A Trio of Junior Gold Miners

03/06/2018 5:00 am EST


Brien Lundin

President, Jefferson Financial, Inc.

My job is to report on the current trends and themes in the investment markets, particularly gold, the rest of the metals and mining stocks, explains junior mining sector expert Brien Lundin, editor of Gold Newsletter.

Well, I’m here to tell you there aren’t any. No consistent trends or themes are to be found in the metals, or in fact any of the other asset classes. The flow of news has been erratic, and even investor reactions have been inconsistent.

Last week, we experienced a sudden, two-fold shift in investor sentiment: 1) They began to worry about inflation, and 2) they started to view gold as something to buy to hedge against that inflation, instead of selling it in anticipation of a more-hawkish Fed reaction.

This week, if there is a theme to be found, it’s revolves around the 10-Year Treasury’s march toward a 3% yield. There lies Armageddon, if you believe the pundits. But even if/when the 10-Year hits that mark, there’s no telling what the market reaction will be.

In the meantime, we have confusion. I continue to believe the gold rally will continue this year, as it seems that investors are continuing to interpret new events as positive for the metal. In the meantime, some of our favorite juniors have been making news.

In Nova Scotia, Atlantic Gold (Vancouver: AGB) announced additional assays from its Phase 3 infill and expansion program on its Fifteen Mile Stream and Cochrane Hill properties.

Overall, these results continue to provide encouragement that this Phase 3 program will allow Atlantic to prove up and expand the resources at both Fifteen Mile Stream and Cochrane Hill.

A recently released prefeasibility study indicates the current resources on these two satellite deposits to the MRC mining complex can boost that mine’s production and economics considerably.

Producing companies with growing resources are exactly the type of levers we’re looking to have in our portfolio as we move into the next phase for the gold market. Atlantic’s still a buy.

Excellon Resources (Toronto: EXN) released more high-grade results from drilling on its Platosa Mine in Durango, Mexico.

The company plans to release an updated resource estimate based on drilling completed through the end of 2017. Given the quality of the results from this effort so far, I think this estimate has the potential to surprise the market to the upside.

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Combined with the improving picture for the silver market, the high-grade results from Platosa argue for keeping Excellon at a buy at current levels, which is what we’ll do.

GoldMining Inc. (Vancouver: GOLD) is a large, global gold resource. Thanks to three acquisitions in 2017, GoldMining’s total measured and indicated gold resources stand at 9.5 million ounces (12.4 million ounces gold-equivalent).

The company’s acquisition of the La Mina gold-copper project has given the company a complement to Titiribi, its other Colombian gold-copper asset. Situated in the country’s Mid Cauca Belt, these projects lie about six kilometers apart, and both are open to expansion via drilling.

The recent addition of the Yellowknife Gold Project (“YGP”) in Canada’s Northwest Territories gives the company 11,000 hectares of ground covering 30 kilometers of the Yellowknife Greenstone Belt.

The land package comes with the past-producing Discovery mine, which generated more than one million ounces of high grade gold in the 1950s and 1960s. It also comes with a treasure trove of historic data, including 231,609 meters of drilling, 2,400 meters of underground development and metallurgical data.

Given the aggressive reputation and track record of GoldMining’s management team, it wouldn’t surprise me to see the company grow its global resource even more via acquisition in 2018.

The company’s share price has trended down so far this year and, to my eyes, is trading at a very attractive level for accumulation, given the current environment for gold.

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