FN Media Group Presents Oilprice.com Market Commentary
London – October 13, 2020 – In the past 10 years, we’ve only seen a relatively small amount of new gold discoveries. That’s a small number when you consider gold’s solid performance this year under multiple crises, from a pandemic and economic recession to all the political uncertainty that is piling up as we speak. Mentioned in today’s commentary includes: Barrick Gold (NYSE:GOLD), Newmont (NYSE:NEM), Yamana Gold (NYSE:AUY), Kinross Gold Corp. (NYSE:KGC), Kirkland Lake Gold (NYSE:KL).
“2008 was a banking crisis. It was concentrated in a handful of people. Now you’re seeing a broader crisis,” former Goldman Sachs trader Jason Urban told Kitco on October 1st, the same day President Trump and the First Lady announced they had COVID-19, sending the markets into deeper chaos.
“In 2008, people were worried about losing their homes, or their second homes, or their third homes, or things of that nature. Now, you have people that don’t know necessarily if the stimulus check doesn’t come, where their next meal is coming from. That kind of fear changes behaviors across everything,” Urban said.
Gold is looking more attractive by the day …So why are we so short on discoveries? Because major minors have given up on new exploration. Instead, they’re milling around late-stage gold assets or going back to old producing mines to try to get more out of them.
In other words, they’re leaving new exploration to the junior miners. And that means a phenomenally bigger upside for early-in investors in juniors that make a major discovery.
The needle barely moves on large mining stocks when a new discovery is announced. They’ve got too much else going on. They aren’t pure plays. But when a small-cap miner starts buying up loads of high-potential gold territory and then hits it home with a major discovery announcement, the stock soars into three and four-digit multiples.
There’s nothing better, and the only question remaining is this: Where will the next big discovery most likely be?Quebec, the ever-friendly Queen of gold and home to at least 30 major venues and 160 exploration projects.
And even so …Only some 40% of the province’s mineral potential is known today. And the latest Holy Grail is the Abitibi Greenstone Belt, where Amex Exploration recently hit very high-grade gold. And now, Starr Peak Exploration Ltd. (STE.V; STRPF) is gearing up to try and do exactly the same.
In A World of Gold, Why Canada?
That’s simple: Closeology, money and management. The trajectory is easy to follow:
Amex Exploration (AMEX) made a huge, high-grade gold discovery at its Perron Gold Project. The company’s shares surged 7000% in the past year alone. Right before this discovery, Starr Peak was savvy enough to acquire a strategic land package adjoining Amex’s property that is on trend and strike with Amex’s world class gold mineralization. But this is may be only the beginning for four reasons:
First, Amex is drilling closer and closer to Starr Peak’s property boundary, and the closer it gets, the higher grades of gold it’s reporting and it is open at depth. In fact, the last drill hole that Amex reported was one of their best to date and it was situated less than 1km away from the Starr Peak boundary. The drills keep moving east and that means a potential direct line to Starr Peak’s property. Second, Starr Peak has been aggressively making acquisitions–buying up everything nearby and boosting its portfolio over and over. Third, it’s fully funded to drill, and is identifying targets right now. Fourth, the news flow is fast and furious, and double what it would usually be. That’s because with every move Amex makes, it benefits Starr Peak, and with every bit of progress Starr Peak announces it benefits even more.
The Golden Acquisition Trail
First, Starr Peak (STE.V; STRPF) bought up property adjoining Amex before Amex made its recent, high-grade gold discovery at Perron. Then, Starr Peak bought up a past-producing gold mine on the other side. Now, it’s got 74 miner claims on some 2,280 hectares in the world’s hottest gold venue.
It breaks down like this:
- Starr Peak’s NewMétal Property, adjacent to the AMEX discovery, is 53 mineral claims covering 1,420 hectares of highly prospective ground for orogenic gold and polymetallic VMS style mineralization in the wildly attractive Abitibi Greenstone Belt.
- Starr Peak’s newly acquire Normétal Mine is a past-producing mine from which approximately 10.1 million tonnes grading 2.24% Cu, 5.41% Zn, 0.526 g/t Au, and 44.45 g/t Ag were extracted periodically between 1937 and 1975, with development down to a depth of approximately 2.4 km.
- The company’s Normetmar mine, adjacent to the above, shows a historic resource of 306,000 t grading 11% zinc, of which only ~48,000 t has been mined since 1990. It also shows several amazing high-grade gold intersections.
- The Rousseau property is a bloc of 12 claims covering over 470 hectares in the Rollmac gold zone of a very impressive 31,298 tonnes grading 11.99 g/t Au (historical*) …
- The Turgeon Lake property gives Starr Peak two more claims covering almost 113 hectares with samples at the water line assaying up to 168.3 g/t Au, 30.2 g/t Au and 23.7 g/t Au (GM 52490) and a drill hole assaying 18.7 g/t Au over 3.09 m, including 68.9 g/t Au and 10.48 g/t Ag over 0.4 m.(historical*).
*Historical resources described above are not relied upon as exact numbers. The historic resources are relevant to give a ballpark estimate of the potential on the property.
Getting Down to the Drill
This company has been all about stealth moves since it quietly started to build up its arsenal of properties in this area that Amex has turned into a world class district. But now it’s time for drilling–and exposure. And the Starr Peak story was compelling enough to prompt several Amex directors to jump in as shareholders themselves, anticipating the next big discovery. They’re hoping to ride the Amex momentum for a repeat.
But the story has also been compelling enough to attract money for drilling. And with each move of the Amex drill closer to Starr Peak, the story gets even more compelling.
Now, it will Starr Peak’s turn to be in the spotlight with a drill program commencing within a couple of months. In August, it secured a top geological consulting firm in Quebec, Laurentia Exploration–the same firm behind the Amex discovery–to move things forward. This is extremely valuable as the team that is working the Starr Peak properties has a huge understanding of the geology of the area after contributing to the success of the Amex world class discovery. They have already drilled in excess of 100,000 meters for Amex and have recently been contracted to increase to 300,000 meters so the knowledge of where to drill will be invaluable.
On September 9th, Starr launched VTEM (Versatile Time Domain Electromagnetic) system surveys on the main block of its NewMétal property, which includes the past-producing Normetal mine. It also just launched high-resolution drone mag geophysics surveys over the entire property, including its new plays of Rousseau and Turgeon Lake Gold.
Amex continues week after week announcing high grade wide intercepts as they drill their world class property. Soon, it will be Starr Peak’s (STE.V; STRPF) turn, and in an atmosphere of wild pandemic, economic and political uncertainty, there’s never been a better time to go all-out on gold. And there’s never a more rewarding way to do that than betting on the junior minors–the only ones who make big discoveries these days.
Gold Still Has Upside, Just Ask Buffett
Buffett broke with his long-held negative stance on gold on August 17th when his Berkshire Hathaway disclosed a massive stake in Canadian Barrick Gold (NYSE:GOLD) at a time when gold is soaring. Berkshire Hathaway bought more than $560 million in Barrick Gold shares. Buffett has always called gold useless for the most part. But with COVID-19 ravaging the economy, even if the dollar makes a few temporary comebacks, gold is on track for a 90% increase in a very short time frame.
Barrick Gold is on track to produce to produce between 4.6 to 5 million ounces of gold and between 440 to 500 million pounds of copper in 2020. At current prices, that could equate to as much as $1.5 billion in revenue from just its gold and copper assets. And Barrick isn’t the only one looking to strike it big….
Newmont (NYSE:NEM) may be the biggest gold mining company on the planet, but that doesn’t mean that it doesn’t still have significant upside potential. Founded in 1916, and based in Greenwood Village, Colorado, Newmont is a veteran miner with one of the top executive teams in the business, and its operations span 11 countries, including gold mines in Nevada, Colorado, Ontario, Quebec, Mexico, the Dominican Republic, Australia, Ghana, Argentina, Peru, and Suriname.
The big news for the company last year was its acquisition of Goldcorp. Though it was controversial at the time, the $10 billion acquisition has paid off in a big way. This year, gold has soared from $1282 to over $2000 at one point, and Newmont’s stock rose with it, earning investors as much as 90% returns on their original purchase.
Yamana Gold (NYSE:AUY) is another gold giant with a massive presence in the industry. And it’s been on a tear this year. Since March, the miner has seen its share price climb by as much as 145%, and it could be heading even higher. That’s great news for investors looking to jump on board the gold rally. Though it weighs in with a modest $5.4 billion market cap, Yamana’s $5.70 per share price is accessible for all types of investors. And if that wasn’t enough, it also has a long history of increasing its dividends which gives investors even more incentive to grab a few shares and hold on for the long haul.
Recently, Yamana signed an agreement with Glencore and Goldcorp to develop and operate another Argentinian project, the Agua Rica. Initial analysis suggests the potential for a mine life in excess of 25 years at average annual production of approximately 236,000 tonnes (520 million pounds) of copper-equivalent metal, including the contributions of gold, molybdenum, and silver, for the first 10 years of operation.
Kinross Gold Corp. (NYSE:KGC) is a relative newcomer in the gold world compared to some of its century old peers, but it’s quickly become a giant in the industry. With operations across the globe, it’s big picture approach is paying off. The $11 billion gold giant has mines in Brazil, Ghana, Mauritania, Russia and the United States, and it’s looking to expand even further.
Since 2015, Kinross has seen its share price rise by as much as 400%. In fact, this year alone, it’s already up by as much as 85%. And Kinross is showing no signs of slowing. With a healthy balance sheet, favorable earnings reports, and governments, banks, and retail investors piling into safe haven assets, it’s likely to continue climbing
Kirkland Lake Gold (NYSE:KL) is another one of Canada’s top gold companies. Though not quite as established as Barrick or Newmont, Kirkland is no stranger to striking headline grabbing deals in the industry. In fact, just recently, Kirkland and Newmont signed a $75 million exploration deal that could wind up being a game-changer for the industry.
According to a joint press release on August 18th, “Newmont has acquired an option from Kirkland on the mining and mineral rights subject to a royalty payable by Newmont to Royal Gold, Inc. (the Holt Royalty) in exchange for a $75 million payment to Kirkland Lake Gold.”
By. Nick Petersen
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ CAREFULLY**
This news release contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this release include that prices for gold will retain value in future as currently expected; that Starr Peak can fulfill all its obligations to acquire its Quebec properties; that Starr Peak’s property can achieve drilling and mining success for gold; that historical geological information and estimations will prove to be accurate or at least very indicative; that high-grade targets exist; and that Starr Peak will be able to carry out its business plans, including timing for drilling. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that the Company may not complete all the property purchases for various reasons; it may not be able to finance its intended drilling programs; Starr Peak may not raise sufficient funds to carry out its plans; geological interpretations and technological results based on current data that may change with more detailed information or testing; and despite promise, there may be no commercially viable minerals or ore on Starr Peak’s property. The forward-looking information contained herein is given as of the date hereof and the Company assumes no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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