Will 2021 be a golden year for gold investors?

With global equity markets looking frothy, the COVID-19 pandemic still raging on, and reserve banks continuing to print record amounts of money; gold looks to be a good place to park some of 2020’s profits in 2021. Gold usually does well in times of turbulence and can be a good hedge against a weaker US dollar and inflation. Also gold performs best when rates are low and right now we have historic low US interest rates.

Gold 25 year price graph – Gold is currently USD 1,923/oz but is forecast to go higher in 2021

Source: Trading Economics

Several of the large US investment banks are bullish on gold. As a reminder, last year Bank of America made their forecast for gold to hit US$3,000/oz by October 2021. Goldman Sachs forecast gold prices to climb to an average $2,300 an ounce in 2021.

If the above forecasts are anywhere near being correct then the gold miners should have an excellent year in 2021. Against this we may see equities struggle in 2021 after recently reaching an all time high which saw the S&P 500 gain 16.26% in 2020 (18.4% if dividends of 2.14% are included).

Will 2021 be a golden year? 

One of the best ways to make money in gold is to pick the quality and improving gold junior stocks in a year when gold prices are moving higher.

Below is a brief summary of the gold miners we are following at InvestorIntel.

  • Angkor Resources Corp. (TSXV: ANK) is a leading Canadian gold, base metals, oil and gas explorer in Cambodia. Angkor works as a project generator as they control a very large land package. To date Angkor and partners have been having some success as I discussed recently here.
  • Eclipse Gold Mining Corporation (TSXV: EGLD) is exploring the district-scale Hercules gold property within Nevada’s Walker Lane trend, 1 hour from Reno in Nevada, USA. The property appears to have all the characteristics of a large, low-sulphidation epithermal gold system.
  • Euro Sun Mining Inc. (TSX: ESM) is focused on the exploration and development of its 100%-owned Rovina Valley gold and copper project located in west-central Romania, which hosts the second largest gold deposit in Europe.
  • Freeman Gold Corp. (CSE: FMAN) is focused on the development of its 100% owned Lemhi Gold property in Idaho, USA. Recent drilling appears to have been successful with visible gold observed in 17 of the 26 logged holes to date.
  • Granada Gold Mine Inc. (TSXV: GGM) is continuing to develop the Granada Gold Property near Rouyn-Noranda, Quebec, adjacent to the famous Cadillac gold trend. Successfully drilling the past years means Granada is looking to soon upgrade their resource (M&I 762,000 ounces of gold @ 1.06 g/t Au, plus Inferred 455,000 ounces of gold @ 2.04 g/t Au). Granada is considering doing a very low CapEx starter pit for a rolling start to production. You can read more on that here.
  • Quebec Precious Metals Corporation (TSXV: QPM | OTCQB: CJCFF) is a gold explorer with a large land position in the highly-prospective Eeyou Istchee James Bay territory, Quebec, Canada. The Company reported some excellent drill results last year including 80 m at 1.10 g/t Au at La Pointe Extension and 42 m at 1.31 g/t Au.
  • Signature Resources Ltd. (TSXV: SGU | OTCQB: SGGTF) is an explorer at their Lingman Lake gold property which covers 12,148 hectares in northwestern Ontario, Canada. They do have a historical resource (not NI 43-101 compliant) of 234,684 oz of gold (1,063,904 tonnes grading 6.86 g/t). You can read more about Signature Resources here.
  • Treasury Metals Inc. (TSX: TML | OTCQX: TSRMF) owns the Goliath Gold Project and Goldlund Gold Project located in Northwestern Ontario, Canada. Treasury plans on the initial development of an open pit gold mine with subsequent underground operations.
  • Troilus Gold Corp. (TSX: TLG | OTCQB: CHXMF) is focused on the mineral expansion and potential mine re-start of the former gold and copper Troilus Mine, located within the Frotêt-Evans Greenstone Belt in Quebec, Canada. The Troilus Property encompasses 107,326 hectare and is largely unexplored. The Troilus Project now has an Indicated Resource of 4.96m ounces of contained AuEq @ 0.87g/t AuEq and an Inferred Resource of 3.15m ounces of contained AuEq @ 0.84g/t AuEq. The August 2020 PEA was very impressive, with a 22 year mine life, 220,000-246,000 gold ounces produced pa, resulting in a post-tax NPV5% of US$576m (22% IRR), based on a gold price of US$1,475/Oz. Initial CapEx was estimated to be US$333m and AISCs of US$1,051/Oz Au.
  • West Red Lake Gold Mines Inc. (CSE: RLG | OTCQB: RLGMF) is focused on gold exploration and development in the prolific Red Lake Gold District of northwest Ontario, Canada. West Red Lake has a 3,100 hectare property with a 12 km strike length that contains three former gold mines. In total they have NI 43-101 reported 1.087 million inferred ounces of high grade gold (7.57 gpt) open at depth.

During January I will be writing several in depth articles covering the gold sector and several of the above gold stocks.

Stay tuned and wishing you a healthy and prosperous 2021.

Eight gold plays that may surprise you in 2020 – Part 2

Legendary investor and billionaire Ray Dalio recently stated: “The world has gone mad and the system is broken.” My personal favourite, renowned investor Jim Rogers recently stated: “Buy gold coins and silver coins as global crisis is coming.” Other big names in mining such as Frank Guistra, Rick Rule, and Eric Sprott are all saying we are likely about to begin a gold bull run. In September 2019 Frank Guistra stated: “This is going to be an explosive gold market”, heading towards US$1,900/oz. If that happens gold would set an all time record high breaking the past high of ~$1,890 an ounce in 2011. Gold mining CEO Rob McEwen thinks gold is going much higher, as high as US$5,000/oz. There are even others that have long been forecasting gold to go as high as US$10,000/oz.

Given the world’s enormous debt and political problems right now, it would certainly be wise for investors to hedge some of that risk by owning some gold stocks.

In Part 1 we looked at four small cap gold stocks, 2 in production, and 2 that are just a few years away from production. In Part 2 we look at three gold stocks, with good exploration potential.

Gold price 21 year history

Granada Gold Mines Inc. – Market cap C$8 million

Granada Gold Mine Inc. (TSXV: GGM) is a Canadian junior mining and exploration company with gold and silver properties in Quebec and Ontario. The Company’s current focus is directed towards the development and continued exploration of the Granada Property situated in the heart of the famous Abitibi Greenstone Belt and along the prolific “Cadillac Trend”. The Cadillac Break Trend has produced >75 million ounces of gold in the past 100 years.

Recent drill results have been promising including from surface 7.67 g/t over 15 meters. When discussing the Companies recent drill results President and CEO Frank Basa stated: “These preliminary results highlight the potential of near-surface, underground high-grade potential and are in line with historic production grades of 8 to 10 grams per tonne gold when it was mined in the thirties from the two shafts.”

With such a small market cap and promising high grade drill results investors will need to be quick or risk missing out. Investors can learn more here.

Granada Gold Mines tenements sit along the prolific Cadillac Break Trend

West Red Lake Gold Mines – Market cap C$6 million

West Red Lake Gold Mines Inc. (CSE: RLG | OTCQB: RLGMF) is focused on gold exploration and development in the prolific Red Lake Gold District of Northwestern Ontario, Canada. The district is host to some of the richest gold deposits in the world and has produced 30 million ounces of gold from high grade zones. West Red Lake’s 3,100 hectare property has a 12 km strike length and 3 former gold mines (Rowan Mine, Red Summit Mine, Mount Jamie Mine), and contains 1.1 million inferred ounces of high grade gold (7.57g/t) which remain open at depth.

The Mount Jamie Mine and Red Summit Mine properties are 100% owned by the Company, and the Rowan Mine property is held in a 60%-owned joint venture with Goldcorp Inc. (40%).

Exceptionally low market cap given the 1.1 million oz inferred resource, high grade, and exploration potential. Investors can learn more here.

West Red Lake Gold Mines 3 main projects and tenements (shown in red)

Signature Resources Ltd. – Market cap C$4 million

Signature Resources Ltd. (TSXV: SGU |OTCQB: SGGTF) is a Canadian gold exploration company with advanced and early exploration assets. Their core asset encompasses the Lingman Lake Gold Mine in northwestern Ontario, Canada. Signature Resources has a historic resource estimate of 234,648 oz of gold, over an area of 9,896.8 hectares. The Company’s other assets include two new early exploration projects: Lingside West and Lingside East. All three projects are located within the Lingman Lake greenstone belt. Signature is poised to advance and expand these projects centering on targeted diamond drilling of the high-grade gold zones.

With such a tiny market cap any strong drill results could easily double or triple the stock from here. Investors can learn more here.

Signature Resources Lingman Lake Gold Mine location map

In this series (click here for Part I), I have covered eight gold companies, all with enormous potential. The experts all agree a gold bull run is coming. The question is what stocks to buy. Investors should be reminded that generally risk and reward gets higher in smaller companies. As we approach the festive season wouldn’t it be nice to have a few big wins in the gold sector, especially as insurance in this current debt-ridden world we live in.

Eight gold plays that may surprise you in 2020 – Part 1

In this two-part series, Part 1 will cover 4 promising small-cap gold miners, and Part 2 will cover 4 promising micro-cap gold juniors.

The gold price is still well below the previous peak and the world is saddled with enormous debts and growing geopolitical conflicts, including the never-ending US-China trade war. Should the gold price remain strong or even strengthen further then all these stocks have the potential to do very well.

Gold price 21 year history 

Alkane Resources Ltd. – Market cap A$306 million

Alkane Resources Ltd. (ASX: ALK | OTCQX: ANLKY) is a gold production company with multi-commodity exploration and development projects predominantly in the Central West region of NSW, Australia. The Tomingley Project is expected to produce about 30,000 to 35,000 ounces of gold for FY20 at an AISC of A$1,250 to A$1,400 per ounce, in line with the recent move to underground mining. Alkane is also ramping up nearby regional gold activity. This year Alkane identified an exploration gold corridor between Tomingley and Peak Hill in New South Wales. The three prospects of San Antonio, Roswell and El Paso received encouraging results suggesting a real potential for mine development in the area. A 60,000-metre resource definition drilling program on the San Antonio and Roswell prospects is in progress. Alkane is also continuing gold exploration more broadly at the Northern Molong Porphyry Prospect, 35 km east of Dubbo. Significant porphyry style gold-copper has been discovered at the Boda project.

The Company is also well known for its rare earths project known as the Dubbo Project which has a potential mine life of 70+ years.

Investors can read more about Alkane Resources’ gold projects here.

Every year finding new gold discoveries is getting harder and harder

Harte Gold Corp. – Market cap C$128 million

Harte Gold Corp. (TSX: HRT) commenced gold production in early 2019 at their wholly owned Sugar Zone underground mine in White River Ontario, Canada. The current Resource estimate is 1,108,000 contained gold ounces @8.12g/t Indicated and 558,00 contained gold ounces @5.88g/t Inferred. There is also excellent exploration upside with a 30 km strike potential with only 5km so far explored, over a massive 79,335 hectares land package.

2019 has been a challenging year for Harte with several production ramp issues resulting in high All-In-Sustaining-Costs (AISC) for now. Full-year 2019 guidance has been adjusted to 24,000 – 26,000 ounces at an AISC of US$2,000 to US$2,200 per ounce. Naturally, the market was spooked by this and the stock fell heavily as a result.

To urgently rectify the problems a new CEO (Sam Coetzer) and Chief Operating Officer (Martin Raffield) have recently been appointed. Both have a long and excellent mining track record. Looking ahead the new management team combined with a push towards the higher grade gold should result in AISC falling towards the previously forecast AISC of US$845/oz from the April 2019 Feasibility Study. As production and grade improve further economies of scale will kick in, leading to what should be a very profitable operation once ramped to the planned 61,000 Au ounces pa over an initial 14 year mine life.

Investors can read more about Harte Gold here.

Eastmain Resources Inc. – Market cap C$27 million

Eastmain Resources Inc. (TSX: ER | OTCQX: EANRF) is a Canadian gold exploration and development company focused on the James Bay area, Quebec, Canada. Eastmain has several gold projects; however, their flagship is the advanced Eau Claire Project with an open pit and underground M&I Resource estimate of 853,000 oz Au, grading 6.18 g/t.

Eastmain’s district-scale land package covers a total of 109,000 hectares within the James Bay gold camp. The Company is actively focused on two of its three key properties: The new Percival discovery and the Eau Claire Project in Clearwater, and the Eleonore South Joint Venture. In total, Eastmain has a pipeline of 11 exploration projects ranging from early exploration to pre-development.

Eastmain Resources has the potential to be a gold producer from 2022/23, once start-up CapEx funding is secured.

Investors can read more about Eastmain Resources here.

Euro Sun Mining Inc. – Market cap C$21 million

Euro Sun Mining Inc. (TSX: ESM) is advancing its 100%-owned Rovina Valley Project, located in west-central Romania. It is the second-largest undeveloped gold deposit in Europe. Euro Sun has an M&I resource of 7.05 million gold ounces and 1.39 billion copper pounds at their Rovina Valley Project. In addition, Euro Sun has recently discovered four new gold-copper porphyry targets, with a cluster of three porphyry targets just 1.5 km apart from each other, only 6 km east from their existing Project.

The February 2019 PEA was based on just 29% of the Rovina Valley resource, and on 108,000 oz pa of gold production at an All-In Sustaining-Costs (AISC) estimate of US$752/oz. The Pre-Tax NPV5% was $218.1 million, with an IRR of 15.4% at $1,325/oz gold and $3.10/lb copper, over a 12-year mine life. This should be substantially improved in the BFS in mid 2020 if the mine life can be significantly extended.

The grade is not high but with large near surface gold-copper porphyry deposits, expect excellent upside potential from this under the radar gold junior. Euro Sun is a potential gold producer (subject to project financing) by 2022/23.

Investors can read more about Euro Sun Mining Inc. here.

Finding gold was never easy, but finding it today is even harder. Global gold reserves and grades are declining, with many suggesting we have now reached peak gold production. This can only result in one thing – Gold will become scarcer and more valuable.

Next, in Part two I will look at some higher risk/higher reward gold micro-cap juniors.