Source: Streetwise Reports 08/23/2018
Rob McEwen, chairman and chief owner of McEwen Mining and former CEO of Goldcorp, speaks to Streetwise Reports about the impact of trade wars on the dollar and precious metals, where he sees the growth in precious metals equities, and how he plans to qualify McEwen Mining for the S&P 500.
The Gold Report: Prices of some commodities have been falling. What are your thoughts on the current commodities market?
Rob McEwen: The commodities market has been adversely impacted by the strong dollar and the discussion of a trade war possibility, which may already be happening. With the economies of America, Europe and Asia picking up, most investors are asking, why buy gold or silver? The dollar is the key. When it starts dropping, we will see the price of gold, silver and all commodities improve.
TGR: What is your sense of that? Do you think that we might be in for a longer period with a stronger dollar?
RM: Many foreign governments and companies borrowed in dollars, thinking the dollar was going lower relative to their own currencies. But the dollar has done the complete opposite. So now, these borrowers of $US are being squeezed as their borrowing costs have risen dramatically. This is creating financial distress in certain corners of the world. At these locations the price of gold has been climbing quickly.
When will we see the gold price going up in America? Look to the fall; that is when investors will turn their attention to some of these developing problems that exist outside of America and consider how it will impact America.
TGR: What about gold equities? Do you see their prices recovering irrespective of the price of gold or are the two looped together?
RM: During the past two months, gold equities have been performing better than bullion. In the past, rallies in the gold equities have been an early signal of an improving gold market. When I look at how well the gold equities have held up relative to the drop in the gold price, I’d say that’s a very positive sign. Also, there’s a seasonality factor to consider. We are entering the fall, which often has been good period for gold and silver.
I’m optimistic about the price right now. It is a good time to be buying. Investors’ sentiment is extremely bearish for gold. So, if you are brave enough to act as a contrarian, it’s time to buy this sector!
TGR: What mining companies are you paying close attention to?
RM: I believe the junior and midtier explorers and developers are going to be the focus of the market. This is where investors will make the largest percentage gains. They have growth in production and resources, whereas, most of the seniors have sold current and future production to pay down their heavy debt loads. So, they have a negative slope on their production profiles where the juniors and the midtiers will have positive growth.
There are a couple of juniors I watch closely. I’m talking my own book though, so I want to caveat emptor:
One, Mawson Resources Ltd. (MAW:TSX; MWSNF:OTCPK; MRY:FSE) is an junior exploration company actively exploring in Finland. It has some very interesting, high-grade gold drill results. Earlier this year, Goldcorp Inc. (G:TSX; GG:NYSE) purchased 12.7% of the company.
Two, Pure Gold Mining Inc. (PGM:TSX.V) is an exploration and development story operating in the prolific the Red Lake district in Ontario, Canada, which is around my old stomping ground with Goldcorp.
Three, Monarques Gold Corp. (TSX-V:MQR) is a small, growing gold producer that has been steadily building its resource and production base in Quebec, Canada. It has been buying growth at attractive prices when few are buying.
Four, B2Gold Corp. (BTG:NYSE; BTO:TSX; B2G:NSX) is a midtier producer with a diversified production base. Its management team has been executing well on its growth strategy and its shares have been performing better than the industry.
Beyond these four companies there are numerous juniors and midtiers with good exploration results and positive low capex development stories that the market is just not paying any attention to. I believe now is the time to be building positions in these companies.
Senior producers such as Goldcorp and Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) are in the market buying. They are stepping over the intermediate-sized companies and going after the development or late-stage exploration companies. Compounding this demand are the intermediate producers that are also looking to buy the same type of companies. For these reasons, I favor the juniors that have interesting exploration stories. I believe this is where your readers have the opportunity to make their biggest gains in the sector, make the biggest returns.
TGR: What do you see happening in mergers and acquisitions (M&A)?
RM: The majority of the senior producers need new resources, need new projects for their production growth pipeline to prop up their share prices. In the past four years they have gutted their exploration departments and budgets as well as selling off mines to reduce their debt and rid themselves of high cost mines. To address these needs the seniors have been buying future production. This trend feels like it is going to accelerate. M&A activity should pick up in the fall.
TGR: Let’s turn to McEwen Mining Inc. (MUX:TSX; MUX:NYSE). Can you bring us up to date on what’s been happening with the company?
RM: There’s been a lot happening. We have three active mines producing gold and silver, we are constructing our fourth and we are finalizing plans for a fifth mine. Our mines are located in the Americas: in Canada, Mexico, Argentina, and our fourth mine is scheduled to begin operations in Nevada in Q1/19.
Here is a quick overview of our operations. In Argentina, we have a 49% interest in the San José mine, an underground gold-silver mine that began production in 2007. …read more
From:: The Gold Report