What I found interesting was that Don is picking producers and developers (assuming higher metals prices) and Jeff is picking drill stories (using current prices for 10-20x opportunities). Worth the listens!
Caveat for Don’s picks – he uses $2500 gold and $100 silver
- Silver X mining. Small producer in Peru. 7m oz, producing 1.5m oz. Could be a 3m oz producer with mkt cap at $42m
- Guanajuato silver. Valued $120m. Less silver, but high grade. 25m oz. Ramp up to 2.5m oz. Bought this from Endeavor. Mined very high grade in ealry 1900. Valued at 40m oz and 3m producer.
- Luna mining. Nightmare for investors with dilution. New CEO and mgmt team. 6m oz gold in W Australia, 100k with valuation at $123m. High cost of $1650. Making FCF, want to go from 100k to 250k oz. Want to reduce AISC to $1400.
- Great Panther. Had fallen on hard times. Gold property in Brazil had problems. 120k oz producer valued at $168m. Plus silver mines in mexico mining 2.5m. FCF at mines.
He likes a path to production that is cheap (3 years), or optionality that is cheap (5 years)
- Discovery – $550m mkt cap now. 1 billion oz of silver eq. Could be up to 1.5b. Could be producing 50m oz per year. PEA coming. Sprott has big position, hoping it is not sold.
- Chesapeake gold – only valued $220m. 18m oz gold, 500m oz silver. Low grade silver. Likes the CEO. Construction in 2025, could then jump to $1b – could run much higher based on price of silver.
- Bear Creek Mining – 300m oz of silver at 50gpt, with zinc and lead offsets. Economic with offsets. More higher grade the first 3 years with 60m oz with lots of FCF. Loan is $425m – could get it in first quarter. IF they get the loan, stock has 10x potential.
Don sees shortages in silver coming, with “not a lot” of above ground inventory. I have an article coming on this where I disagree with the above ground supplies, but it STILL has higher price points to get that above ground inventory.
Jeff Clark’s picks
10 baggers? I only thought I saw 2 in this. Did I miss one?
Blackrock silver – Nevada. Lots of interest from First Majestic. Tonopah really good it seems as this was a place old timers worked with picks and shovels. 10 mineralized veins. Lots of news coming?
Reyna Silver – in Mexico. This was part of the original MAG and connects to it. Dr. Peter Magaw part of this. Did his PhD on this type of geology. Do they find the source? If so, probably a 10 bagger. Waiting on assay results
20 baggers – more risk, lots of reward
Silver Hammer – in Nevada, lots of high grade silver recovered from the surface, but not deep. Taking the latest and greatest exploration methods to see if this is deep and on the south side of the fault.
Cassiar gold – may of the top guys seem to have a stake in this. 3 top geologists said “yes”.
I already own some of these. I own Guanajuato, Discovery, and Reyna. I usually hold positions in Chesapeake, Bear Creek, and Blackrock for trading.
With these types of drill stories, I play them a few ways…
- On a 2x, I dump half. It’s a rule I have for ME. One I woke up and missed it and sold 1/3rd at 3x (Labrador gold)
- Buy and sell in tranches. If I have a tranche at 20-30% now, I sell and buy on pull backs. I think the time for strong pullbacks may be coming near an end. That being said, on a saw tooth pattern up, we may have sharp runs and then a cooling off period for 1-4 weeks. You can watch it come back to the fib level and RSI cool a bit. I’d be nibbling at buying a tranche at those levels.
This week could be CRAZY or a non-event. many think tomorrow the fed will talk more about the beginning of tightening and stopping buying bonds. At the same time, the economy is cooling off and we are on several months straight of lower jobs numbers. We could get a hawkish hit on Tuesday, then Friday a strong non-farm payrolls which could be a double whammy on gold and silver.
The fed could come out and be dovish and punt for another month or two, then non-farm payrolls could be a miss, which sends gold and silver up, after an initial mandatory smash.
This also could be either the start of a 5-10% market correction OR a gap up with more blow off top material.
Crazy week ahead. I may buy a quarter position in each today, then maybe another quarter position Friday. Also, with the tax loss selling, you don’t want to go all in on these things and get smacked over the next 6 weeks with tax loss selling as people reduce their positions.
This to me is a wait and see. Also – you might want to have a portion of your portfolio you just put in and let sit and watch paint dry. Lots of these 10 baggers out there, but some of these could drop 50% or go to zero. Mining is a risky sector, and these are the RISKIEST of them all. Only something like 1 in 3,000 projects becomes a mine. Most don’t realize that.
The last one above, Cassiar gold, is looking at like a million ounces. To ME, many of these projects may be at the end of M&A or may miss this cycle completely. Why? There are now maybe 3 large gold companies. Seems this is a LOT different than 2011, where all of these companies now have pristine balance sheets and massive free cash flow. To ME, I see some of the big projects coming off of the board first. The 5+ million projects. You have a few like Chesapeake that are 19m oz. It seems IF we have another 7 years in this gold cycle, we may see:
- Some juniors with large projects and free cash flow may get 30-50% premium to stock prices. These sort of bore me. Do I want to have my money in a junior, watch paint dry for a 5-10% up move, then another 35% premium in a takeover? I believe many of these may be first as they add ounces in the ground and free cash flow to a bigger producer.
- 5+ million ounce projects that have a plan in place for construction, they may just need a JV or capital. Many of the companies like silver one, MAG, Discovery may be takeover targets on the silver side. On the gold side, I see a chesapeake at 2026, Treasury for 2025, etc in the works for takeover. You see Chesapeake above. Problem is this with some of those. If you buy Chesapeake today at $3, it could not move until construction decision in 2025ish. That is money that goes nowhere for 4 years, then maybe you get a 10x over 18 months. To ME, I love the Chesapeake story, but I might be more interested to get back in later leading up to construction decision. This is a tough one because I think they only need like $100m. This is different than a blackrock who doesn’t have a PEA yet and we are still trying to define what they have.
- 1+ million oz stories. So Cassiar may be around a million oz and drilling, but this also might be WAY out before someone buys. Many of these Barricks and Newmonts are no longer taking chances – at all – it appears like they want everything gift wrapped, and THEN they may buy for a premium to share price. So the money may be in getting this to a 3-4x and get the hell out. Or, if you have some money you want to not look at for a decade, it may go 20x. To me, there’s a lot of moving and shaking that can be done at 20% in weeks, get out, get another 20%, get out, etc.
I had one I made a mistake with – Medgold. I still own it. I got this by one of those “golden opportunities” things from the Gold Newsletter. The problem with many of them are they are illiquid projects that might have good numbers, but no one knows about them. Medgold on paper looks to be a 10x if not more, but the problem is that it is in Serbia and not much has been done in 4 years on it. It’s just a property at this point that looks to have maybe 800,000 oz of gold? The PEA looks good and everything. But no one, at this point, is looking at a sub 1m oz project in Serbia. This mine may never get built. IF this was a district play and you had a bigger miner next door, yeah – but who is moving their operations to Serbia? I checked with Kranzler and he said it was a solid jurisdiction. But this is a LOT different than an 800k oz resource in Newfoundland right next to some well known miners that could just add it to their property.
So be careful on you 10-20x projections. On paper they may look great, like Medgold. But if they are not in the right place or have the right teams, or not have the size/grade of material that is attractive, you could be holding for years. For me, Medgold may be a great tax loss item in the next few weeks, and then of course I will see it go 5-10x in January or some shit.
Of all of these, silver hammer might be the most compelling to buy a full spec position, soon, go for a 2x, then let the other half ride for 3-4 years. I will have to check the charts on these to see if the hype machine made these run up 50% in a few days. If so, watch for volatility as profit taking off of the hype happens and you might wait a week or two and get in 20% less.
You get the “free” half position and then can use that profit on another spec position. You can then end up with 5-10 spec “half positions” you never have to touch, for FREE – and if they all 5-20x, great! If they all go to zero, you lose nothing. I probably have at this point about 10 doubles, 4 triples, and 1 4x in about 20 months of doing this. Nothing I had really crushed my soul other than Medgold, and most of my losses were in ill-timed call options plays on false breakouts. A lot of these that made those moves, I made profits and then watched them all slink back a lot. IF you are going to be playing the 10-20x game, you NEED to understand how to bank some profits to protect your wins and not get too emotional and cling to these. No one gives a shit who is your favorite, the market will crush your soul if you get too much of a cheerleader on a stock. Ask anyone who bet on a Peru stock over the last year with all they had.
Lastly – remember, gold may NOT go to $2500 and silver may NOT get to $75, so be careful of picks that are assuming higher metals prices. Pretty much any junior silver producer at the moment would do a 10x on $75 silver (like my Impact silver with costs at $20-$30 per ounce). You have to be careful of people possibly hyping stocks they have held and have not moved, and if they have an audience, they can then offload to you. Not accusing these guys of that, as these guys are above reproach. Just be careful of people pitching you on unknown companies with little trade volume. High risk. Lastly – I went in heavy 20 months ago on a Jeff Clark pick from December 2019 (Pure Gold) which was a darling – and he predicted it up to about $6. It crested at $2.25 and crated down recently to $.70. While I made some loot on Pure Gold on the way up, it never hit its apex as predicted. Meaning, Jeff is one of the best in the game, but he also doesn’t have a crystal ball. So be careful with your money. These guys are giving you their best take on what they are seeing, but they are human and not infallible.