Canadian Gold: Speculative Miners

06/01/2016 8:00 am EST


Stephen Leeb

Founder and Research Chairman, Leeb Group

Our recommended small-cap mining stocks are starting to perk up, justifying our belief in them, states Stephen Leeb, editor of The Complete Investor.

Our bullishness is firmly rooted in our conviction that gold and other metals will be embarking upon long-term uptrends.  Here, we look at two of our most aggressive metals plays

NovaGold (NGD) illustrates that for junior mining stocks, the share price has little to do with quarterly releases, which invariably show losses as by definition juniors are accumulating resources they plan to mine in the future.

On that score the recent jump in the shares despite negative earnings is hardly a surprise. The big news for Nova is that it continues to move seamlessly through the permitting process for what could be the largest undeveloped gold asset in the world, the Donlin Gold project.

As with past successes of the company’s controlling shareholders, the mine has close ties to the community, adding to the likelihood that permitting will be completed by 2017.

Donlin, a joint partnership with Barrick Gold (ABX), potentially could produce at least 1 million ounces of gold a year for more than 25 years.

The company’s leverage to gold comes from the fact that higher gold prices will make overall financing easier. NovaGold remains the stock most likely to make investors very rich indeed.

A contender for that mantle, though, is NovaCopper (NCQ), a spinoff of NovaGold, a stock we view as a great mining speculation.

It controls over 350,000 acres in Alaska’s Ambler Mining District, near the Arctic. Its resource measures are throwbacks to days of yore when mining was easy because ore bodies were so mineral-rich.

NovaCopper’s resource body contains an estimated 3.3 percent copper vs. average grades today of 0.6 percent. Another outlier is the nearly 4.5 percent of zinc in the ore body, which contains gold and other minerals as well.

Massive amounts of copper will be needed both to develop the world’s undeveloped economies and to create alternative energies for the developed world.

While NovaCopper’s properties are remote from major transport stops, a road under construction will connect it to Port Mackenzie, which is ice-free year round.

Over the next five years, electric cars, which use hefty amounts of copper, will proliferate in China, which wants 5 million of them on the roads by 2020.

Add to this the need for cable as urbanization proceeds in China and elsewhere and its clear why copper prices should soar.

As for zinc, it has many critical applications and is one of the few sources of the very rare metal germanium, needed in semiconductors, in highly technical chemical analysis, and more.

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By Stephen Leeb, Editor of The Complete Investor

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