Once again, there has been little news at the companies on our list. Summer doldrums, a weak market, and pending quarterly financials combine to make this a particularly quiet period.
Altius Minerals Corp. (ALS:TSX.V) updated its Prospect Generator business and junior equities portfolio, which declined in value over the quarter by almost 30%, in line with the market. New investments exceed equity sales. The most interesting item for us is the disclosure that Altius was a participant in the recent financing undertaken by Lara Exploration Ltd. (LRA:TSX.V).
Although the $550,000 investment is quite small for Altius, it is not only a foothold but also an endorsement from some of the smartest people in the world.
Altius is a very good buy here, particularly for those who do not own it, offering very broad exposure to resources, a strong balance sheet, and top management. It is down from over CA$25 in mid-April.
Lara is also a buy.
Down from a recent high of $0.94, Lara is a relatively thin trader often with wide spreads. We would use a limit close to the last trade ($0.82) or the bid.
Wheaton Cancels a Stream To Get Transaction Completed
Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) agreed to cancel its silver stream on Alexco’s Keno Hill property to enable Hecla to acquire Alexco. In return, Wheaton will receive $135 million in Hecla shares. This is a good deal for Wheaton, which receives a little above the NAV on the stream, and will receive it immediately (once the Hecla/Alexco transaction closes), though it does reduce future revenue. It was however only a small stream, less than 2% of 2023 estimated revenues. Wheaton, down again last week, remains a very strong, long-term buy.
TOP BUYS THIS WEEK in addition to those above include Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE); Barrick Gold Corp. (ABX:TSX; GOLD:NYSE); Franco-Nevada Corp. (FNV:TSX; FNV:NYSE); Osisko Gold Royalties Ltd. (OR:TSX; OR:NYSE)); Pan American Silver Corp. (PAAS:TSX; PAAS:NASDAQ); Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE); and Orogen Royalties Inc. (OGN:TSX.V).
Questions from Readers
I own some Russian stocks through London-traded or U.S. OTC depository receipts. I had read that these shares had to be converted into local ordinaries, but when I called my broker to do this, he came back saying that that was no longer allowed. What is going on?
It has been a long, complicated, and particularly fluid story, but to address your specific question: The European Union issued new sanctions a couple of weeks ago to prohibit the European clearing house from converting the depository shares. This is quite perverse, because such actions do not harm Russia, but on the contrary, hurt Western investors. At present, you cannot buy, sell or convert Russian shares. (Polymetal, which we discussed in Bulletin 814), is technically not a Russian company and still trades on the London exchange, though most U.S. brokers do not permit purchases of the stock.)
One of my favorite newsletters, Undervalued Shares, written by Swen Lorenz, who provides in-depth and balanced articles on specific companies as well as various topics. Information is available here. He has just published the most thorough discussion on the state of Russian shares. His conclusion: although there is nothing Western holders can do now, you are unlikely to completely lose your investment. You just have to be patient.
Inflation: What’s That?
Speaking at a central bank conference in Portugal a couple of weeks ago, FedHead Jerome Powell said, “I think we now understand better...how little we understand about inflation.” This is the same Powell who a year ago assured us that inflation was “transitory.” Not one mention anywhere of the role the Fed’s creation of excess liquidity might have played. Powell is not the most mendacious of men. As I once mentioned of Bernanke, he would probably make an inoffensive, if rather boring neighbor. I am, however, reminded of Coleridge’s jab: “He had as honest a heart as was compatible with exceedingly profound ignorance of his ignorance.”
Regulate
Regulate Sec Chairman Gary Gensler, who seemingly has never met an activity that he doesn’t want to regulate, has proposed that all regulatory agencies establish one comprehensive set of regulations for crypto. If you are going to have regulation, that seems sensible. His goal, however, is “to avoid gaps” in the regulation. He wouldn’t dream of one set of regulations to avoid overlapping and duplicative rules.
Where Were You Then?
When Rishi Sunak was U.K. Chancellor of the Exchequer (Treasury Secretary), he spent public funds like a drunken sailor, proclaiming proudly that he was spending more in certain areas than a Labor government would, and increasing the debt to its highest ever peacetime level. Now he wants massive tax hikes.
In his bid to replace Boris Johnson as Prime Minister, says “Someone has to rebuild the economy,” not unlike Casanova wanting to restore public morals.
Originally published July 10, 2022.
Adrian Day, London-born and a graduate of the London School of Economics, is the editor of Adrian Day’s Global Analyst. His latest book is "Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks."
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