Month: May 2021

Owner Seeks Permit To Resume Gold Mining At Stanly County Mine  WFAE

1. Gold settles at a nearly 3-month high after a weaker-than-expected U.S. April jobs report  MarketWatch
2. Gold price pops after much weaker-than-expected U.S. jobs report  Kitco NEWS
3. Gold Price Recap: May 3 – May 7 – GoldPrice.org  GoldPrice.org
4. Gold Price Analysis: XAU/USD shoots to fresh three-month tops on disappointing US jobs report  FXStreet
5. Gold Prices May Retreat as US Jobs Data Flags Sticky Wage Inflation  DailyFX
6. View Full Coverage on Google News

Gold/silver: The bond breakdown | Kitco News  Kitco NEWS

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

The long-awaited breakout in gold and silver may finally be upon us.

The gold market had been knocking on the door of the $1,800 level for the past three weeks. On Thursday, prices pushed strongly above that resistance line to close at $1,822 an ounce. As of this Friday recording, spot gold trades at $1,841 and is up 3.7% for the week.

Turning to silver, the white metal is surging 5.5% higher this week come in at $27.46 per ounce. Any additional strength to finish out Friday’s trading would cause the market to register its best weekly close of the year.

Although silver prices traded up to the $30 level briefly in early February, a sharp selloff followed that caused the market to put in a significantly lower close for that week.

Some long-term traders prefer to follow weekly rather than daily technical and momentum indicators.

A decisive move above $30 an ounce confirmed by a weekly close would be hugely bullish. It would represent a breakout from the consolidation pattern that has formed since last summer. It would also establish a fresh new multi-year high for the precious metal.

When silver is ready to run, its rallies can be fast and furious. So, a rapid move to new all-time highs above $50 can’t be ruled out.

But the market will ultimately move at its own pace, so having a long-term time horizon is the best way for investors to avoid missing out on the next big move.

Precious metals markets will lift over time with the rising tide of inflation. Recent trends show inflation running hotter than it has in years.

In recent days, officials at the Federal Reserve and Treasury Department have gone out of their way to downplay the inflation problem. They insist inflation pressures showing up in the economy right now are “transitory.”

But the trillions of dollars in new spending, borrowing, and currency printing coming down the pike from Washington will have long-term consequences.

The Treasury Department recently reported it expects to borrow $463 billion in the current quarter – far more than previously expected. The new spate of Biden borrowing will spike the federal budget deficit to $2.3 trillion. All in a single year.

Treasury Secretary Janet Yellen says not to worry, though, because the Fed has everything under control.

Financial News Anchor #1: US Treasury Secretary, Janet Yellen, tamps down concerns that President Joe Biden’s plans for infrastructure jobs and families will further stoke inflation.

Financial News Anchor #1: Well, now the Treasury Secretary says she does not anticipate that inflation will be a problem in the U.S. economy. Treasury Secretary Yellen also saying, “Aside from some transitory,” that’s the Fed’s word, “increase in inflation in coming months, I don’t think there’s going to be an inflationary problem. The Fed has tools to address them.”

Janet Yellen: The Federal Reserve has the tools to address inflation should it arise. We will monitor that very carefully. We’re proposing that the spending be paid for. And, I don’t believe that inflation will be an issue, but if it becomes an issue, we have tools to address it.

The Fed may have the tools to keep inflation in check. It could cease making asset purchases, jack up interest rates, and curtail money supply growth. At least in theory.

The real question is whether central bankers would actually have the will to do what’s necessary to bring down rising prices. Their current stated objective is the opposite – to raise inflation rates above 2% for an extended period.

The risk is that inflation overshooting their target puts policymakers in a precarious position. Would they take away the punch bowl? Would they be willing to inflict financial pain upon Wall Street, the big banks, and the U.S. government itself?

Without the Fed’s low interest-rate stimulus, markets could collapse. Government borrowing costs could become unmanageable, sparking a sovereign debt crisis.

Treasury Secretary Yellen and Fed Chairman Jerome Powell know full well that the entire house of cards could collapse without the benefit of negative real interest rates. They may not say so publicly, but officials in Washington are effectively banking on inflation to bail themselves out in perpetuity.

If wage earners, savers, and retirees who earn and hold dollars suffer in the process, then so be it.

In this environment where the entire financial system is artificially propped up, bubbles never fully burst. Instead, they are constantly reinflated on a rotating basis.

It won’t always be the stock market that is the top performer. At some point, inflation fears may drive mainstream investors to make dramatic moves to try to protect themselves.

The biggest rotation of all could be from dollar-denominated financial assets into tangible assets including physical precious metals.

In recent days, we have seen signs of such a rotation. Some of the hot stock market sectors from last year including biotechnology, internet, and innovation plays have sold off. Meanwhile, inflation plays including energy and metals are showing impressive relative strength.

While gold and silver have lagged most of the year, they have tremendous upside potential at these levels and may just now be getting warmed up.

Moving to some industry news, I’m pleased to report that Money Metals Exchange and the Sound Money Defense League have secured another state sales tax exemption for our precious metals customers.

On Monday, Arkansas Governor Asa Hutchinson officially ended sales taxation on gold, silver, platinum, and palladium bullion and coins in the Natural State by signing Senate Bill 336.

This also sets a great example for legislators in New Jersey, Maine, Ohio, and Tennessee, who are also considering enacting similar sales tax exemptions in their own states this year.

The Arkansas sales tax exemption takes effect on October 1, 2021.

Including Arkansas, 40 U.S. states now fully or partially exempt gold and silver from sales taxes. That leaves 10 states and the District of Columbia as the primary jurisdictions that still harshly penalize citizens seeking to protect their savings against the serial devaluation of the Federal Reserve Note.

Arkansas will now rise from dead last in the Sound Money Index to 30th place among the 50 states.

I want to specifically thank our Money Metals customers and readers in Arkansas – as well as a handful of local coin dealers – who called and emailed their elected leaders in the Arkansas legislature to register their support for the bill. There is no doubt that grassroots pressure played a big role in securing this week’s important legislative victory.

Well, that will do it for this week. Be sure to check back next Friday for our next Weekly Market Wrap Podcast. Until then this has been Mike Gleason with Money Metals Exchange, thanks for listening and have a great weekend everybody.

Source: Adrian Day for Streetwise Reports   05/06/2021

Fortuna Silver made an all-share offer for West African miner Roxgold, and its shares promptly collapsed on the news. Money manager Adrian Day asks whether this is a good transaction for Fortuna, and what it might mean for the shares in the period ahead.

Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE, US$6.03) announced on April 26 a friendly share bid for Roxgold Inc. (ROXG:TSX), a low-cost West African producer, offering 0.283 of a share (plus 1 cent) for each share of Roxgold, a better-than 40% premium when the offer was made. Fortuna will own about 64% of the pro-forma company.

The deal is not based on synergies. However, it is accretive on all relevant metrics; at the time of the announcement, Fortuna was trading at 1.89 x NAV compared with about 0.58 x NAV for Roxgold, hence the all-share offer.

Timing of offer not coincidental

Roxgold has assets in Burkina Faso and the Ivory Coast, with low-cost, technically straightforward assets, a near-term development project, several exploration properties, a strong team and solid balance sheet. The merger brings together robust assets and strong technical teams. The transaction, which requires the approval of both companies’ shareholders, is expected to close in late June or July.

The acquisition is opportunistic and well timed. Lindero, in Argentina, is virtually complete now with no more meaningful capital requirements. And political risk in Latin America is increasing. On the Roxgold side, the market is beginning to recognize its assets—up over 40% before the Fortuna announcement—while it is ahead of the expected production decision later in the year on its Seguela deposit. In addition, the all-share bid makes sense given the discrepancy in price to NAVs, while the financially conservative Fortuna was relatively stretched following the construction of Lindero and I do not think would want to take on debt for an acquisition.

Buying the whole package

For Fortuna this is a departure from its Latin American home base and a further move away from silver. Jorge Ganoza, CEO, bases his “pitch” for the deal on the company buying high-quality, undervalued assets, with a strong team and strong exploration potential. “We are buying not an asset but a platform.” The combined company would be able to build Roxgold’s next mine (with an estimated low capex of $140 million) from internal financial sources, without requiring debt or equity. For the notably conservative and debt averse Mr. Ganoza, this was no doubt a compelling factor.

Fortuna recognizes the difficulty of running West African assets from Latin America, with a team whose skillset was honed in Latin America. Hence, he has tied up the technical team, including the CCO and VP of exploration, with employment contracts. The community and government relations are critical.

Success in the mining business, Mr. Ganoza said, comes from the quality of assets and from execution. Mining is frontier business. He would prefer a mine in Nevada, but would rather a strong, undervalued asset in Africa than a weak, overvalued asset in Nevada. Both Fortuna and Roxgold have a track record of strong execution. Ganoza said the company had spent the past year or two looking at assets up and down the Americas but found nothing that compared with Roxgold.

Fortuna is not leaving Latin America or silver, despite difficulties

Fortuna has stated that the move should not be seen as a move away from Latin America and the increasing risk on that continent. Political risk in developing countries, the CEO notes, ebbs and wanes. Further, in answer to a question, he said that geographic diversification was not a big factor in the decision to buy a company with assets outside of Latin America.

However, there is little doubt that political risk is increasing throughout the continent, and in particular in all three countries in which Fortuna currently has mines. In Argentina, although Fortuna is currently repatriating capital, companies can expatriate only to service loans, and at present not profits. In Peru, an extreme leftist who wants to take big chunks of mines operated by foreign companies is significantly ahead in the polls after winning the first round. And in Mexico, in addition to the overall less attractive climate since the new president came to power, with delays in mine permitting and in particularly new exploration permits, Fortuna has a fight with the government over a royalty dispute, and has lost each round in court, including rulings in two parallel cases at the end of March.

Fortuna also said it is committed to silver. “But more,” Mr. Ganoza said “we are committed to quality assets that can perform in precious metals cycles.” Pure silver mines are few and far between; new ones are discovered, not acquired.

The market does not like it

The market reaction has been vicious, with Fortuna down 25% in the week since the announcement. In such transactions, the shares of the acquiring company always drop while those of the target increase. When Equinox announced a friendly takeover of Premier in December, for example, its shares fell 16% in two weeks. So some decline in Fortuna’s shares was to have been expected.

However, there are additional factors here, factors that led me to believe that Fortuna’s shares will continue to be soft. On the Fortuna side, the further move away from silver will disappoint silver-focused investors who tend to be—how shall I put it?—more dedicated than gold investors. In addition, some will not like the entry into Africa with its higher perceived political risk. Fortuna’s second-largest shareholder, a fund out of London, has a mandate to invest only in the Americas and Australia and will be forced to sell. (The largest shareholder is the GDX fund, which will own about 8% of the combined company.)

Will there be another offer?

On the Roxgold side, many shareholders own the shares precisely for a takeover, which has long been expected. In such a case, most, particularly retail investors, typically sell on completion of the takeover. In addition, many Roxgold shareholders to whom I have spoken are disappointed with the premium offered, particularly given the timing of the announcement with a new mine ahead. Now that Fortuna’s share price has declined, the all-share offer is worth even less, not even a 9% premium on Roxgold’s price as of the date of the announcement. So less-than-long-term investors holding Roxgold precisely for it to be acquired will be disappointed.

Roxgold is still an undervalued company, despite a 40% rally over the past month, including the move after the Fortuna offer. Now that the Fortuna offer price has declined, there could be a competing bid. In the region, there are several well-capitalized larger firms, with local operating skills and a history of regional consolidation, albeit none that come to mind with compelling synergies with Roxgold’s specific assets. And none did bid, despite the company being available. Fortuna expects the significant break fee of $40 million to act as a deterrent. It may well, though one must assume many regional companies are sharpening their pencils this weekend.

Fortuna said it is “not going to chase prices.” There is the potential perhaps for it to offer some cash instead of some shares, though part of the attraction of the transaction is the resulting strong balance sheet, so I would not expect a high level of cash. Given the wide discrepancy in valuation metrics, there is some room for an increased offer in my mind.

The merger creates a great company

All in all, the potential merger will create a very strong mid-tier company with quality diversified assets, low costs, a strong balance sheet and a good growth profile. In the near term, there will be softness, with different shareholders exiting for different reasons, though most of that weakness is already behind us. But when the dust settles, this will be a very attractive buy.

BEST BUYS now include Lara Exploration Ltd. (LRA:TSX.V, 0.71), Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX, US$111.86), Orogen Royalties Inc. (OGN:TSX.V, 0.365) and Barrick Gold Corp. (ABX:TSX; GOLD:NYSE, US$21.25).

Originally posted on May 2, 2021.

Adrian Day, London-born and a graduate of the London School of Economics, heads the money management firm Adrian Day Asset Management, where he manages discretionary accounts in both global and resource areas. Day is also sub-adviser to the EuroPacific Gold Fund (EPGFX). His latest book is “Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks.”

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Disclosure:
1) Adrian Day: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: Lara Exploration, Orogen Royalties, . 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. Funds controlled by Adrian Day Asset Management hold shares of the following companies mentioned in this article: All. 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 this article are billboard 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) 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.
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 decision to publish an article until three business days after the publication of the 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 Lara Exploration, Fortuna Silver Mines and Orogen Royalties, companies mentioned in this article.

Adrian Day’s Disclosures: Adrian Day’s Global Analyst is distributed by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. Publisher: Adrian Day. Owner: Investment Consultants International Ltd. Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM. Views herein are the editor’s opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. ©2020. Adrian Day’s Global Analyst. Information and advice herein are intended purely for the subscriber’s own account. Under no circumstances may any part of a Global Analyst e-mail be copied or distributed without prior written permission of the editor. Given the nature of this service, we will pursue any violations aggressively.

( Companies Mentioned: FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE,
ROXG:TSX,
)

Source: Streetwise Reports   05/06/2021

Shares of Hecla Mining Co. traded 16% higher after the company reported Q1/21 financial results that included a 54% YoY increase in revenue along with record cash margin and adjusted EBITDA.

America’s largest silver producer, Hecla Mining Co. (HL:NYSE), today announced financial and operating results for the first quarter of 2021 ended March 31, 2021.

The company reported that in Q1/21 in achieved sales of $210.9 million, which it advised is the second highest amount in its 130-year operating history. These revenues represented a 54% increase over the $136.9 million of sales registered during Q1/20. Hecla Mining stated that silver production in Q1/21 increased by 7% to 3.459 million ounces (Moz), versus 3.245 Moz in Q1/20.

The firm indicated that for Q1/21 gross profit increased by $53.4 million to $64.8 million, compared to $11.4 million in Q1/20. The company pointed out that the substantial increase in gross profit in the quarter was mostly due to benefits from higher metal prices and increased production of silver, lead and zinc.

Hecla reported that in Q1/21 net income attributed to common shareholders was $18.8 million, or $0.04 per share (basic) and that adjusted net income applicable to common stockholders came in at $30.6 million, or $0.06 per share. The company further highlighted that in Q1/21 it delivered record adjusted EBITDA of $86.1 million, which was 145% higher than the amount earned in Q1/20 and is $12 million greater than any quarter in Hecla’s history.

The company reported that its Board of Directors has agreed to increased the silver-linked dividend at the $25 per ounce silver price threshold by 50% to $0.03 annually and in a separate news release today announced that the board also increased each level of the silver-linked dividend by $0.01 per year.

Hecla Mining’s President and CEO Phillips S. Baker, Jr. commented, “The strong performance Hecla has had in five of the last six quarters continued in the first quarter of 2021 with the second highest sales in our history, a new record for EBITDA and gross profit on sales that is about a third higher than the next closest quarter…Free cash flow generation was the most Hecla has had in the first quarter in a decade. Since the first quarter is typically our smallest quarter, we anticipate cash flow increasing over the rest of the year. Therefore, the Board has increased the silver-linked dividend at the $25 price threshold by 50% to $0.03 per share annually.”

“The backdrop for silver remains very positive with improving industrial demand due to global policies that support green energy where silver is a key component, strong investment demand and tight supply. Hecla is in a key position as the United States’ largest silver producer, mining more than a third of all U.S. production, which should increase as our U.S. silver production is anticipated to be 15 million ounces by 2023 with the Lucky Friday’s silver production expected to increase to 5 million ounces by then,” Baker added.

The company stated that its Greens Creek Mine in Alaska produced a total of 2.6 Moz silver and 13.266 Koz gold in Q1/21, compared to 2.8 Moz silver and 12.273 Koz gold in Q1/21. At the Casa Berardi Mine in Quebec, the firm said that in the current quarter it produced 36.190 Koz gold, which was 35% higher than the 26.752 Koz gold it produced in Q1/20.

The company provided some forward guidance for annual production and cost estimates during the next three years. Hecla Mining stated that for FY/21 it expects total production of 12.9-14.0 Moz silver and 185-193 Koz gold.

Hecla Mining Co. is headquartered in Coeur d’Alene, Idaho. The company operates the Greens Creek and Lucky Friday silver mines in Alaska and Idaho and is becoming a growing gold producer at its Casa Berardi underground/open pit gold mine located in western Quebec, Canada. The company has a portfolio of six exploration and one pre-development properties in seven different silver and gold mining districts in the U.S, Canada and Mexico. The company operations benefit from production of both precious and base metals zinc and lead, which the firm indicates serves to provide a natural revenue hedge.

Hecla Mining started the day with a market capitalization of around $3.3 billion with approximately 535.3 million shares outstanding and a short interest of about 1.9%. HL shares opened 2.5% higher today at $6.41 (+$0.16, +2.56%) over yesterday’s $6.25 closing price. The stock has traded today between $6.41 and $7.315 per share and is currently trading at $7.26 (+$1.01, +16.16%).

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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 decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

( Companies Mentioned: HL:NYSE,
)

If you are a regular Fun on Friday reader, you know I love sports. Hockey is my favorite followed by football. My favorite teams are the Tampa Bay Lightning and the Tampa Bay Buccaneers. Well, all of those worlds collided in a moment of sports harmony this week. Tampa Bay Buccaneers tight end Rob Gronkowski […]

The post Blog first appeared on SchiffGold.

Treasury Secretary Janet Yellen did a big flip-flop this week. Her comments and her subsequent attempt to walk them back were telling. She accidentally revealed the ugly truth about inflation and the central bank’s ability to deal with it. In this episode of the Friday Gold Wrap, host Mike Maharrey takes Yellen to task. He […]

The post Blog first appeared on SchiffGold.

In response to the very tight labor market as the economy opens back up to an unprecedented worker shortage… Greg Hunter gives the Weekly News Wrap-Up for Friday, May 7, […]