Month: August 2020

Gold Price Forecast – Gold Markets Continue Explosive Move Higher  FX Empire

Ask precious metals’ holders and chart technicians what in the last 6-8 weeks stands out in their mind and they will point to the breakout of gold and silver above areas which had contained them for almost a decade.

Gold rocketed without pause to $2,070. Silver, though still well below record nominal dollar highs, sliced through $26, which was supposed to be a lid on prices until next year.

A litany of “price pullers” we’ve long discussed in our essays – government deficit spending, lagging metals’ production vs. exploding demand, and an almost complete absence of big discoveries have all played a part.

But these are relative symptoms. I believe that several new and hard to quantify root causes are set to become critical drivers in their own right.

The interplay of these new factors means that all bets are off in terms of how high, how violently up and down, and how vigorously the rest of this secular gold and silver bull run – over at least the next several years, will play out.

As Dorothy tells her dog Toto in The Wizard of Oz, after riding the tornado and landing with a bump… “We’re not in Kansas anymore.”

What follows are two “finishing touches” to this uber-bull narrative. The third element – a “capstone event” – took place in early August.

Combined with the “volcanic tremors” discussed above, these volatile elements should soon lead to “a pyroclastic explosion” in the price of gold, silver and the miners which produce them.

National Geographic defines my metaphor as,

“… a dense, fast-moving flow of solidified lava pieces, volcanic ash, and hot gases… extremely hot, burning anything in its path…Pyroclastic flows often occur in two parts. Along the ground, lava and pieces of rock flow downhill. Above this, a thick cloud of ash forms over the fast-moving flow. (It) can transform the landscape drastically in a short period of time.”

M + R +WB = P.O.R.

#1, The “M” Factor: Millennials, the cohort born between 1980 and 2000 are today’s largest generation – bigger than the record-sized Baby Boomers. Their sheer numbers will have an outsized impact on the markets. One investment approach that a fair number are taking is…

#2, The “R” Factor: Robinhood.com is a “no-commission” trading site that allows trading from relatively small accounts. Millennials are flocking to it in droves.

There’s even a related site that tracks how many Robinhood investors hold a given stock. Interestingly, not just Tesla and Apple, but also gold and silver mining picks are showing up on this screen. And you can bet your bottom fiat dollar that they’re buying physical metal too!

#3, The “WB” Factor: Warren Buffett is arguably the most successful investor alive today. During the “early days” a friend of mine bought just 4 shares of Berkshire Hathaway and lived off the increased value and splits for the rest of his life! Though Buffet’s late father was a proponent of gold as money, he has himself been a naysayer for many years.

One of Buffett’s many comments was that “Gold gets dug out of the ground in Africa, or some place. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility.”

However, after having sold off his airline holdings and much of his bank stock position this spring, he decided to buy $560 million dollars of Barrick Gold (NYSE:GOLD), the world’s second largest gold miner!

The implications of this monumental philosophical turnaround will be massive, far-reaching, and enduring.

Here’s what “Plunger,” the resident Market Historian at Rambus1.com (one of the very best technical analysis sites I know of and to which I am a paid subscriber) has to say:

This is the ultimate green light for the sector, it has now been legitimized in the canyons of Wall Street. Whereas before, asset managers feared getting fired for owning gold stocks, they will now fear getting fired for NOT owning gold stocks because of Warren’s action. The gold bull market now sits at the cusp of the publics’ point of recognition (POR).

I cannot overemphasize how significant this is.

Buffet has been the dam, holding back the great flood of investment dollars into the gold bull market. As long as Buffett steered clear, the lemming institutional money managers would avoid the sector as well. The dam broke on Friday afternoon after the market closed when Berkshire’s 13f filing was publicly released revealing he had bought about $500m of Barrick last quarter. He’s now given tacit permission that the average investor needs to own some gold stocks. Don’t think people won’t notice.

This sector was always going to be an asymmetric trade once the third leg of the secular rise got underway, even as the shakeout of the last nine years was brutal and unforgiving.

Sadly now, a number of those who had held on are washing out, and have been selling their physical metal at break-even levels, or for “a tidy profit.”

I understand their motivation from the dark times and false starts, but they might want to take a second look.

If this scenario sounds logical, there’s no dishonor in getting back in, even at a higher price. And if you’re still fence-sitting about at least getting a reasonable amount (by your definition) of hold-in hand gold and silver, that last train sure looks to be heading out of the station.

Personally, I’m willing to accept the risk that goes with taking action because sometimes it can be even more risky not acting. I’ve gone through the last 9 years with the bear nipping at my heels just like you have. But I’m still showing up.

Whether the next impulse G/S leg above $2,100 and $30 respectively gets underway tomorrow, in October, or next year is irrelevant to me.

Top-tier investor Rick Rule has a motto that resonates. He says, “You’ve gone through the pain, now get ready for the gain!”

Source: Matt Badiali for Streetwise Reports   08/17/2020

Independent financial analyst Matt Badiali discusses Warren Buffett’s recent move.

The biggest news in gold mining, after the record price, is Warren Buffett’s Berkshire Hathaway recent disclosure. They informed the world that they invested in Barrick Gold Corp. (ABX:TSX; GOLD:NYSE).

That sent financial twitter ablaze, because Buffett is a famous gold hater. He famously said in 1998:

“(Gold) gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

However, even Warren Buffett understands the impact of higher gold prices on gold miners. That’s why he bought Barrick.It’s not like he bought a ton of metal…he bought 20.9 million shares (1.2% of the company’s stock). It’s a $565 million bet on Barrick’s profits going stratospheric on these higher gold prices.

While that’s good news, the recent ding in the gold price took Barrick’s shares down. You can see what I mean in the chart below:

That sell off is an opportunity for investors to follow Berkshire’s lead.

It only takes a minute to understand Berkshire’s attraction to Barrick Gold—it’s the same reason I recommended the stock to my readers in July 2019. The company is profitable. Just look at this table:

	2018	2019	2020*	2021*
Revenue	$7.2 billion	$9.7 billion	$12.1 billion	$12.8 billion
Cash from Ops	$1.8 billion	$2.8 billion	$4.3 billion	$5.0 billion
Free Cash Flow	$365 million	$1.1 billion	$1.9 billion	$3.1 billion
Gold Price (realized)	$1,267 per oz	$1,396 per oz	$1.657 per oz**	–
EV to FCF***	60 times	39 times	31 times	–
Data from Bloomberg; *Bloomberg Estimate; **2020 Average through June 30. ***At Year End

The valuations just keep looking better. I used enterprise value (EV) because it takes debt into account compared to free cash flow (FCF). What we see is that even though Barrick’s EV more than doubled since 2018, its valuation fell by half.

That’s because of the profit it can make on the higher gold price. It generated a modest $365 million in free cash flow in 2018 when it earned just $1,267 per gold ounce. If we get a full year of the gold price at $1,900 per ounce, Barrick will be hugely profitable.

Based on Bloomberg’s 2021 estimate, if you bought Barrick today, you are paying just 19 times enterprise value. It’s closest competitor, Newmont Corp. (NEM:NYSE) trades even lower, at just 16 times 2021 free cash flow.

This is a fantastic point to add to our positions in the major gold miners. The ones that are profitable at lower prices will do very well at these much higher gold prices.

Regards,

Matt Badiali

Matt Badiali is a geologist and independent financial analyst. He spent fifteen years researching and writing about great investments inside the natural resources sectors. He can be reached at www.mattbadiali.net.

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Streetwise Reports Disclosure:
1) Matt Badiali: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in the article are sponsors of Streetwise Reports: None. 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. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.

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 three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Newmont Corp., a company mentioned in this article.

( Companies Mentioned: ABX:TSX; GOLD:NYSE,
NEM:NYSE,
)

Source: Michael Ballanger for Streetwise Reports   08/17/2020

The story of how an inner city liquor store grew its business serves as an example of what sector expert Michael Ballanger calls ” a compelling revelation of ‘academics versus practicality.'”

In watching the travesty of disinformation, misinformation and moral hazard formation ongoing in the global financial markets, I am immediately reminded of a case study from my university days of which I was a part, the nature of which required that our team analyze a local business and make specific recommendations designed to improve it. Seeing as our campus was located in the Saint Louis inner city, surrounded on three sides by a ghetto second only to Detroit’s in crime and murder, and on the fourth by Interstate 70, it was to no one’s surprise that the “local business” we were to dissect was a package liquor outlet run by a large and very angry African American gentleman by the name of Marcus Thicke.

The first time we met Marcus, he took one look at me and then my two other classmates and said, “The bruthas will have a field day with them (pointing at the two diminutive students) but they will wanna take their time with you.” (I was an extremely fit Canadian hockey player.) Marcus looked a great deal like Samuel L. Jackson in “Pulp Fiction.” He had an Afro, piercing dark brown eyes and skin of a darker hue than most of his race and gender. If there was one thing I immediately liked about the man, it was that he was not going to be taking any bull from anyone, Saint Louis University (SLU) finance student or not.

Being Canadian, I was at a distinct advantage over my two American teammates. First, I was bigger and stronger, and, while at six feet tall (plus a half-inch), I was only four inches shorter than Marcus. Second, I was completely ignorant of the beatings and rapes and robberies of anyone that had as much as “fair” skin in that area of Saint Louis, because I grew up in a neighborhood in Toronto that had not one black family until I was well into high school. I had no ingrained fear of black people, so I easily bypassed any emotional roadblock that might have otherwise afflicted my teammates.

We spent a month at his store, watching from the sidelines, and while Marcus had a ton of traffic, really great employees (all former hookers now in their forties) and a superb location with tons of parking right next to Busch Stadium, when we counted his end-of-week cash, it was always about 10% of what we expected. We counted beginning and ending inventory; we counted beginning and ending cash. We went through cost of sales and every receipt from Cutty Sark, Jim Beam and Wild Turkey. What should have been a steady stream of positive cash flow was barely a break-even before tax.

You have to remember that we were students, and I was a student athlete, so there wasn’t a great deal of extracurricular time to monitor Marcus’ operation in the midnight hours. But one night, after dropping my girlfriend off in West County (no black people allowed except maids and lawn-cutters), I ventured over to his shop at around 1 a.m., only to see Marcus out in front, brandishing a large, sawed-off shotgun and swearing as if his preacher had just run off with his dog. I pulled over (I drove a ’69 Chevy Impala with a broken hood latch, but a 350 turbo under the hood) and jumped out to help my “new best friend Marcus,” at which he pointed his shotgun at me and screamed, “You! Get your white honky ass back into the car and go back to your white-ass dormitory and don’t never come back here again.”

The next week, we were to submit three separate reports and recommendations on the “Laclede Package Liquor case study,” and as the SLU Billiken hockey squad was on the road on the U.S. East Coast (kicking butt in Boston and upstate New York), I had to rush to get mine in. The professor told me, “Gimme what you got, because your teammates have 80-page reports complete with financial statements. . .”

So, I decided to get my two “teammates” to read me their “final conclusions” over the phone as I was writing down (remember—no email, no fax and no laptops) their conclusions sitting in my underwear and dying for a beer.

Their conclusions were as follows:

1. Fire the owner and replace him with an educated (white) retail “specialist.”
2. Request inventory pricing concessions from his suppliers. (He moves a great deal of product.)
3. Replace the aging and somewhat tainted sales staff with younger people.

My report was sent as a cable to Professor Yeager from the Sonesta Hotel in Boston about three hours later, but only after I had talked to Marcus. It was a one-page essay.

Recommendations: Based upon location (football and baseball Cardinals), and based upon revenues (almost entire inventory replaced every day), I recommend that Mr. Thicke make the following changes and upgrades:

• Install a bullet-proof Plexiglas shield between the inventory and the cash/employees
• Buy three more Remington shotguns to fortify the shop and its employees

When I got back to campus, I was informed that my two teammates had received “A’s” for the thorough job they had done on their analyses. I was getting a “C” because I failed to support my recommendations with “facts” (data).

Well, I passed that course (barely) and got my B.Sc., B.A., from the tenth-best undergraduate business school in the U.S. circa 1976, and the certificate still sits on my office wall.

However, after I quit pro hockey a few years later, I returned to the Saint Louis area on a business trip. I rented a car and toured the area with the intent to see how Laclede Package Liquors had made out. I walked inside and saw a large, bullet-proof, plexiglas screen behind which were the cash registers and a young black kid that looked like a cross between Samuel L. Jackson and Whitney Houston. The place was booming and had expanded, and was barely recognizable from the shop I saw in 1976. As I was leaving, I looked up on the wall behind the registers and there it was—a 1976 Remington double-pump shotgun, and beside it was a picture of a Saint Louis Billiken hockey player. I looked around for Marcus for a brief second but then decided that some accomplishments belong in the sweetness of memories past, and I left.

Why do I write stories about things unrelated to precious metals when all everyone wants to know is “how,” “what” and “when?” The anecdote of Marcus Thicke’s package liquor store is a compelling revelation of “academics versus practicality.” It is like watching Tesla shares move to levels never before seen in the history of modern finance, and most certainly ever understood. It is like watching Jerome Powell of the U.S. Fed look at the camera and say, with a straight face, that Federal Reserve Operations “have not contributed to income inequality” in the mighty US of A. It is like watching the actions of last Tuesday, where three times annual silver production was dumped into the Crimex “paper market” as a method of lowering price.

There must be a mechanism whereby those that would relieve us of our wealth (central banks and the politically connected) can be effectively resisted through intelligent discourse and reasonable debate. Alas, there is not such a mechanism available to us. There could be in the future, but today? Nothing, except for the ownership of precious metals held outside of the banking system.

Then again, all they represent is a shield against monetary confiscation through the debasement of money.

A little packaged liquor store grew into a big packaged liquor store because Marcus Thicke rejected nonviolent, conventional solutions to the problem of inner city crime. Instead of changing staff and revamping inventory, he made it very difficult for people to rob him, and if they even tried, he had the firepower behind that Plexiglas screen to thwart them.

In today’s world, filled with the insanity of entitlements, elitism and pork-barrel politics, there has never been a greater need for a shield that is politically and societally bulletproof, behind which true believers in free markets and the ethics of hard work can reside. Sadly, as the men and women who fought to defend freedom in the last century pass along into the eternal night, they are replaced by a generations of those who feel that governments owe them not only a living but a high-standard of living to boot, to which I say, “They are in for a very rude awakening.”

As I wrote about last week, the time for being aggressive buyers of precious metals has passed.

I write this because the “easy money” has now been made. Sentiment and momentum models that have served me well early in 2020 are quite the opposite of conditions in mid-March.

Using silver as the poster child for the current “crowded trade” scenario, note the vertical descent from last March that prompted my “Generational Buying Opportunity” missive, sent out the weekend before the lows were “in.” It has since been replaced with another near-vertical decline, but this time it happened far too quickly for a bottom to have formed. I see continued consolidation through mid-September, as the late longs are punished into vacating precious metals positions that were surely (in their minds) “no-brainer” trades.

The current correction in precious metals is a healthy event, and one that has not only prolonged this bull market, but also strengthened it. Once the overbought conditions are resolved and I get “only” fifteen (instead of fifty) “silver to $100!” e-mails in my inbox every morning, then conditions will have improved representing a safe entry point.

Make no mistake, the bull is far from expired. He is resting, and when he decides to charge again, you will not want to be on the sidelines.

Originally published Aug. 15, 2020.

Follow Michael Ballanger on Twitter @MiningJunkie.

Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger’s adherence to the concept of “Hard Assets” allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.

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Disclosure:
1) Statements and opinions expressed are the opinions of Michael Ballanger and not of Streetwise Reports or its officers. Michael Ballanger is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. Michael Ballanger was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This 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.
3) 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 three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Michael Ballanger Disclaimer:
This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.

Source: Streetwise Reports   08/17/2020

Shares of Comstock Mining reached a new 52-week high after the firm reported positive Q2/20 financial and operating results highlighting debt restructuring, non-mining asset sales and a new mercury remediation venture.

Comstock Mining Inc. (LODE:NYSE.MKT) today announced that it filed its Form 10-Q quarterly report last week and reported selected strategic and financial results for the second quarter ended June 30, 2020. The firm highlighted that it also has received and is assembling its first mercury remediation system.

The company stated that in Q2/20 it eliminated the current senior secured debenture from a combination of $0.9 million in accelerated cash proceeds from Tonogold and new, unsecured promissory notes, with favorable, extended terms. The firm noted that as of June 30, 2020, its investments in Tonogold Resources Inc. are valued at $10.4 million, representing a $1.6 million increase in fair market value during Q2/20, which was a positive driver for net income in the quarter.

The company further noted that its investment in Mercury Clean Up LLC (MCU) increased to $1.75 million as of June 30, 2020, as commencement of the on-site installation of the Comstock mercury remediation system has begun. The firm added that extended agreements for the sale of the company’s two non-mining properties in Silver Springs, Nev., are in place. Both sales are expected to close in Q3/20 and should result in proceeds of $10.1 million, the company stated.

The company reported that for Q2/20, total operating costs were $1.3 million, which showed a $0.2 million (15.9%) improvement compared to Q2/19. The firm stated that net income improved to $1.3 million, or $0.05 per share in Q2/20, compared to a net loss of $2.1 million, or $0.13 loss per share in Q2/19. Comstock advised that this was driven primarily by investment gains and lower costs.

The company’s Executive Chairman and CEO Corrado DeGasperis commented, “We have grown and strengthened our balance sheet, extinguished our secured debt, and deployed and installed the first MCU – Comstock system as we prepare for material testing within the boundaries of the Carson River Mercury Superfund Site (CRMSS). We have also reserved shipping containers as we prepare to ship our first international unit to the Philippines.”

The firm stated that it has enacted its transformational strategic plan that focuses on high-value, cash-generating, precious metal-based activities. These areas include environmentally friendly, and economically enhancing mining technologies such as mercury remediation and others. The company indicated that “its goal is to deliver over $500 million of value from its existing assets and the commercialization of these environmental mining technologies, partnerships and ventures.”

The company provided an update on its mercury remediation activities and stated that “its American Flat processing platform is fully permitted, and the infrastructure has been prepared, including pads, power, water and retaining walls, for the delivery of the brand new MCU mercury remediation system.” The firm added that the MCU’s system is being assembled and getting prepped for mercury testing.

The firm stated that is also owns net non-mining assets presently valued at over $25 million. These include over $10 million in the Silver Springs assets, $10.4 million combined in its investment in Tonogold convertible preferred stock and common shares and a $4.475 million promissory note from Tonogold.

The company pointed out that MCU-P plans to commence reclamation operations in the Philippines in Q3/20. The firm stated that “this represents the first real international opportunity for large-scale mercury remediation and environmental reclamations, using MCU’s systems, with the objective of establishing MCU as a leader in mercury remediation projects, and in particular, contaminations caused by Artisanal and Small-Scale Miners.”

Comstock Mining started off the day with a market capitalization of around $63.8 million with approximately 80.79 million shares outstanding. LODE shares opened 72% higher today at $1.36 (+$0.57, +72.15%) over Friday’s $0.79 closing price and reached a new 52-week high price today of $2.12. The stock has traded today between $1.32 and $2.12 per share and is currently trading at $1.79 (+$1.00, +126.58%).

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Disclosure:
1) Stephen Hytha compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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 three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

( Companies Mentioned: LODE:NYSE.MKT,
)

Source: Streetwise Reports   08/17/2020

Troilus Gold’s updated resource and its leverage to the gold price are discussed in a Canaccord Genuity report.

In a July 29 research note, analyst Tom Gallo reported that Canaccord Genuity raised its target price on Troilus Gold Corp. (TLG:TSX; CHXMF:OTCQB) after the explorer released an updated Troilus project resource and after the financial services firm applied a revised gold price of CA$2,015 per ounce to its model.

Canaccord Genuity’s new target price on Speculative Buy-rated Troilus Gold is CA$3.10 per share, up from CA$2.10 previously, and compares to the current share price of CA$1.42.

Gallo presented the main takeaways from the resource update that encompasses the Southwest zone. The total resource of the Troilus gold project in Quebec now amounts to 4,960,000 ounces of gold equivalent (4.96 Moz Au eq) at 0.87 grams per ton (0.87 g/t) Au eq in the Indicated category and 3.15 Moz Au eq at 0.84 g/t Au eq in the Inferred category. The open pit part of the resource increased by 601,000 ounces (601 Koz) of Au eq.

The analyst highlighted that the Southwest zone added 375 Koz of gold (Au) at 0.97 g/t Au (at a 0.6 g/t cutoff) to the resource, increasing it by 25%. Were Southwest excluded, the resource would have increased 16%. In addition, Gallo pointed out, the Southwest area offers exploration upside as minimal drilling has been done there.

“The company has re-focused its efforts on defining the open-pit resource rather than a combined open-pit and underground operation. Troilus does believe, however, that depending on the gold price environment the current underground resource adds future optionality to a mine plan,” Gallo noted.

“This resource update continues to demonstrate open-pit growth potential and highlights the exploration potential that remains on the large land package with the addition of the recently discovered Southwest zone,” Gallo commented.

He indicated that Canaccord Genuity’s base case resource for the Troilus project is 130 million tons at 0.95 g/t Au. Its total estimated resource of 4.4 Moz Au at 0.95 g/t Au is comprised of 4 Moz Au plus the roughly 400 Koz of exploration potential from the Southwest zone. This is using a cutoff grade of 0.6 g/t Au, which is higher than the 0.3 g/t Au used in the resource update.

“This is due to our belief that the gold-only grade represented at 0.3 g/t Au cutoff of about 0.65 g/t is simply too low for real world operating parameters at the scale modeled,” Gallo explained.

He concluded his report by noting that among all of the companies in its coverage universe, Troilus Gold has the greatest leverage to the gold price. Thus, as the gold price rises, the Troilus project becomes more attractive. Further, “with a growing resource base, the company could climb toward the top of the mergers and acquisitions pipeline, should it continue to derisk through further drilling and technical study,” Gallo wrote.

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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Troilus Gold. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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 three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from Canaccord Genuity, Troilus Gold Corp., Raising Target Price, July 29, 2020

Analyst Certification: Each authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby certifies that (i) the recommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent and
objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring
analyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related
to the specific recommendations or views expressed by the authoring analyst in the research, and (iii) to the best of the authoring
analyst’s knowledge, she/he is not in receipt of material non-public information about the issuer.

Analysts employed outside the US are not registered as research analysts with FINRA. These analysts may not be associated
persons of Canaccord Genuity LLC and therefore may not be subject to the FINRA Rule 2241 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Required Company-Specific Disclosures (as of date of this publication)

Troilus Gold Corp. currently is, or in the past 12 months was, a client of Canaccord Genuity or its affiliated companies. During this period, Canaccord Genuity or its affiliated companies provided investment banking services to Troilus Gold Corp.
In the past 12 months, Canaccord Genuity or its affiliated companies have received compensation for Investment Banking services from Troilus Gold Corp.
In the past 12 months, Canaccord Genuity or any of its affiliated companies have been lead manager, co-lead manager or comanager of a public offering of securities of Troilus Gold Corp. or any publicly disclosed offer of securities of Troilus Gold Corp. or in any related derivatives.
Canaccord Genuity or one or more of its affiliated companies intend to seek or expect to receive compensation for Investment Banking services from Troilus Gold Corp. in the next three months.

( Companies Mentioned: TLG:TSX; CHXMF:OTCQB,
)

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