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KRO Summary: August 1-31, 2020


KRO Summary: August 1-31, 2020
Kaiser Research Online is an information portal featuring all resource companies listed on the ASX, TSX, TSXV and CSE. Membership is available as an Individual Annual KRO Membership at USD $450 and as Multi-User Corporate Annual KRO Membership at USD $1,000. For those who want to catch the awakening of the junior resource sector bull market during the rest of 2020 we have a Special which gives full access to the end of 2020 for USD $275. Use your Email to retrieve your login credentials if you have previously registered. See Membership Details for an overview of KRO.
The KRO Summary lists all Trackers and Blogs published during the designated weekly or monthly period so that so readers can easily catch up on what they may have missed. We no longer notify KRO members by email about new material except in special circumstances. When a Tracker is posted at KRO we notify members through the KaiserResearchOnline Slack Workspace. If you are an active KRO member and not registered on Slack, please let us know and we will send the invite. We will email the link to the KRO Summary to all KRO members when it is published. We will also Tweet the link so that Twitter followers can catch up at their leisure. The title links to the Tracker or Blog, the charts in the Discovery Watch Blog link to the YouTube audio segment for that company, and the Tracker charts link to the free Corporate Profile. On occasion we may include commentary on the state of the market. Blog content is unrestricted but Trackers are always restricted to KRO members unless one has been tagged to become unrestricted. Check the General Release Schedule to see which Trackers are already unrestricted or scheduled for general viewing.
Bracing for a Dangerous Final Segment for 2020
The precious metals gold and silver paused their uptrend during August as gold retreated back below $2,000 where it has been consolidating for a definitive run into the $2,000-$3,000 range. The spring-summer Covid-19 infection surge in the United States saw the daily infection case count subside in August, though what will happen in October when the regular flu season resumes as people in the northern hemisphere move indoors remains to be seen. The Chinese economy, benefiting from a draconian Covid-19 response in January 2020 once the bad news reached the ears of Dictator for Life Xi Jinping, recovered smartly while the US economy limped along as a premature reopening of the lockdown caused daily cases to surge to a new record. The Chinese recovery enabled raw materials to enjoy a strong August as copper, nickel, zinc, palladium, iron, oil and even aluminum recovered from the March lows.
The rush to reopen in the United States reduced the non-farm US unemployment from its 14.7% peak in April to 8.54% in August, below the Volcker Recession peak of 10.8% in December 1982 and the Great Recession peak of 10.1% in October 2009. However, the persistent threat of Covid-19 infection has kept the US economy in a state of suspended animation. Whatever was going on at Sturgis in South Dakota when hundreds of thousand bikers converged for their annual August rally in a mask-free non-socially distanced setting is not happening in places like California which, despite limited relaxation of lockdown, still achieved the highest infection total rate among the states, mostly through younger people who have digested the message that they will survive unharmed and just need to stay away from more vulnerable older people. The drift toward a de facto herd immunity policy will meet its challenge when the flu season resumes in October. The race to approve and deploy a vaccine in the context of political disparagement of science and its method is, unfortunately, doing wonders for the anti-vaxxer movement.
Progress made on the employment front, vaccine development, and suppressing the summer Covid curve helped stall the gold uptrend and spur the V-shaped recovery in general equity markets onward. Big data technology stocks which have done so well harvesting the private data of consumers and "selling" to the sellers of goods, services and propaganda have led the charge, driving indices higher while smaller companies beholden to producing more mundane revenues languish. The contrast between the 1920 and 2010 decades still looks eerily similar. With the US election on November 3, 2020 less than two months away we would appear to be very vulnerable to a massive sell-off between now and the end of 2020.
The GLD ETF chart shows that the steady increase in gold holdings since the start of April stalled at the start of August as investors seemed to think that the worst is behind us. But look how long it took the two term Obama administration to get unemployment below 5%. Covid-19 is unlikely to stop being a major obstacle to economic expansion until 2022. The Republican control of the US House from 2011 onwards prevented Obama from launching fiscal stimulus in the form of infrastructure renewal, all in the Tea Party name of fiscal prudence, none of which of course is relevant when it is Republicans who call the shots. Trump's re-election campaign has no policy agenda for the second term other than to create more "law and order" and put China in its place behind America's marching drum. The monetary handouts to the unemployed and threatened small businesses have come to an end. As tenants stop paying rent because nothing is getting better and the government support is over, landlords will start having a tough time paying interest to their lenders, who will start a foreclosure cascade, which eventually will undermine stock prices. This will be underway in Q4 of 2020 before we learn that the election outcome is fuzzy. Assuming the Trump administration has not launched an October Surprise, most likely involving escalation of a military conflict with China which is already pushing the envelope in its backyard with issues like Hong Kong, Taiwan, the South China Sea and now even the Himalayan border with India, the greatest risk for a massive general market sell-off would be the absence of a clear-cut election outcome accepted by both parties.
Left and right wing extremist thugs have already murdered each other. The stage is set for escalation of domestic violence, especially in light of the president and elected officials endorsing QAnon, the new social media umbrella for conspiracy minded people that isn't just attracting right wing white supremacists but worried gullible mothers and even leftists in Germany. Whatever the election outcome, America has become a divided nation in danger of breaking down and even apart, unless there is a miraculous recovery of core values and a collective awakening from an increasingly nightmarish reality show. It seems very strange that Trump sat down with Bob Woodward and let him tape what he really thought about the danger of the corona-virus in early February before publicly dismissing it as little more than a media scam to undermine his re-election chances, a virus that will disappear under the blaze of spring's sunshine. But it's possible he did that as a nudge to his base to move on if necessary.
The KRO 2020 Gold Producer Index had already stalled in mid July, and the broader group of resource juniors that participated in the bull market awakening that began in June stalled in early August. Although Warren Buffett signaled a major departure from his lifetime of shunning gold by investing in Barrick, following in the tracks of liberal billionaires like Sam Zell and Ray Dalio, this failed to drive the gold producers higher, even though at $1,900-$2,000 gold they are all making huge cash flow. The KRO 2020 Favorites Index, which currently has 33 members, peaked at 2022.4 on August 17, up 102.2%, but is now up only 87.6%. The failure of Zephyr Minerals Ltd to deliver a world-class Broken Hill style discovery at its El Plomo project in Colorado was a big disappointment for a conceptual exploration play that caught the market's imagination.
Hopes that a September rally would reignite the resource juniors have so far not yet been fulfilled. One reason is that gold remains stalled at the $2,000 threshold, rekindling fears that $2,000 is the ceiling, not the new long term base as I believe. Another reason is fear that the general equity market will collapse before the end of the year, taking the juniors and gold brutally with it as happened in September 2008. And a third reason is the four month private placement timebomb that developed during the May-August resource junior financing binge which focused on the highest profile, best promoted juniors.
I have tracked TSXV financing activity since 2002 and with the help of my database I am able to distinguish between resource and non-resource related financing activity. But I only developed the ability to separate TSXV trading activity into resource and non-resource categories in 2009 so the chart takes back only to the start of 2009. Although August was a weaker financing month in terms of new financing announcements, it was a staggering success in terms of total value closed. The $769 million raised is the highest since March 2011 which marked the slide into a 10 year bear market. There was an anomaly of $720 million in March 2017 that was created by a handful of Bay Street financed feasibility demonstration stage juniors. The recent August peak is part of a build-up that began in May 2020. A significant segment of the resource juniors was able to load their treasuries. 88% of the value raised was in the form of a private placement which comes with a four month hold restriction (placees cannot sell until 4 months after the financing closed). In most of the financing cases the stock is trading higher than the financing price. The TSXV private placement timebomb has a value of $1.65 billion which starts to come unrestricted in October with the August batch coming free trading in January 2021. This is a serious gauntlet the awakening resource junior bull market must navigate.
Most of that paper is in the money, and most of it was done in the form of units. As this paper comes free trading there will be a rush by investors to take profits and clip the warrant for a free ride. But will there be enough buyers and why will they be buying? To generate new audiences and keep the stock price trending higher most of the juniors will need to deliver evidence of fundamental value creation. Where ounces are already present in the ground, that could come from gold breaking through $2,000 and banishing worries that gold will soon enough sink back to $1,300. Such a development will even help juniors still hoping to delineate a gold discovery. But if gold stays stalled below $2,000, the juniors will need to deliver discovery exploration success and engage in activity that can keep doing so, which will be a problem if the project has a seasonal exploration constraint such as those in the Golden Triangle.
The short term graphic above comparing TSXV resource and non-resource traded value shows that the early summer enthusiasm for resource juniors subsided during August while non-resource juniors regained the upper hand. But since the start of September the interest in resource juniors has been quietly building. While the higher profile stocks that raised a lot of capital have stalled and are off their peaks, a broad-based awakening continues. The number of TSXV resource listings still below $0.10 is at 30.3% as of September 11, 2020, the lowest since early 2012. The awakening of a broad-based resource junior bull market is still underway. The challenge for the resource juniors during the last quarter of 2020 will be to attract new audiences that buy those which funded their projects this summer and are in a position to keep doing exploration. These are also the juniors most vulnerable to being whacked if the final months of 2020 unleash a general equity market meltdown. My preference will be to keep spotlighting legitimate resource juniors whose management teams are waking up, while monitoring for buying opportunities among the higher profile juniors later this year when the hold restrictions on their private placement financings end. The $275 full access Individual KRO Membership to the end of 2020 Special has come to an end and has been replaced with a USD $200 membership special that provides access to the end of 2020. It is more cost effective to pay USD $450 for a full year, but that can be done in the last week of December when we have a better idea of how this dangerous election period has played out and what it means for the awakening resource junior bull market.
KRO Summary: August 1-31, 2020
Aug 3, 2020 - Tracker - Tracker: What's Next for Midas Gold Corp?
Midas Gold Corp has escaped the stigma of a never-ending permitting cycle for its Stibnite gold-antimony project in Idaho, which has allowed the stock to more than double from the $0.63 stock price at the start of 2020 when we confirmed the Good Spec Value rating and Favorite for 2020 status. Midas, which has been my top gold optionality pick for several years now due to its potential to produce 350,000 oz gold annually once in production as a 20,000 tpd open pit mine, plus a significant antimon...
Aug 3, 2020 - Tracker - Tracker: Whats Next for Scandium Interantional Mining Corp?
Scandium International Mining Corp is a Bottom-Fish Spec Value rated Favorite which was rated as Good Spec Value until a downgrade became necessary at the end of 2019 when it was clear that the company had run out of money, failed to secure any scandium offtake orders two years after initiating a "letter of intent" market development strategy that involved multiple potential end-users and which was supposed to have a 12-18 month timeline, reinstatement of the Nyngan mining lease on which the 201...
Aug 3, 2020 - Tracker - Tracker: What's Next for NioBay Metals Inc?
NioBay Metals Inc has been a Favorite with a Good Spec Value rating since April 9, 2020 when it was upgraded at $0.30 from its Bottom-Fish Spec Value rated Favorite status established at $0.45 on December 31, 2019. The reason for the upgrade was the completion of an outcome visualization for a 6,000 tpd UG Scenario which yielded an after-tax NPV of CAD $1.4 billion which, if NioBay underwent no further equity dilution taking the project to a production decision, translates into a future stock pr...
Aug 3, 2020 - Tracker - Tracker: What's Next for Zephyr Minerals Ltd?
Zephyr Minerals Ltd has a dual strategy at its Dawson-Green Mountain project in Colorado where on the one hand it wants to increase a 132,000 oz high grade gold resource to the 500,000 oz threshold Newmont needs to process trucked ore at its Cripple Creek facility, and on the other hand it intends to test the potential for a world class Broken Hill type zinc-lead-silver deposit in the El Plomo Section. The project consists of a 2 km wide band of claims that track 12 km of Proterozoic lithology t...
Aug 3, 2020 - Tracker - Tracker: Whats Next for Wolfden Resources Corp?
Wolfden Resources Corp started off as a Bottom-Fish Spec Value rated 2020 Favorite at $0.12 on December 31, 2019 and was upgraded to a Good Spec Value Favorite at $0.165 on July 10, 2020 following KRO's publication of outcome visualizations for the polymetallic 100% owned Pickett Mtn project in Maine. See Tracker July 15, 2020 for the most recent recommendation overview. During H1 of 2020 Wolfden raised USD $3.5 million by selling off its timber rights at Pickett Mtn, which avoided equity diluti...
Aug 1, 2020 - Blog - Kaiser Media Watch Blog - August 1, 2020 to August 31, 2020
Aug 6, 2020 - Blog - KMW Blog August 6, 2020: Discovery Watch August 6, 2020 with Jim Goddard and John Kaiser
Clean TeQ Holdings Ltd (CLQ-ASX) Skeena Resources Ltd (SKE-T) Tri Origin Exploration Ltd (TOE-V)
Aug 7, 2020 - Tracker - Tracker: Spec Value Rating for MG Capital Corp (DLP-V)
MG Capital Corp was assigned a Bottom-Fish Spec Value rating on June 23, 2020 based on its emergence as the exploration vehicle for Sullivan expert David Pighin which plans to drill 3 separate Sullivan 2 targets in southeastern British Columbia during H2 of 2020. The company plans to change its name to DLP Resources Inc in honor of David Leo Pighin's initials. During July the junior raised $1.67 million through a no warrant financing at $0.19-$0.23 and in late July extended the Teck hole on the ...
Aug 7, 2020 - Tracker - Tracker: What's Next for MG Capital Corp?
MG Capital Corp is a Good Spec Value rated Favorite as of August 7, 2020 based on its emergence as the exploration vehicle for Sullivan expert David Leo Pighin which plans to drill 3 separate Sullivan 2 targets in southeastern British Columbia during H2 of 2020. The company plans to change its name to DLP Resources Inc in honor of Pighin's initials. During July the junior raised $1.67 million through a no warrant financing at $0.19-$0.23 which will come free trading at the end of November 2020. ...
Aug 10, 2020 - Tracker - Tracker: What's Next for Pacific Empire Minerals Corp
Pacific Empire Metals Corp was upgraded on May 28, 2020 from a Bottom-Fish Spec Value rating to a Favorite at $0.06 with the same rating based on the junior's plan to make or break the Worldstock and Weedon copper-gold prospects during the summer and then roll up its sleeves in the fall to tackle the Jean-Marie copper-gold project it optioned in late May 2020. Tracker May 28, 2020 describes the junior's exploration strategy which involves using a company owned customized RC rig to "prospect" ove...
Aug 11, 2020 - Tracker - Tracker: Wolfden hints at expanded VMS land play in Maine
Wolfden Resources Corp published an update on August 11, 2020 about the 15 hole drill program currently underway at its 100% owned Pickett Mtn project in Maine. The stock was up $0.055 the day before but there isn't anything obvious in the update to explain the move and the stock has settled back in the wake of gold's single day $100 drop that turned resource sector sentiment red. However, there is good news buried inside the press release which I'll address after discussing what has been acco...
Aug 11, 2020 - Tracker - Tracker: What's Next for Eagle Plains Resources Ltd?
Eagle Plains Resources Ltd is a Bottom-Fish Spec Value rated Favorite based on its highly competent pursuit of the prospect-generator-farmout model with a focus on British Columbia and Saskatchewan though the junior does also have prospects in the Yukon and Northwest Territories. Eagle Plains is a hybrid PGFO junior in the sense that sometimes it will drill strategic holes on a 100% basis in order to harvest potential low hanging fruit for itself but mainly to enhance the farmout prospectivity. ...
Aug 12, 2020 - Tracker - Tracker: What's Next for Forum Energy Metals Corp?
Forum Energy Metals Corp was made a Bottom-Fish Spec Value rated Favorite at $0.09 on December 31, 2019 based on the discovery exploration exposure it offers to three metal groups, copper, platinum group metals, and uranium, all of it focused in northern Saskatchewan. The flagship play is the Janice Lake copper project under option to Rio Tinto since May 2019 allowing it to earn up to 80% by spending $30 million over 7 years (see Tracker May 12, 2019 for background on how Forum evolved from a ur...
Aug 13, 2020 - Blog - KMW Blog August 13, 2020: Discovery Watch August 13, 2020 with Jim Goddard and John Kaiser
Pacific Empire Minerals Corp (PEMC-V) Wolfden Resources Corp (WLF-V) Zephyr Minerals Ltd (ZFR-V)
Aug 14, 2020 - Tracker - Tracker: What's Next for Sonoro Metals Corp?
Sonoro Metals Corp was elevated to a Fair Spec Value rated Favorite on August 13, 2020 following confirmation that the junior had raised $8 million through a private placement of just under 36 million units at $0.22 (with a full 3 year warrant at $0.30). This is a remarkable transformation since my July 17, 2020 Tracker in which I confirmed a Bottom-Fish Spec Value rating despite a working capital deficit of $1.3 million and another round of option payments looming in Q1 of 2021 for the Cerro Ca...
Aug 18, 2020 - Tracker - Tracker: What might the updated Decar PEA of FPX Nickel look like?
FPX Nickel Corp has been a Bottom-Fish Spec Value rated Favorite since the start of 2020 when it was trading at $0.16, based mainly on Tracker Dec 13, 2019 which outlined the likely path a revision of the PEA done by Cliffs in 2013 would take. Since then there have been two important developments that have helped FPX develop a market uptrend. The first was news in early January 2020 that the 65% nickel concentrate possible through FPX's new flow-sheet of grinding, magnetic separation and flotati...
Aug 20, 2020 - Blog - KMW Blog August 20, 2020: Discovery Watch August 20, 2020 with Jim Goddard and John Kaiser
Zephyr Minerals Ltd (ZFR-V) Sonoro Gold Corp (SGO-V) FPX Nickel Corp (FPX-V)
Aug 21, 2020 - Tracker - Tracker: What's Next for FPX Nickel Corp
FPX Nickel Corp is a Bottom-Fish Spec Value rated Favorite based on the work the junior has done since acquiring 100% back from Cliffs in 2015 to improve the economics defined by a PEA Cliffs produced in 2013 after spending $22 million on the project since optioning it in 2009. Nickel prices have traded between $4-$6/lb since FPX recovered 100% which has been a problem for the junior because the 2013 PEA required a $9.39/lb price for Decar to be viable. During the past 5 years FPX has worked to ...
Aug 27, 2020 - Tracker - Tracker: US Forest Service accepts Draft EIS for the Stibnite gold-antimony project of Midas Gold
Midas Gold Corp announced on August 14, 2020 that the US Forest Service has released the Draft Environmental Impact Statement for the Stibnite gold-antimony project in Idaho. The DEIS consists of 80 reports comprising 27,000 pages which the public can access through the US Forest Service. This kicked off a 60 day public comment period which ends October 13, 2020. Comments can be mailed or submitted online to the USFS or through the more user-friendly Midas site called RestoreTheSite. Usually it ...
Aug 28, 2020 - Tracker - Tracker: What's Next for Midas Gold Corp?
Midas Gold Corp has escaped the stigma of a never-ending permitting cycle for its Stibnite gold-antimony project in Idaho, which has allowed the stock to more than double from the $0.63 stock price at the start of 2020 when we confirmed the Good Spec Value rating and Favorite for 2020 status. Midas, which has been my top gold optionality pick for several years now due to its potential to produce 350,000 oz gold annually once in production as a 20,000 tpd open pit mine, plus a significant antimon...
Aug 28, 2020 - Blog - KMW Blog August 28, 2020: Discovery Watch August 28, 2020 with Jim Goddard and John Kaiser
Zephyr Minerals Ltd (ZFR-V) Midas Gold Corp (MAX-T) Tri Origin Exploration Ltd (TOE-V)
 
 

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