With a basket of junior explorers and developers all indirectly or directly linked to either precious metals prices or the Electrification Movement, it is not exactly a fun time to be the author of an advisory service that prides itself on its ability to avoid the pratfalls of what has become a very difficult space in which to invest. Junior exploration issues have been taking it on the chin lately after a brief respite in July and August, and with the exception of selected lithium stories, Canadian junior resource stocks ignored the big 5-month U.S. market rally that began in March while the TSX Venture Exchange went out for the week at 52-week lows.
In other cycles, you usually had retail leaders who could be switched to the juniors. Either a group (like lithium) or an individual stock (like Great Bear Resources in 2018) would command the attention (and dollars) of the new generation of Millennial and Gen-Ex investors that have already experienced Nirvana in Artificial Intelligence deals (or Purgatory) in cannabis and crypto sectors, but the fact remains that many of them have not been able to hold on to profits generated in the past cycle.
Another source of ammo for the juniors has been the buoyant real estate market, where, more than often, a hot stock tip is bought with money from a big fat credit line with a house behind it. Now that housing is in the tank, investors are not feeling nearly as confident in speculating in junior resource names because, for the first time in their lives, they are experiencing the effects of a credit cycle where borrowing costs are levitating in front of their very eyes across the globe.
Now, I cannot change Fed or Bank or Canada policy moves, and I can only speculate on the prices for gold, silver, copper, and lithium, but today, I intend to give subscribers an "ad hoc" assessment of the basket of juniors held in the GGMA portfolio and trading accounts.
My last conversation with management was when they asked me to assist in a raise of funds at US$0.50 less than a year after ponying up at a That is rarely an event that causes a warm and happy feeling.
So, I have elected to simply "HOLD" in anticipation of higher gold prices.
Western Uranium & Vanadium Corp. (WUC:CSE; WSTRF:OTCQX): Western has had two major runs since I first became a shareholder back in 2017, neither of which I traded while many subscribers successfully exited twice above CA$3.00 earning them a jeweled crown and me the dunce cap. Nevertheless, with 56 million lbs. of U3O8 contained mostly at their 100%-owned Sunday Mine in Colorado, this company remains my proxy for uranium, looking out to 2024 and beyond.
The catalyst for higher prices is (obviously) the price of uranium or, hopefully, an initiative to monetize some of the extensive high-grade vanadium tonnage also contained at the mine.
Buy below CA$1.00.
Goldcliff Resource Corp. (GCN:TSX.V; GCFFF:OTCBB): The one reason I elected to participate in the 2020 and 2021 fundings for this company as President and CEO George Sanders, who was a founding director of Silvercrest Metals that went from CA$0.15 to nearly CA$16.00 between 2016 and 2020 AND who owns over 30% of the equity in the company (an unheard-of situation for most Canadian juniors).
Alas, when I went to post the chart, I discovered that StockCharts had removed it from coverage, which is usually due to inactivity and/or subscriber disinterest. I own the placements at CA$0.10 and added back in 2022 when they were drilling Kettle Valley, but since those absolute blanks they reported from that campaign, there has been little or no action. Norseman Silver Ltd. (NOC:TSX.V; NOCSF:OTCQB):
In fact, it has been a long descent into nothingness while George awaits a turn in the silver markets in order to try to rejuvenate GCN/GCFFF. I will refrain from posting a chart here and rate the stock as a HOLD, but the reality is that it has been a colossal disappointment for the past three years.
That said, I cannot fault George Sanders because you could be Robert Friedland in this market, and no one would care. Conditions for all juniors are pretty much the same disastrous.Norseman Silver Ltd. (NOC:TSX.V; NOCSF:OTCQB): Norseman remains one of my favorite companies largely because of the seniority of the management team.
With the recent addition of Merlin Marr-Johnson as the new Vice-president of Exploration, they have a Spanish-speaking, former-fund-manager geologist who fits perfectly with Navidad-discoverer Daniel Bussandri.
Their flagship project is the Taquetren Project, located in the Gastre Fault section of Patagonia, Argentina, in the pro-mining Rio Negro province located adjacent to the mining-hostile Chabut province, which hosts one of the world's largest undeveloped silver assets (Navidad).
I could ramble on for days about Taquetren, but the fact remains that it is a "grassroots" property, and in this market, there is NO INTEREST in funding high-risk exploration, especially for gold, which seems to be the major element showing up in the early prospecting efforts.
I bought a large chunk of the paper owned by Cloudbreak, the B.C. company that did option deals with Norseman back in 2021, and while I suspect that NOC would like to have avoided those deals (which proved less than geologically inspiring), at least the large and very onerous blocks have been placed in secure hands that are content to await the return of popularity to the junior exploration space.
As an anecdotal aside, I should tell you that I was hounding President Sean Hurd all through 2021 and 2022 about his lack of initiative in the marketing of the Taquetren property because it was my opinion that Taquetren and especially Daniel Bussandri were extremely marketable despite the challenging market environment. Well, here we are in 2023, and Sean dug in his heels and spent ZERO dollars to market ANYTHING related to Norseman, with the result being a respectable treasury ($400,000 plus), thus avoiding the necessity of a cheap 5-cent financing being required just to keep the lights on.
When markets do turn, NOC/NOCSF will be a favored player with an abundance of deal flow and funding opportunities. If you have the patience, accumulation down in here at a nickel is a solid, low-risk bet on the return of favor to the junior mining sector.
BUY at CA$0.05.Getchell Gold Corp. (GTCH:CSE; GGLDF:OTCQB): I used to write about GTCH/GGLDF every other day back when they were drilling the Fondaway Canyon property but now that there is no activity at Fondaway and with a large property payment looming on the horizon for January, a turn in the fortunes of the junior gold space is a definite requirement before any real excitement can be generated.
(For those that have noted a drop-off in coverage of my favorite junior gold stock in favor of Volt Lithium Corp. (VLT:TSV;VLTLF:US), it all boils down to relevance. Lithium is relevant to the current and highly- popular "Electrification Movement," while gold is not. New generations of investors unfamiliar with gold and silver and their respective utilities to portfolio allocation have chosen Bitcoin over gold as an inflation hedge, and they are experiencing huge wins with positions in lithium deals like Patriot Battery Metals Inc. (PMET:CA) and more recently, E3 Lithium Ltd. (ETL:TSXV;EEMMF:US), which last week touched US$5.34, up 144.56% YTD versus the S&P/TSX Global Gold index down 3.41% YTD.
I continue to hold my position in GTCH/GGLDF despite being heavily tempted to switch it to Volt, especially a few weeks back when they both traded under CA$0.20. Call it "misplaced loyalty" or "stubborn blindness," but selling GTCH/GGLDF at under US$9.00 per ounce for a two-million-ounce discovery in highly-favored Nevada is a move I simply cannot make. With Volt at CA$0.375, it is a move that perhaps I should have made, but that is a decision that will be vindicated once gold trades above US$2,350 per ounce and the kiddies are all fired up to own "ounces-in-the-ground" deals.)
To repeat, the catalyst that will drive investors into GTCH/GGLDF will be a breakout in the underlying commodity price, just as the move in lithium from 30,000 CNY/T to over 600,000 CNY/T sparked the junior lithium deals. Gold at US$2,350 will be a huge shot of adrenalin for all junior gold players, but it will be the developers with proven, high-grade ounces (like Fondaway) that will get all of the early money.
As an investor, it is agony to have to sit and wait while other non-gold deals are flying around us, but there are times when markets can apply unfathomable amounts of abject cruelty to one's analytical track record. Developing the ability to hang in to avoid the devastating throwing-in-the-towel capitulation move is not an easy process, but that is exactly what I did with Allied Copper Corp. before the Volt Lithium deal was consummated.
Buy GTCH/GGLDF under CA$0.20/US$0.15.Volt Lithium (VLT:TSXV/VLTLF:US OTC Qb):
Volt Lithium Corp. (VLT:TSV;VLTLF:US)
Despite the current overbought condition, the operative word here is VOLUME, and as I have been tweeting out since the lows of CA$0.185 a couple of weeks ago, "Volume ALWAYS precedes price."
With the amount of coverage I have provided since one year ago at CA$0.10 when I first mentioned the Allied Copper merger with Volt, I need not go into yet another five-paragraph-long-long repeat of the reasons I love this stock. Volt will be a huge winner for all that own it because, in the current environment, proximity to cash flow generation sets it apart from any of the hard-rock developers or explorers.
With RSI at 72.93 and MACD and MFI stretched out, I would normally wait for a pullback, but with the volumes coming in every single day, it makes dip-buying a labored and questionable effort.
The junior space is dominated right now with lithium, and while that scares me, the "briners versus miners" piece I sent out last week attempts to separate the current mania in the underlying commodity from reality. A couple of months ago, investors were selling E3 Lithium because they thought the lithium "bubble" had popped. While lithium prices had topped (near term) and big names like Albemarle Corp. and Patriot Battery Metals did top, the "briners" led by ETL have grabbed the mantle and are now represent a secondary wave of lithium deals stealing the spotlight, thunder, and market cap from the lithium "miners."
These portfolios were created with the view that electrification of the world will demand more of three major commodities:
1. Clean energy, which means nuclear; 2. Improved transmission methods, which means copper; and 3. Increased electrical storage, which means lithium (plus lead, cobalt, and nickel).
With uranium coming alive last month, two of the three major components of the electrification movement have now gone "active." The only one that remains dormant is copper. The junior copper space is filled with underfunded, dormant deals right now, so I am awaiting the arrival of one of these that has a decent share structure, adequate working capital, and a better-than-average, advanced project. When copper wakes up, it could light up the TSX Venture Exchange, and that will benefit everyone.
You all have my cell number (647 285 9783), so if you wish to discuss any of the names mentioned or how to reallocate to take advantage of the electrification theme, feel free to text me or call me. In the interim, enjoy what is left of the summer.
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Michael Ballanger Disclosures
This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.