Every December for the past few years as regular and predictable as the Winter Solstice investors dump junior mining shares they have lost patience for. We call it the tax loss season but tax loss silly season makes a lot more sense. On just as regular basis, as the daylight gets longer in the Northern Hemisphere other investors run the same stocks higher in the first few months of the year.
It's one of those few times where you don't really need to know anything other than to have the ability to read a calendar.
Lots of people including me and people a whole lot smarter than me have called for a tradable low in December this year. Two weeks ago I talked about wanting to see my favorite sentiment indictors show an extreme. We seem to have gotten our plunge from the speculators in the COTS. Those are the guys who listened to the PermaBulls claiming that gold was suppressed all the way from $252 to $1923. To call them the dumb money is a kindness. You just have to wonder how people could be that stupid. The commercials are the dealers. They will take any bet. So automatically they look like rocket scientists next to the speculators.
But we didn't see an extreme in the DSI (Daily Sentiment Index). That worries me. The DSI for gold got down to 13 and 10 for silver on the 11th of December but that is hardly an extreme. Like Jordan Roy-Byrne, I suspect we may have a dead cat bounce and then another plunge to new lows. In any case gold, silver, platinum and the resource shares are about to have a heavy tailwind soon. If we have a crash to new lows, back up the truck.
I'm going to talk about two companies at the same time. They are both gold companies in Brazil and have shared management. The first is Cabral Gold (CBR-V). The shares were as high as $0.50 in November and have plunged to $0.32 but the story is absolutely compelling.
The company has an existing historic resource of 1.5 million ounces of gold at a grade of 1.2 g/t. Now while it's true that depending on location, grade and infrastructure, an ounce of gold isn't the same as another ounce of gold, we do have a benchmark. Eldorado Gold plans on putting the Tocantinzinho gold project into production and they are right next door.
Cabral completed an additional 22,000 meters of drilling that have not been included in the existing historic resource. The new 43-101 will come out in Q1 of 2018. The company has about $4 million in cash. With a market cap of about $10 million that values gold at about $4 an ounce and doesn't factor in the additional ounces contained in the 22,000 meters of drilling. With any sort of tailwind from the price of gold, this puppy is going to fly.
Altamira Gold (ALTA-V) has similar management and is in gold in Brazil. The shares were as high as $0.34 in September but are at a seasonal low of $0.17 now. The company has an existing 43-101 resource of about 500,000 ounces that does not include assay results from 2016 and 2017. Recent drill results were excellent and will add to the resource. The company is in the midst of a private placement for $2 million that will fund the 2018 program.
In each case with Cabral and Altamira they have large land positions in areas that were properties subject to massive alluvial garimpeiro mining in the past. For certain there is gold there. With any sort of tailwind, both stocks will go a lot higher on any news or no news at all.
I first wrote about Metals Creek Resources (MEK-V) in February of 2017. The shares were a tiny $0.095. Recently they hit an even tinier $0.05. That is despite having some of the best drill results I have seen this year. Their primary project is subject to a 50-50 JV with Goldcorp and is called the Ogden property. Ogden covers 8 km of the famous Porcupine-Destor fault. Mines directly to the east on the same fault structure have produced as much as 22 million ounces in total. At the very least, MEK is aiming at elephants in elephant country. With a tail wind they will go higher.
DNI Metals (DNI-C) started the year at $0.03 and has done quite well, hitting a high of $0.155 in August before settling down to $0.085 today. I wrote about them in April and pretty much told the whole story. But the story has gotten better. DNI had done a 50-50 JV with an Australian junior who had committed to a major drill program and 43-101 and then failed miserably. I visited the project in October but couldn't write anything until DNI had finished booting the Aussie junior.
DNI is a graphite company with a primary project in Madagascar even though they sell graphite on behalf of a Brazil company. Realizing they had a problem with their partner, DNI began a core drill program late this summer. It consisted of 28 holes and just over 1000 meters of core drilling. They released the first results from 12 holes on the 7th of December. They were excellent.
Graphite, cobalt and lithium are going to be in big demand and short supply for years in the future. DNI is bringing in a small test plant so they can deliver actual representative samples to prospective customers. The graphite is some of the highest grade and quality that I am familiar. The properties were in production, are near a port and the graphite is at surface. DNI will continue drilling and one day soon the market will understand the potential. With a market cap of under $4 million, DNI has a bright future in graphite.
I have spent months talking to and researching the next company. Their name is Anaconda Mining (ANX-T). They are in gold production in Newfoundland and have about the lowest profile I have ever seen. For the last year the price range for the shares has been a low of $0.05 and a high of $0.08. They have way too many shares outstanding at 422 million and I hope down the road they do a roll back. It couldn't possibly hurt the share price.
In my viewpoint this stock is one of the least understood gold companies I have ever seen. With a number of major announcements expected in early January I am hesitant to say too much for now. I love the company, management and projects. If I ranked gold projects, this would be #2 behind Novo. Do yourself a favor and go to their presentation and bone up on them. I will be doing a serious and major piece on them in early January. But I've been snapping up shares in the open market for months.
All of these companies are advertisers and I own shares in all of them. With tax loss silly season ending and a tradable low in gold and silver coming or just past, I think they will benefit a lot from a more favorable junior resource market. Please do your own due diligence.
Cabral Gold Inc.
CBR-V $.325 (Dec 16, 2017)
31 million shares
Cabral Gold website
Altamira Gold
ALTA-V $.17 (Dec 16, 2017)
EQTRF-OTCBB 38.9 million shares
Altamira Gold website
Metals Creek Resources
MEK-V $.08 (Dec 16, 2017)
CMREF-OTCBB 56.2 million shares
Metals Creek website
DNI Metals
DNI-C $.085 (Dec 16, 2017)
DMNKF-OTCBB 40.5 million shares
DNI Metals website
Anaconda Mining
ANX-T $.065 (Dec 16, 2017)
ANXGF-OTCBB 422.6 million shares
Anaconda Mining website
Bob and Barb Moriarty brought 321gold.com to the Internet almost 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.
Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.
Disclosure:
1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Cabral Gold Inc., Altamira Gold, Metals Creek Resources, DNI Metals and Anaconda Mining. Cabral Gold Inc., Altamira Gold, Metals Creek Resources, DNI Metals and Anaconda Mining are advertisers on 321 Gold. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned are billboard sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Cabral Gold Inc. and Altamira Gold, companies mentioned in this article.
