Terraco Gold Expands Royalty on Spring Valley Gold Project in Nevada

Terraco Former Royalty Map

After a relatively long period without significant news, Terraco Gold seems to have shifted a gear now, so The Critical Investor sat down with CEO Todd Hilditch for a company update.

Meeting in Vancouver around the latest VRIC show, I felt it was an opportune time to interview Terraco Gold Corp.’s (TEN:TSX.V; TCEGF:OTCPK) CEO Todd Hilditch on a number of subjects. First Paul Zink, a royalty veteran was contracted, and shortly afterwards on February 1 an additional royalty was acquired from the Schmidt Family Mining Partnership LLC on the Spring Valley Gold Project in Nevada. This is a 0.5% Net Smelter Returns royalty (NSR royalty) on lands within a one-half mile perimeter of the Schmidt Claim Block. Red Kite Mine Finance also had a right to, and purchased, an identical royalty on the same lands, for the same price, USD$567,895. Furthermore, according to the news release:

“Terraco currently owns a 3% NSR royalty on the Schmidt Claim Block covering a majority of the known gold resource at Spring Valley, as well as a 1% NSR royalty on adjoining additional lands to the Schmidt Claim Block (the “Additional Royalty Area”3 ) covering the northeast portion of the known gold resource at Spring Valley. The acquisition of the Perimeter NSR adds new royalty coverage on areas beyond the Schmidt Claim Block and further increases Terraco’s Additional Royalty Area to 1.5% NSR. The Perimeter NSR also adds brand new royalty coverage on the southern portion of the Spring Valley resource where Barrick Gold Corp. (“Barrick”) previously completed step out drilling outlining further evidence for the potential to expand Spring Valley’s resource base.”

I found it particularly interesting to see this royalty increase the existing 1% royalties to 1.5%, as one part of those covers about a third of the delineated Spring Valley deposit. Before the transaction:

After the transaction:

Terraco Royalty Map

In reviewing drill results from the old operator/owner of Barrick and Midway Gold, management believes that investors may have forgotten about some of the late stage Barrick drilling at Spring Valley (Midway news releases in 2012/13) because of the Midway bankruptcy. As an example, the majority of the deposit and where Terraco has a 3% royalty (Schmidt Claim Block), drill holes included 361m of 1.47gpt gold including 21m of 7.54 gpt, 116m of 1.58 gpt gold including 27m if 11.66 gpt.

No wonder, Terraco continues to be excited about Spring Valley and happy to add more if it can. Management explained to me this new royalty acquisition is about land that has seen some very significant drilling and showed high grade areas of the deposit that included 120m of 2.26 gpt gold and 105m of 0.96 gpt, 85m of 1.58 gpt.

From the back of an envelope, this transaction looks cheap to me, and I’m interested to hear from CEO Todd Hilditch what his thoughts are about adding value versus acquisition costs. Another development or rather non-development I would like to discuss in this interview is the apparent delay of the Nutmeg PEA, which was due in Q4 2016, later on in December 2016, and at the start of February 2017 there is still no sign of a PEA, so I would like to get some sort of status update on this too, if possible of course.

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

The Critical Investor: Nice to have you available to answer a number of questions for the audience, Todd. Let’s kick off with the first question. Looking at this new royalty deal, does new hire Paul Zink already had something to do with this, possibly already visualizing his added value, or is this a deal set up and finalized well before he got on board?

Todd Hilditch: This new acquisition was part of a structure I negotiated with Mr. Schmidt, who owned the Spring Valley royalty, long before Paul joined us. As Spring Valley was at its early stage of exploration but showing great promise, I thought it was important to help Terraco cover the growth potential beyond the Schmidt claim block. At the time we didn’t know that it would represent a significant portion of the currently known ore body but we did want to ensure Terraco would cover the growth potential at Spring Valley, so in our minds by negotiating a right of first refusal on the Schmidt claims in 2011 we (when exercised and just did) would have upside in royalty coverage no matter which way the deposit grew (i.e., east, west, north, south or at depth). Paul recognizes the value of what we created on Spring Valley in this right-of-first-refusal transaction.

TCI: As mentioned in my introduction of this interview, could you indicate to us a back of the envelope estimate of possible value-add for the 0.5% royalty increase on the part that covers the Spring Valley Gold deposit, versus the approximate amount you paid for this?

TH: When we originally structured the transaction in 2011, our value creation on Spring Valley as a whole started with Terraco buying (through the royalty) gold between $200 and $300 per ounce based on the Spring Valley NI43-101 at the time. Since then and under Barrick’s development work outlined in our press release, we believe strongly that the deposit has grown and the drill results have proven our confidence that Spring Valley is expected to be a mine. This is substantiated by Barrick’s presentation, prior to the sale, of Spring Valley being PFS 2016 fast track project. The price we have paid historically as well as this new purchased royalty drives blends our cost per ounce lower.

Going forward, at no cost to us, the cash flow from this royalty is expected to be significant and well in excess of what we paid. By way of example and very simplistic and roughly estimated: 5m oz X 80% (recoveries guesstimate) X 30% (royalty coverage guesstimate) X 0.5% (recent NSR purchase) = 6000 payable ounces (rough and dirty) X gold price of for example $1250 =$7.5m USD. This would imply in theory a 15X return on our investment, and this is assuming no additional ounces found. Our return could be greater depending on inputs but this is a rough math number on why it made a lot of sense to us and Red Kite to do this deal, and this is just for the new NSR. When you put them all together the sum of parts NAV has increased a lot.

TCI: We see your new transaction adding to the Spring Valley royalty package, can you tell us about Red Kite and why they are there?

TH: In 2011 when I negotiated the terms of the Spring Valley royalty purchase with Mr. Schmidt, Terraco required a funding package to complete the deal. Red Kite, through subsidiary RK Mine Finance, funded the original Schmidt royalty transaction. Red Kite clearly saw the value in Spring Valley and the royalty package which included an option with Terraco to purchase 50% of the perimeter royalty along with Terraco on the same terms as we paid in the right of first refusal.

TCI: Why would Red Kite participate in the royalty transaction considering Waterton is quiet on news for SV? Don’t they usually want more influence on outcomes of investments?

TH: I can’t comment on Red Kite’s investment protocol relating to influence on their investments but I would have to assume that the transaction and price Terraco, and thus them, made sense in their investment criteria. Red Kite has over $2B under management and a long history in the mining industry of making good investment decisions (as does Waterton) so regardless of whether Waterton publicly announces information on Spring Valley advancement or not, I would assume Red Kite (along with us) believe strongly in the development potential and royalty economics of Spring Valley so news and timing isn’t as critical

TCI: Does Red Kite own other royalties in the area? I’m not really familiar with them holding royalties or streams besides this project.

TH: I am not aware of Red Kite holding any other royalties in the area or any jurisdiction for that matter but wouldn’t know definitively.

TCI: Despite we both know that Waterton isn’t really forthcoming with news on assets in general, have you heard anything about Waterton’s plans at Spring Valley in the meantime?

TH: I can’t comment on what Waterton is doing at Spring Valley but I can confirm that the folks that run Waterton are very sharp people and they have made a lot of money by buying mining assets, investing in their development and improvement, and then selling them to producers. A good recent example is Waterton’s purchase of the Hollister Mine a couple years ago (I believe it was from bankruptcy), then investing approx $19m in development and improvement before selling to a producer Klondex for $100m. I don’t expect anything different with Spring Valley, i.e., bought it, improve it and possibly sell it to a major. Their model is excellent and it works.

TCI: Will their business model eventually work for Terraco shareholders?

TH: I think their business model will work for us as well. I doubt they expect to sell Spring Valley at a significant premium to a major mining company without improving and advancing the project whether that is with additional drilling, permitting, mine planning, infrastructure, etc. I suspect that work is going on and that one day soon we will either wake up to an announcement of work they are doing /have done or that Spring Valley is sold to a major like Newmont or Kinross or someone else. I would bet our royalty holdings and company would be adjusted upwards in relation to a major coming in. . .so, yes, I think their model will work for us we just need a little more patience.

TCI: As mentioned in my introduction, I noticed the Nutmeg PEA, which I view as an important catalyst for Terraco, wasn’t released in 2016. Is there a specific reason for this, and if so, could you elaborate on as much as possible?

TH: There are a few reasons and relate to priorities. First, our focus on advancing the royalty portfolio including this transaction took several months to complete thus taking time away from other work. Second, we decided to spend more time on the recoveries aspects of the deposit including review of additional crushing methods and potential high pressure grinding and if utilizing this method would help in liberating more gold. We recently initiated some test that will take a few months to complete. These results will help us decide our path and timing for moving towards any economic studies.

TCI: Do you think you can give any indication when the Nutmeg PEA can be expected?

TH: Unfortunately not yet, it will depend on the HPGR tests (high pressure grind).

TCI: The share price has come off quite a bit since I initiated coverage, predominantly on lower gold, but is recovering now as gold seems to get stronger again. Where do you see gold and Terraco heading for in 2017 and for the longer term, and why?

TH: We continue to examine and complete due diligence on possible royalty purchases that I hope will add other royalties in addition to Spring Valley to our portfolio. With our current royalties, advancement of Spring Valley (sale or other news), additional royalties and all in conjunction with a higher gold price I would expect our value to increase. My gut feel is gold will move higher in 2017 with many uncertainties globally that would contribute to a lift in the yellow metal.

TCI: Thank you, Todd, for answering these questions, which will probably provide more insight in the Terraco Gold story to readers and current investors. I’m looking forward to what Paul Zink could bring to the table this year, I know you are always chasing new deals so this could be interesting to follow as well, and I hope to see positive test results for Nutmeg, and in that case the PEA results soon afterwards.

Rochester Mine owned by Coeur Mines
Rochester Mine owned by Coeur Mines, adjacent to Spring Valley Gold project; Nevada

I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter on my website www.criticalinvestor.eu, and follow me on Seekingalpha.com, in order to get an email notice of my new articles soon after they are published.

The Critical Investor is a newsletter and comprehensive junior mining platform, providing analysis, blog and newsfeed and all sorts of information about junior mining. The editor is an avid and critical junior mining stock investor from The Netherlands, MSc background in construction/project management. Number cruncher at project economics, looking for high quality companies, mostly growth/turnaround/catalyst-driven to avoid too much dependence/influence of long term commodity pricing/market sentiments, and often looking for long term deep value.
Getting burned in the past himself at junior mining investments by following overly positive sources which more often than not avoided to mention (hidden) risks or critical flaws,
The Critical Investor learned his lesson well, and goes a few steps further ever since, providing a fresh, more in-depth, and critical vision on things, hence the name.

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Disclosure:
1) The Critical Investor Disclaimer: The author is not a registered investment advisor, and currently does not have a position in this stock. Terraco Gold is a sponsoring company. All facts are to be checked by the reader. For more information go to terracogold.com and read the company’s profile and official documents on sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.
2) The following company mentioned in the article is a billboard sponsor of Streetwise Reports: Terraco Gold Corp. Streetwise Reports does not accept stock in exchange for its services. 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.
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 families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview/article until after it publishes.

( Companies Mentioned: TEN:TSX.V; TCEGF:OTCPK,
)

PennTrade – A U.S. Broker For Canadian Shares & Warrants

February 7, 2017 By: Dudley Pierce Baker http://CommonStockWarrants.com     I am glad to bring to your attention that PennTrade is now available for trading in the Canadian shares and stock warrants. If you are a U.S. Citizen and interested in trading the Canadian shares and/or stock warrants this news will be of great interest to you. It has long been an issue for U.S. Citizens on how to trade the Canadian securities using the Canadian symbols for shares and warrants. I had a long chat today with John Worrell who assures me that PennTrade is good to go and ready to execute our trades. You can get all of the information necessary to open an account, to commissions, etc on their website. PennTrade is now the online trading division of Paulson Investment Company, LLC. Founded in 1970 in Portland, Oregon, Paulson Investment Company earned national distinction as a premier … Continue reading

Trevali Is in Position to Benefit from Strong Zinc Fundamentals

Trevali Mining is transitioning to an owner-operator model at its Caribou zinc mine in New Brunswick, Canada, and analysts note that the company is positioned to take advantage of strong zinc fundamentals.

Trevali Mining Corp. (TV:TSX; TV:BVL; TREVF:OTCQX) announced on Feb. 1 that it is becoming an owner-operator at its Caribou zinc and is investing in a new mining fleet at the mine. The company stated that it “has committed to an approximately Cdn$20-million investment through a new partnership with Sandvik Mining to supply and maintain a full fleet of mining equipment for Caribou Mine operations. Trevali will operate and manage all aspects of the underground mining operation and Sandvik will be responsible and accountable for the maintenance of the fleet.”

Dr. Mark Cruise, Trevali’s President and CEO stated, “Trevali’s new investment demonstrates our ongoing commitment to the future of the Caribou Mine and operations in the Bathurst region of New Brunswick,” adding that “The efficiencies realized through this initiative. . .form a pathway for the Company’s long-term, multi-cycle vision for the Bathurst Mining Camp.”

Analyst Joseph Gallucci of Dundee Capital Partners stated in a Feb. 1 research report that “moving to an owner-operator model is a positive move for TV. . .investing in their own fleet and moving away from contract mining should lead to cost savings at the mining operation.” He also stated that replacing the current mining equipment “with new machinery and improved technology should lead to better operational efficiencies as well.”

Gallucci noted that with “Caribou online and cash flow positive, we believe TV is in an excellent position to capture strong zinc fundamentals. Our view is that a majority of zinc development plays will not be in production to catch the cycle, either due to permitting or funding obstacles (or both).” He names Trevali as a top pick on TV’s zinc leverage “based on current production as well as short-term organic growth.”

BMO Capital Markets initiated coverage on Trevali on Feb. 1, rating the company as an “Outperform.” Analyst Alex Terentiew wrote, “Over the past seven years, Trevali has worked to put its Santander (H2/13) and Caribou (2015) mines into production, maintaining its objective of remaining a zinc-focused miner, providing investors with exposure to a rise in zinc prices that it expected to materialize. . .it was not until the H2/16 that zinc prices notably began to improve, positioning current shareholders to participate in a significant rise in cash flow. We believe Trevali is just starting its operating and financial turnaround and investors will be rewarded by accumulating shares in the company.”

Terentiew noted that Trevali intends to update resource estimates for both of its mines in Q1/17, “incorporating exploration results and actual operating experience to its estimates, and may declare reserves, which we would view as a positive catalyst.”

He added that “with zinc accounting for ~70% of the company’s sales, it is the leader in zinc exposure among its covered peers.” As the price of zinc improved, “mining operations aligned with the zinc price, and cash flow began to improve. We expect significant and rapid improvement in Trevali’s balance sheet over the remainder of 2017, with Trevali turning net cash positive in Q3/17,” Terentiew concluded.

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Disclosure:
1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Trevali Mining Corp. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
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 families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.

Additional Disclosures for this Content

( Companies Mentioned: TV:TSX; TV:BVL; TREVF:OTCQX,
)

But What About that ‘Big, Ugly, Red Candle’?

GDXJ Chart

Precious metals expert Michael Ballanger discusses why technical analysis does not work in the precious metals arena.

I have a great number of friends that pride themselves on being “technical analysts” and many of them are actually very good, especially the ones that are students of market history and even more so the ones that are “old” and by that, I mean “older than me.” I love the guys that can tell you what happened in the fall of 1987 and recite off the top of their head that intraday high and intraday low of Tuesday October 20, 1987, when the Dow Jones had its first 500-point intraday swing, especially when they can tell you what they had for lunch that day.

Most impressive, though, are those analysts that will make a technical assessment and state categorically that the next move will be “up” or it will be “down” and that brings me to the ones that I detest—the “wafflers,” the ones that tell you that the next direction is up unless we get a breakdown through point B in which event the next direction will be down. You know them; they fire up a chart of weekly gold prices and paste arrows on the “big, ugly, red candle” that now MIGHT be pointing to a down market UNLESS gold rises and NEGATES the signal. The wafflers are the types of market forecasters that give race track touts are good name; they are constantly being drawn into these traps that are set by the bullion banks and their legion of tape manipulators and in doing so, they take their ovine subscribers with them.

Below is the chart of the candle that was supposed to send shivers through the hearts of the gold bulls and, as you can see, it was precisely the “fake-out” that I wrote about last week, the type of tape-painting exercise that these amateur technical “analysts” fail to decipher, because in the end, technical analysis simply does not work with any degree of reliability in the precious metals arena because the interventionalists read those same charts and backed by central bank financial muscle, they will slam anything that the sheep will act upon and especially “big, ugly, red candles.”

I posted the chart above on January 29th.

Here is what I wrote on January 27th:

“I took advantage of the weakness on Thursday morning to add to the GDXJ under $36 and added a spec position in the Feb $35 calls at $2.45 with the thinking that that “big, ugly red candle” is one big, ugly, red FAKE-OUT planted by the Commercials to accelerate selling volume into which they will continue to reduce their still-large short position (126,374 contracts) such that by Wednesday, the HUI and their junior brethren (GDXJ) have continued their advance.”

I told you that I was going to take advantage of that signal and BUY the GDXJ (VanEck Vectors Junior Gold Miners ETF)vFeb $35 calls at $2.40 and I did and although I have been trading them, I exited the position today with the GDXJ up over $7.00 from the “big, ugly, red candle” bottom on Feb. 1 and got a print at $7.00 to close out the position. The shares I bought at $35.63 are now comfortably ahead but I also exited the position at $41.50 and will remain sidelined due to an RSI (relative strength index) screaming into the 70s where we have seen just too many trading tops for my liking. For the record, now that the chart shows a clear TECHNICAL BREAKOUT above the 200-dma, I have used that as an excuse to get ahead of the bullion bank heathens that are going to lure in all of that guru’s subscribers that waited for a week to enter the market and now that they have, the Cretins will pounce. With the RSI above 70, the stage is set for a reversal.

The big news for today was the performance of my newest holding, a fascinating Angolan diamond project that while certainly not for the faint of heart being from West Africa, the market cap of Gem International Resources Inc. (GI:TSX.V)(C$.11) at a fully diluted $8m gives this sparkler a real kick at a 10–20 bagger. Located 20km south of the fourth largest diamond mine in the world, it is a compelling project with production estimated to begin from alluvial mining in 2017 and exploration of some thirty-two subterranean targets believed to be kimberlite pipes to commence shortly thereafter. It is a complicated deal but one that allows substantial upside for all shareholders because while there is always risk while dealing in the Dark Continent, having the Angolan government as your partner removes a great deal of uncertainty in terms of permits, environmental and community relations. The shares traded up to a multi-month high today on big volume and appear poised for a further advance.

Gem International Resources

Things seem to be normalizing these days as spouse and dog are now talking to me again. Since taking the pledge of cranberry tea and mango coconut spritzers on January 1, the two other inhabitants of this house are finding themselves lured into an odd sense of complacency where sudden noises from snowmobiles screaming across lovely Lake Scugog send them both scurrying under beds. I am sure they secretly await the moment where a treasured framed photo of old Auntie Gertrude goes sailing across the room or a quote machine is found hissing in a snow bank, the steam rising off and into the woods. Alas, no such unpardonable occurrences will return to this humble abode as long as gold and silver are left to their own devices and away from the malodorous, muddling hands of the bankster vermin. And that is precisely why my partner vacuums while watching BNN and how Fido has learned to read a quote screen.

After all, forewarned is forearmed.

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.

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Michael Ballanger: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. My company Bonaventure Explorations Limited owns 1,000,000 warrants at $0.10. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: Gem International Resources Inc. My company has a financial relationship with the following companies mentioned in this article: Gem International Resources Inc. 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 sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. 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.
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 families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

All charts and images courtesy of Michael Ballanger.

( Companies Mentioned: GI;TSX.V,
)

Major Banks Are Now Bullish for the First Time in Close to a Decade

Commodity Prices

Chinese and European economic activities are finally showing signs of strength, and in 2017, any severe corrections should be viewed as opportunities to position more strategically for long-term gains, says Lior Gantz, editor of Wealth Research Group.

Not only have commodities finished 2016 strongly, but the specific outperformers are those that indicate that we’re going to see a new supercycle, and they have flashed a clear buy signal.

Source: U.S. Global Investors

Copper, iron ore, and crude oil are all up big since Election Day, and it’s just the temporary “Trump effect” – it’s backed by a lot of undisputable financial data that Wealth Research Group tracks.

Global Manufacturing
Source: U.S. Global Investors

Since it is the quantity of minerals that is rising, ore processors, which small-mining operations rely on for services, will do very well.

In fact, Peru, the world’s sixth largest gold producing nation, is now undergoing a revolution in this sector, and there are only two companies that have formalized legally to take advantage of this situation.

Wealth Research Group sees how this company could soar higher in the next three to five years, since it has a brilliant management team and an aggressive growth plan.

The last time so many global factors came together, commodity prices rose by close to 800%, and select mining shares created a new class of millionaires.

S&P Metals and Mining Index
Source: Palm Beach Research Group

Back in 2003–2008, when China was creating infrastructure mega-plans, the last commodity supercycle occurred. Now, it’s China, Europe, and the U.S., together with India, Russia, and many South and Central American countries, all building their foundations for the 21st century at the same time. As you can see, we have plenty of upside.

High inflation rates and low interest rates are making high-yield investments close to impossible, and Wealth Research Group profiled two companies in 2016 that yield 8.4%, a requirement to be called a High-Yield Master. Both are up double-digits in three months, and including dividends, they have already returned close to 18.43% on average.

I spent the past week analyzing 53 companies that yield over 7.2% in dividends and have direct upside potential from commodities, and I found one company to own for the long-term.

This is part of the High-Yield Stocks asset allocation model of the 2017 Global Wealth Portfolio, and if you are approaching retirement, companies like this are extremely rare to find.

These inflationary trends are creating a set-up for gold and silver as well.

Currency depreciation
Source: U.S. Global Investors

It is already a fact that no fiat currency has held its status this century versus gold, and there is absolutely no reason to expect that any will in the future.

We own physical gold and silver because governments steal our wealth using currency printing. Gold has had a 2% annual increase in production this past century, but currencies have been printed at a much faster pace.

Real Assets at All-Time Lows

There is absolutely no question that this chart shows the 36-year downtrend in real assets has approached exhaustion, and aligning with higher mineral prices is the most sensible and contrarian move to make, while 99% of investors are still hypnotized and following the old paradigm.

Another sector, which finding a viable company in is a rare occasion, is marijuana.

I personally think that this sector could be 2017’s highest gainer, but there are countless companies that are burning cash, and only a select few that will actually be profitable.

2017 could prove to be a pivotal year for marijuana legalization.

Lior Gantz, an editor of Wealth Research Group, has built and runs numerous successful businesses and has traveled to over 30 countries in the past decade in pursuit of thrills and opportunities, gaining valuable knowledge and experience. He is an advocate of meticulous risk management, balanced asset allocation and proper position sizing. As a deep-value investor, Gantz loves researching businesses that are off the radar and completely unknown to most financial publications.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosures:
1) Statements and opinions expressed are the opinions of Lior Gantz and not of Streetwise Reports or its officers. Lior Gantz is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Lior Gantz 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 families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.

Charts provided by Wealth Research Group

Gold-Silver | Pre Super Bowl Suggested Reading

Jack Chan: This Past Week in Gold

chanhui12-4

Technical analyst Jack Chan charts the latest moves in the gold and silver markets.

Our proprietary cycle indicator is up.

The gold sector is on a long-term buy signal. Long-term signals can last for months and years and are more suitable for investors holding for long term.

chanhui22-4
The gold sector is on a short-term buy signal. Short-term signals can last for days and weeks, and are more suitable for traders.

chanfcx2-4
FCX: We are long from 10.64; holding for long-term gains.

chansilver2-4
Silver is on a long-term buy signal.

chanslv2-4
SLV is on a short-term buy signal, and short-term signals can last for days to weeks, more suitable for traders.

Summary
The gold sector is on major buy signal. The cycle is up. I am holding FCX for long-term gains.

Jack Chan is the editor of simply profits at www.simplyprofits.org, established in 2006. Chan bought his first mining stock, Hoko Exploration, in 1979, and has been active in the markets for the past 37 years. Technical analysis has helped him filter out the noise and focus on the when, and leave the why to the fundamental analysts. His proprietary trading models have enabled him to identify the NASDAQ top in 2000, the new gold bull market in 2001, the stock market top in 2007, and the U.S. dollar bottom in 2011.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Jack Chan: I, or members of my immediate household or family, own puts on the following companies mentioned in this article: Freeport-McMoRan Inc. 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) Jack Chan: We do not offer predictions or forecasts for the markets. What you see here is our simple trading model, which provides us the signals and set-ups to be either long, short, or in cash at any given time. Entry points and stops are provided in real time to subscribers, therefore, this update may not reflect our current positions in the markets. Trade at your own discretion. We also provide coverage to the major indexes and oil sector.
3) 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.

Charts courtesy of Jack Chan

Pershing Gold Is Laser-Focused on Restarting Relief Canyon

Pershing Gold has been going full speed ahead to advance the Relief Canyon mine in Nevada, leading some analysts to speculate that production could begin by the end of the year.

Pershing Gold Corp. (PGLC:NASDAQ; PGLC:TSX) has been working swiftly to advance the Relief Canyon project in Pershing County, Nevada. The company announced that its focus is on the Prefeasibility Study (PFS) and restart of the mine. Stephen D. Alfers, Pershing’s president, CEO and executive chairman, stated, “Early this year the Company plans to publish a third-party Pre-Feasibility Study on Relief Canyon. This study is expected to continue to bolster the confidence in the Relief Canyon project.”

According to the company, “the PFS is a key step to allow the Company to define reserves at Relief Canyon under Canadian NI 43-101 and is expected to provide a higher degree of confidence in the Relief Canyon project.”

Some of the key components of the PFS are economic analyses, including a “detailed capital and operating cost comparison of contract versus self-mining” and a “detailed capital and operating cost comparison of truck stacking versus conveyor stacking of crushed and agglomerated ore on the leach pad.” CEO Alfers said that the company’s main focus for 2017 “will be re-starting the Relief Canyon mine.”

Analyst Heiko Ihle of Rodman & Renshaw noted in a Jan. 10 research report that Pershing continues to “aggressively advance the Relief Canyon Project, which we feel should enter production during 4Q17. We continue to expect the firm to release a Pre-Feasibility Study (PFS) on the project during 1Q17, and think the economic analysis should pave the way towards a positive production decision shortly thereafter.”

Ihle added that “we do not foresee a prolonged construction period and continue to believe the project could enter production in later this year. . .the odds of a positive production decision are likely at this stage, and we feel the release of a positive PFS should serve as a near-term de-risking event for the firm.”

Pershing is moving ahead with permitting. The Nevada Division of Environmental Protection (NDEP) “issued the Reclamation Permit for Phase I expansion of the Relief Canyon Mine. With the receipt of this permit, along with the Bureau of Land Management (“BLM”) approval of the Relief Canyon Mine Expansion announced in August of 2016, Pershing Gold has received the principal permits to initiate the restart and expansion of the Relief Canyon Mine.”

Bhakti Pavani, analyst with Euro Pacific Capital, noted in her Jan. 10 company update that “this is one of the key permits as it allows the Company to restart production and expansion of the Relief Canyon mine.”

The company is awaiting water pollution control and air quality permits. The company stated that on Dec. 21, 2016, “NDEP issued a public notice stating that they had made the tentative decision to approve Pershing Gold’s application to modify and renew the current Water Pollution Control Permit,” and that it expects that the “NDEP will issue the air quality permits in the first quarter of 2017.”

Pavani noted that Pershing completed on Dec. 8 “an underwritten equity offering raising gross proceeds of $7.5MM (~$7MM net proceeds).” In addition, Pershing “entered into a $20 million non-binding credit facility with Sprott Resource Lending. . .the equity financing and an availability of a credit facility have not only improved PGLC’s liquidity but also allow a seamless transition of an exploration project into production.”

The elements seem to be falling into place for moving quickly into production. Ihle concluded that “we think Relief Canyon is primed for production and expect the project to be one of, if not the next project to enter production in Nevada.”

Read what other experts are saying about:

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Disclosure:
1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Pershing Gold Corp. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
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 families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.

Additional Disclosures for this Content

( Companies Mentioned: PGLC:NASDAQ; PGLC:TSX,
)

Victoria Gold’s Eagle Is Getting Ready to Soar

Victoria Gold’s Eagle project in the Yukon moved closer to production with the announcement of a debt facility to fund construction.

Victoria Gold Corp. (VIT:TSX.V) announced on Jan. 24 that BNP Paribas has been appointed to arrange up to US$220 million of senior, secured project debt for the Eagle gold project. John McConnell, Victoria’s president and CEO, stated, “This facility is expected to be the foundation of the financing package that will fund the Eagle Project through construction and into production.”

Chris Thompson, an analyst with Raymond James, noted in a Jan. 25 report that the financing “satisfies ~80% of the estimated C$370 mln initial Capex required to build Eagle. Whilst VIT has ~C$66 mln in cash on its balance sheet, we see additional funds being raised via equity financing.” He also stated that “Eagle is shovel-ready, fully permitted and enjoys the support of local First Nations. Further, while located in Yukon (some view as infrastructural challenged), we see Eagle as being well served by current (camp, road, water) and future (power) infrastructure.”

“‘With a global resource of 4.4 mln in-situ oz (2.7 mln oz in reserve), Eagle is capable of delivering a +200 koz/year production profile + 11 year mine –attractive to potential acquirers (we think) looking to add low cost North American production ounces,” stated Thompson.

That positive sentiment was echoed by Richard Gray of Cormark Securities, who noted in a Jan. 26 report that the appointment of the lead arranger is a “good first step for Victoria in its efforts to fully fund the construction costs of the C$370 MM Eagle project. . .we expect the remaining C$60-100 MM of financing required will likely be some combination of equity and/or stream.”

Gray also wrote that Eagle “continues to be well advanced with an invaluable suite of infrastructure already in place (or easily completed). The project is accessed via an existing year-round road connecting to the Silver Trail Highway. Grid power currently runs along the highway to support grid power via a spur line to be constructed along the existing access road. Access is further improved with a 1,400m airstrip located in Mayo approximately 85km by road from the project site and there is an existing 100-person camp is at site.”

Victoria also announced on Jan. 19 a $6.2 million exploration program in 2017 on the Dublin Gulch property. Gray commented that “several high priority exploration targets have been identified on the large Dublin Gulch Block that show potential to add to the current 4.0 MM resource at Eagle and could demonstrate to investors, and possible acquirers, that there is upside beyond just what has been drilled at the Eagle and Olive-Shamrock zones.”

Gray concluded that Victoria is an “ideal opportunity for risk tolerant, long-term gold investors looking for a de-risked gold developer with assets located Canada. The shares currently trade at only 0.60x NAV, indicating significant upside on a re-rating or a takeout.”

Read what other experts are saying about:

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Victoria Gold Corp. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
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 families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.

( Companies Mentioned: VIT:TSX.V,
)

Bonterra Hits Big Gold Numbers

Bob Moriarty of 321 Gold provides an update on BonTerra Resources after the release of high-grade drill results.

I went to an ice hockey game once in Vancouver. That was enough for me. My host kept telling me what was going on but I understood about as much about ice hockey at the end of the match as I do about cricket. Though I was told as a young man that if I ever wanted to chat with a pretty English or Australian girl, just ask about the rules of cricket. They can go on for hours and you get the benefit of attention from a pretty girl.

I came across a quote from Wayne Gretzky that seems to me to pertain perfectly to investing in mining stocks. I’m told every ice hockey fan knows just who he is. Reportedly he said, “I skate to where the puck is going to be, not where it has been.”

I may be dense or something but isn’t that exactly the point? You want to be where things are going to be, not where they were. But I have heard a lot of moaning from investors who invest using their rear view mirror instead of looking forward.

I wrote about BonTerra Resources Inc. (BTR:TSX.V, BONXF: US, 9BR:FSE) back in September. The shares were $0.405 apiece back then and BonTerra was embarking on an aggressive drill campaign on their Gladiator project in Quebec the same time as gold was embarking on an aggressive correction.

BonTerra hit bonanza numbers including 70.0 grams over 5.5 meters in hole 39 and 12.4 g/t gold over 4.0 meters in hole 38. Those are brilliant results and extended the strike length by 250 meters to 1200 meters and extended the depth from 200 meters to 650 meters. On December 8th the company announced another brilliant hole of 64.3 g/t gold over 2 meters in hole 40 and solid 8.7 g/t results over 3 meters in hole 42.

If gold hadn’t been in a correction that few saw coming those results could have resulted in a doubling of the stock. I was pounding the table and telling readers that this was the opportunity of a lifetime and I was buying at $0.22. Well, if you are still looking at where the puck is instead of where it is going, you are missing a lot of opportunity. As I said several times, companies don’t report much of anything from the 15th of December until the middle of January because punters are too busy swilling the Eggnog and searching for pretty girls standing under mistletoe.

Well, BonTerra has done it yet again. On January 31st the company reported a deep hole at Gladiator including 5.0 meters at 20.7 g/t gold in hole 17-01 and 8.5 meters of 15.7 g/t gold in a different zone. Those results are brilliant. As of now two drill rigs are turning and the company is fixing to bring in another rig when ice conditions allow. Plans call for an additional 20,000 meters of drilling at Gladiator in 2017.

The Gladiator project already has a 43-101 resource of 273,000 ounces of gold at a 9.37 g/t grade. All these great holes are going to increase those numbers a lot. The company expects an expanded resource to be released in the 2nd or 3rd quarter. They have two million in the till and are well cashed up until mid-year.

Their other gold project located 200 km to the southwest is named the Larder Lake project and already has a 2011 historic resource of about 960,000 ounces at just over 5 g/t. With the additional drilling the company has completed, they expect to release the new 43-101 in 2nd quarter 2017. This resource will include results from the 25,000 meters of drilling done by Goldfields that wasn’t factored into the 2011 resource.

Investing isn’t rocket science. We are in a gold bull market. I was one of the early ones to call it and to call for the end of the August–December correction. In a gold bull market you can expect shares to go up. You can expect exceptional projects to drive their shares much higher. Both Gladiator and Larder Lake are exceptional. The company will continue to release results over the next few week and one day investors will start to look at where the puck is going rather than where it is.

BonTerra is an advertiser. I am biased. I have not participated in any private placements with them but I started to accumulate shares in the company in December at $0.22. Please be responsible for your own due diligence.

Bonterra Resources
BTR-V $0.275 (Feb. 01, 2017)
BONXF OTCBB 91.3 million shares
Bonterra Resources website

Bob and Barb Moriarty brought 321gold.com to the Internet almost 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: BonTerra Resources. BonTerra Resources is an advertiser on 321 Gold. 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. Streetwise Reports does not accept stock in exchange for its services. 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.
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 families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview/article until after it publishes.

( Companies Mentioned: BTR:TSX.V, BONXF: US, 9BR:FSE,
)