10 g/tonne.

O3 Mining Inc. (TSX-V:OIII, OTC: OQMGF) is a larger junior gold miner with a market cap of CAD $142 million. Its ample portfolio of assets comprises the provinces of Quebec and Ontario, Canada, which are two of the better mining jurisdictions anywhere, with more than 460,000 hectare. With a huge overall 150,000 meter drill program on its Cadillac Break properties, O3 continues to advance this highly prospective district by using AI technology to help identify drill targets.

In Ontario, O3 Mining participates in the Golden Bear Group of properties with the Garrison project which hosts 2M oz. gold in three main zones. It’s a potential consolidation play as bigger neighbors include Kirkland Lake, Pan American and Moneta Porcupine, some with established deposits of multiple millions of ounces.

Junior gold explorers who are open to consolidation or joint development/exploration present a lucrative opportunity for diversifying your portfolio.  It makes sense to allocate small amounts across several junior miners and to add to positions over time.