Agnico Adds Ounces for Malartic Mill
Contributed Opinion

1. O3 Mining Inc. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Agnico Eagle Mines Ltd., Barrick Gold Corp., Fortuna Mining Corp., Metalla Royalty & Streaming, Orogen Royalties Inc., Altius Minerals Corp., Franco-Nevada Corp., Lara Exploration Ltd., and Fox Riv Res Corp. and 
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Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) is buying O3 Mining Inc. (TSXV:OIII; OTCQX:OIIIF), whose Marban project is just eight miles from Agnico's Canadian Malartic, whose mill has excess capacity which Marban could fill. O3 has agreed to the acquisition of just over CA$200 million.

The project offers synergies with a low capex due to the nearby mill facilities. It is anticipated that production could start in 2033.

Although Agnico has other deposits in the area that could produce ore for the Malartic mill, this acquisition makes sense, given the low cost, and the timing is appropriate before O3 starts to develop the project.

Agnico is the gold standard of major gold producers, with strong management, a good balance sheet, and a low political risk profile, but we are holding for now.

Wheaton Spreads Its Wings With High-Return Investment

Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) has acquired for $175 million a stream onAllied Gold Ltd.'s (ALG:TSX; AGLD:LSE; ALD:ASX) advanced exploration Kurmuk project in Ethiopia.

The stream offers above-average returns, almost 14% IRR on known reserves alone, commensurate with the political risk. With $700 million in cash (as well as an undrawn $2 billion credit facility), Wheaton has had to expand its horizon in the last couple of years, making a series of very small transactions (often to get a foothold into a potential project); to earlier stage projects; and to royalties (as opposed to streams); as well as to higher risk jurisdictions.

We are very long-term holders, given the balance sheet, the management, and the business model well-executed, but holding off adding right now.

Arrest Warrant Issued for Barrick's CEO

Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) refused to comment on reports that Mali had issued an arrest warrant for CEO Mark Bristow, alleging money laundering, ratcheting up pressure on the company to pay back taxes it alleges are owed. Barrick disputed the claims but offered $370 million to settle the claim.

This is idiotic behavior by the military junta that governs Mali. Apart from putting off foreign investors— one small company has already announced it is leaving the country, and others will certainly be less enthusiastic in putting new money there — this action makes it more difficult to come to an agreement.

Bristow has negotiated many disputes with rapacious governments over the years in face-to-face talks, but the issuance of an arrest warrant makes such talks unlikely. Barrick (and predecessor Randgold) has invested over $10 billion in Mali. The Loulo-Gounkoto mine contributed almost 14% of Barrick's total production last year, but the stock price reflects this dispute.

Barrick has the most adventurous management among larger producers, a strong balance sheet, and several Tier 1 assets around the world. It has a far higher political risk profile than its peers. If Barrick misses its full-year earnings, when released in January, after reiterating guidance throughout the year, the stock would fall on a further loss of confidence. But if they meet guidance, then the reverse is true, and the stock could pop.

It is the least expensive of the big miners, and for the more adventurous investor, Barrick is a buy.

Resources Jump at Fortuna's Key Asset

Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) announced updated reserves and resources at its Séguéla mine in Cȏte d'Ivoire. Though reserves fell by 12%, resources increased, measured and indicated by 4% and inferred by 176%.

The jump in indicated resources reflects maiden resource estimates at several nearby deposits to the main pit. Fortuna is a favorite of mine among the intermediate producers, with strong, conservative management, a solid balance sheet, and diversified assets in Latin America and West Africa.

If you do not own, this is a good price, but we would look for any additional pullback to add to positions.

Metalla Adds To Board

Metalla Royalty & Streaming Ltd. (MTA:TSX.V; MTA:NYSE American) has added Chris Beer to its board. Mr. Beer was a top resource fund manager during his 24 years at RBC.

He has agreed to buy 40,000 shares in the market. Metalla is very undervalued on an asset basis. It has a portfolio of over 100 royalties on gold, silver, and copper projects.

The size and breadth of this portfolio is not being recognized in the market, particularly since production at most of the company's assets, including most of its cornerstone assets, are years into the future. However, as many of these assets hit development milestones and production comes into view, the stock price will be re-rated.

At this price, Metalla is a Strong Buy.

Orogen Sells Another Project for Cash and Royalty

Orogen Royalties Inc. (OGN:TSX.V) has sold its Celts property in Nevada to Eminent Gold for US$400,000 in cash and shares plus a 3% royalty (of which 1% can be bought back for $1.5 million). Celts was generated under the alliance Orogen has with Altius looking for "Silicon lookalikes" in southern Nevada.

The proceeds and royalty will be split with Altius, who funds the exploration. It is the fourth project thus generated and the second to be sold. With a strong balance sheet, ongoing royalty revenue, and a business model that allows it to earn revenue from its prospect-generating business, Orogen is in an enviable position of not needing to raise additional equity.

It owns a 1% royalty of the Silicon and Merlin deposits of AngloGold Ashanti Ltd. (AU:NYSE; ANG:JSE; AGG:ASX; AGD:LSE), which it is currently seeking offers. The outcome is uncertain, but in any event, the royalty is a very valuable asset. The stock price has fallen from its late-October high of over $170 on fatigue among some short-term traders who bought for a quick sale of the royalty, aggravated in the past few weeks by a well-known fund that had to sell this year.

This pullback makes Orogen a Good Buy.

Altius Completes Renewables Transaction

Altius Minerals Corp. (ALS:TSX.V) said the plan to take Altius Renewable Royalties private has been concluded. Altius retains 57% of ARR; the value of that business is expected to be enhanced as a private company.

Separately, Vale announced it had completed construction on the underground expansion at its Vale's Voisey's Bay nickel mine, on which Altius holds a royalty.

Altius is a core holding for us, with top management among the most insightful and imaginative of all resource management and a diversified asset base. The value of neither ARR nor its royalty on Anglo's Silicon property in Nevada is fully recognized in Altius's share price.

If you do not own it, take advantage of last week's pullback to buy.

More Positive Results From Midland

Altius Minerals Corp. (ALS:TSX.V) released soil sample results from the La Peltrie project, on which Probe Gold has an earn-in option. La Peltrie is on the Detour Trend. Although early stage, the results are encouraging, with extensive samples identifying copper and molybdenum.

But the market yawned. Midland has strong management, a solid balance sheet, and a broad portfolio of properties being explored along or in joint ventures with the likes of Rio, BHP, Agnico, and Barrick.

The market is suffering from fatigue on the lack of a major discovery, in my view, aggravated by tax-loss selling, with the stock trading close to its annual — and indeed all-time — low. But Midland is in as strong a position to make a discovery as an exploration company, and we should take advantage of this depressed tax-loss selling price to buy.

TOP BUYS this week, in addition to the above, include Nestle SA (NESN:VX; NSRGY:OTC), Franco-Nevada Corp. (FNV:TSX; FNV:NYSE), Lara Exploration Ltd. (LRA:TSX.V), and Fox River Resources Corp. (FOX:CNSX). We are holding (not buying) most gold equities for now, given the possibility of further retracement in the gold price.