Source: Maurice Jackson for Streetwise Reports 04/24/2018
Gerardo Del Real, editor of Resource Stock Digest, sits down with Maurice Jackson of Proven and Probable to discuss some of his resource picks.
Maurice Jackson: Gerardo, please share your background and tell us about Resource Stock Digest.
Gerardo D.: I’ve been involved in the resource space in one way or another for just a little over a decade, about 11 years now. And so it’s truly a passion of mine, and Resource Stock Digest was launched a couple of years ago. It’s absolutely free, and we really take pride in providing quality exclusive content. So every week, if you go to the site, you can count on exclusive interviews with analysts, CEOs, geologists, and some of the top minds in the junior resource space.
Maurice Jackson: One of the virtues that I enjoy about this industry is that it is people driven. You and I are friendly competitors and have a mutual respect for one another, because our ultimate goal is to share the value proposition for our subscribers. So that being said, I want get your take on the precious metals market. Are you currently buying? And if so, what and why?
Gerardo D.: Maurice, I have been as aggressive in the junior space this year as I have been the past seven or eight years, and allow me to explain why. I believe that when it comes to the gold price, we need to breech that $1,365 level, and then get through the $1,374 level before we see a real breakout. I think once we do that, and we get that $1,400 gold price, we’re going to see some sector rotation, back into the junior resource space, specifically the gold stocks, and so there’s a time to buy and a time to sell, and I’ve been trying to preach for the past year and a half or two, that this is the time to buy. Personally, every month I’m adding the best names with the best teams, at what I feel are absolutely depressed prices. So I view 2016, 2017, and the first part of 2018 as opportunities to really get the pick of the litter per se, and get some of the best names in the portfolio at prices that, I don’t think after this year, we’re going to see again.
Maurice Jackson: Speaking of the best names, let’s discuss some issuers that have your attention at the moment.
Gerardo D.: Let me backtrack a bit and explain my process a bit. I’m big on share structure, I’m big on people. You mentioned this is a people business. It’s a relationship business. It’s not a coincidence that the top 5% of management teams outperform the other 95%. That is not a coincidence. So I’m big on teams, I’m big on share structure. Then, of course, once we get past those two, we can definitely look at assets.
One company in the gold space, in the gold/silver space actually, that I find pretty compelling right now is Almaden Minerals Ltd. (AMM:TSX; AAU:NYSE). It’s run by a gentleman by the name of Morgan Poliquin. He is among the best geologists in the space. Has a track record of making discovery after discovery in eastern Mexico. He and his father, Duane Poliquin, actually pioneered exploration for mineral deposits in that part of Mexico, in eastern Mexico. They have a database that’s about three decades ahead of everybody in the space, and why do I think Almaden is a compelling proposition at these levels?
Well, Almaden had a prefeasibility study on the Ixtaca deposit that outlined an after-tax net present value of about $310 million, and an internal rate of return of 41%. That was using a $1,250 gold price, and $18 an ounce silver, which we’re higher there on the gold price, we’re lower on the silver price, but the market cap is about CA$104 million, and by the way, the company also owns a mill that shaved about $70 million off of the initial capital. And so, you have a $70 million mill, you have a polymetallic deposit, great community support, and it has excellent exploration potential in upside, so that’s a company I think is a bargain at these levels, and one that I continue to buy at these prices.
Maurice Jackson: And equally just as well as Almadex Minerals Ltd. (AMZ:TSX.V), which is basically the same ownership, and coincidentally, Duane was actually one of the pioneers for the Project Generator Model, is that correct?
Gerardo D.: That is absolutely correct.
Maurice Jackson: And Rick Rule’s very high on them. Anyone else?
Gerardo D.: You mentioned Almadex, we can talk about it. The company is at a very important juncture in the company’s history; the company made a discovery in Vera Cruz, Mexico, called the El Cobre Project, and that recently attracted the attention of Newcrest. In exchange for 19.9% of the company, Newcrest invested $19 million I believe in Almadex. Almadex is spinning out the remaining exploration portfolio, and royalty portfolio, which is robust, and creating a new company. So shareholders here at the end of May, will have one share of Almadex, which hosts the El Cobre deposit, which will see significant and aggressive drilling this year, and they’ll spin out that new spin co.
All of the other assets will go into a new company, and believe me, that exploration portfolio should not be underestimated. This is the same thing that happened with Almadex, when Almaden spun out Almadex, and so I think if you look at the history there, it’s a pretty compelling opportunity.
Maurice Jackson: And speaking of that, that ended up being a tenbagger when Almadex was spun out of Almaden. For speculators out there that are looking for a company that’s a good steward of capital in your portfolio, Almaden, Almadex, these are some quality names. How about some …read more