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By Caroline Simson (August 14, 2024, 10:57 PM EDT) -- The Third Circuit appeared poised to decline jurisdiction over appeals challenging a Delaware judge's decision to send litigation enforcing some $10 million in arbitral awards against a subsidiary of Venezuela's state-owned oil company to federal court in Washington, D. C.
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Have followed Nevada King here through their long running and tedious process of resource extension... leading to their re-thinking of the deposition model...
But, I'd missed that they'd decided to present that historical sequence again, in video form... a bit more organically over the last year... in a series of Youtube vids, starting with Q2 2023 results, here, then with a greatly changed focus here, here and, most recently, here...
And... that's interesting... Taken together it does a credible job of outlining the history... and ongoing focus in exploration... which ends up presenting a great example of what exploration is supposed to be about... explaining why prior operators missed finding the value Nevada King is finding...
But, it carefully avoids focus on time line considerations ? Although it does present the effort in a context with an expectation... which they don't with NFGC... clearly anticipating that there is an exit strategy in a "sale to a major"... suggesting there's also a driver in planning... an unstated expectation in "how long" exploration is intended to continue... before undertaking more purposeful resource development work... as is likely going to be required before "partners" are induced to become participants ?
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Musings on miners... Its worthwhile reconsidering "junior miners" in larger context... and in what "events" suggest is likely next in the current cycle...
I'd suggest that oil is a good proxy, generally, for how things have changed in resources... with oil majors currently focused on buying other producers with well developed production... if they also hold undervalued resources ( see lawsuits vs Chevron acquisition of Hess) Meanwhile, they're not looking... at all... to buy up pure play explorers/finders to buy resources only... that will add "potential" barrels... (or, ounces)... requiring they do the work to develop them ? The Citgo experience... also clearly relevant in context ?
Outliers apparent in Hercules Silver, a few others... TMQ... but... as experience in both Alaska (in oil and mining) and Yukon show... development timelines continue growing longer, and governments more restrictive, not less...
So plans based on "bull market" timelines and rising prices... even if the bull is sustained over the next ten years... aren't necessarily relevant to real ability to get new finds or existing development projects into profitable production... as long as capital remains constrained and thus "expensive". Although a new bull market, in PM's at least, IS likely to be relevant to change occurring in the near future... at least relative to the last ten years of continually tighter capital market constraints ?
In the short term, though... declining stock markets might soon make the problem more acute... while higher prices for gold, silver, have not yet come close to outpacing the parallel increases in costs of mining... That makes an effort in re-sorting picks now... based on those that are well funded for the next year vs those that will need to find more $ in a tough market... useful to prioritize... ie., "do it now"...with the heft of the checkbook weighted more than "the rest" on offer.
Hugely undervalued PGEZF's deal with Glencore... at current prices, not hugely advantageous to current shareholders... but... what's to be done with near zero liquidity in money flowing into mining ? A major concern they're downplaying the relevance of recent change in understanding the geology... in relation to its meaning re gold values... as gold gives VASTLY better value in the market, now, than all the other metals... and the value of "just the gold" at Stillwater, is larger than the current market cap... IF they'll bother to foster the focus ? Sustaining the undervaluation... benefits... who ? AEM's deal with Firefox... has them giving up 75% just to "get to" a JV... which requires equal funding participation ? Yeesh. TMQ, with real value to offer, beyond only that included in their JV deal, has a 50:50 deal which has them carried... which is a far better deal for holders... or will be, if/when the regulators submit to being ruled by the law. Even NMREF is fully carried, to a point, in their deal with JOGMEC... as that project ponderously continues toward enabling Japan in making REE production decisions.
I think it might be necessary to re-think "sweet spots" versus timelines with all of that in mind... as majors are clearly focused, for now, on "cherry picking" some few of what they see as "best" potentials... while otherwise not really yet "there" in considering M&A of the sort you see in oil, now... miners feeling no pressure to get out ahead of the curve ?
NEVDF "had" some of that potential in copper... if they'd had better luck and better controlled the costs of creating a functional (?) mine... but... wait to see what new owners might do with it... the costs of "fixing" it having been borne by prior ownership ?
Pure Gold... similarly... "was" a producer... and, the Madsen mine being re-invented now under WRLGF, will give it the capacity to "get there again" rapidly, and on the cheap... and prove up larger values now, with ridiculous value adds relative to (others) sunk costs and the Lassonde curve issues... with checkbook issues managed for the next... however long ? Capital constraints... shape "what's possible" and continue to limit expectations... because we're not in a true bull market in miners yet... "This time is different" is always true... but, now, with a clearer bead on timing issues, we should be able to sort out HOW (when) that's likely to be true this cycle... and what that means to sorting out near term winners from long term laggards with potential being made not relevant by "constraints" in $ and/or regulatory or geo-political reality...
WRLGF might be not only a great opportunity as a "value" play... but also an indication of what leadership in value generation through M&A might look like, near term, in the current cycle... when "consolidation" among junior producers, developers and explorers likely offers investors far greater value than will "progress" enabled through "deeply discounted" acquisitions by majors...
I think we'll need to see a new trend with accelerations occurring in consolidations among juniors... to avoid sustained price suppression by majors who have little reason to want change in the status quo...
Perhaps SA provides the ideal in a new model... although its been ponderous in its timelines... its been functional in obviating the investors need in having to be concerned by "price suppression"... and "value recognition" driven by dependence on "deals" done with majors at massive discounts to value. That's a problem that's only made worse when deals are done "at the bottom of the market"... as we just saw occur with NKOSF selling out to NFGC... in a deal that might still end them... given no obvious reason to expect they'll do "better" for shareholders in future "deals" ?
Rick Rule's recent harping on the industry, broadly, as not generating value efficiently... only burning investors money efficiently... seems it still has the sparkle of gold distracting mining stock investors from the facts apparent in most juniors performance... as they continue delivering negative returns on capital invested... even "success" in finding costing more than the market says the finds are worth ?
So, the focus for now... profitable junior producers (a very short list)... and those few successful developers and quality explorers with quality projects... that happen to have bulging checkbooks ?
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Below, from a quick scan of my lists... silver, then gold... the profitable (+) ranked by P/E... the unprofitable (-) with other reasons to consider owning them... not a list of explorers... and no royalty plays.
As noted to be likely, recently... higher prices have grown the list of the profitable...
What I'm seeing, is that capital... even for the best players... remains tight, and thus expensive. As stock markets decline from recent highs... that problem will not become immediately self correcting... but worse.
Lower Fed rates... likely to make leverage more expensive, not less... expect margin calls... metals sold.
But... why worry... September is still a week away ?
So, focus on those making money... and we should see them make more money as metals price rise, all the more while capital remains dear.
Be ready for unexpectedly large moves: in metals... hopefully higher... and in stocks... probably lower.
Van Metre today... saying Monday is the beginning of the end for the dollar. The BRICS alternatives appear they may be "ready" and close to "a big reveal"... with media blackouts being lifted... Powell: "the time has come"... may not mean what most expect it must ? How does it relate to "wait for it"... given "it" is now ???
That focus on "profitable now" should hold "as a rule"... until you see money flows beginning to shift into the space... which seems it will require "metals moving and holding much higher, with stocks drifting lower, post panic". That change is required in order to shift the herd's gaze and get them turning away from the effort to corral and stampede them toward the cliff...
But when they do... be ready... the "bull market" likely hasn't even really begun yet... Historically, when the bull starts "for real"... it can move FAST... So, watch the capital flows... the metals ETFs... and the Brrrrindicator... for evidence of "that's not what the market expected"...
Among the explorers... best picks will be those already well funded with enough fat to last them a year or more... which makes them safer bets to buy for the longer term on bad days in the markets... Or, just sort them out now to buy them "on sale"... if that happens "as per usual" when markets crash ?
Of course, "finders" will still outperform based on what they find... but for now... more as traders vs holds.
Unless the focus is longer term... and then... look at those with proven value and improving potentials (enough commitment and $ from backers to be able to survive, and even explore...) looking most closely at those that are trading much lower now than in 2021... or, March... ?
The "bet" on a bold gold bull... is mostly a bet on "metals higher"... and a bet against the dollar (or, against all fiat currencies in relation)... as BIS / WEF backed globally extant MOPE begins to see its lies unravel and its "accomplishments" unwind. CRE has been collapsing, globally, for a few years now... and the market still fails to recognize it ? How ? Why ? But, precious metals higher is NOT a linear bet against stocks as we head into a market crash ? Look at HL... peaking in 2008... crashing in 2009... and then... in the "bull market" in 2011... not reaching back to its 2008 peak again ?
"This time is different" is always true... But, the devil is in the details...
And we don't know all the details yet, in how this game plays out...
BRICS haven't tried to hide their plans... but... what's the alternative to the alternative ?
Looks to me like gold has become a "heads you win, tails you win" bet... the manipulation since 2010/2011... now realigned to direct the price higher... as the only escape from debt they can engineer while hoping to avoid the parallel to 1787...
Stay alert... keep some powder dry... and trade the day... or avoid the market like the plague... ?
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Operations were all "better"... average costs lower, production higher, prices higher... cash flow higher... all in the range of +35%... with analysts guesses still pointing to "higher" earnings in the future with 18% annual growth versus 12% for the industry... and all that... even while they retained two mining contractors versus only one... to enable the bump in production while lowering their averaged cost, but at a higher total cost...
And, while the earnings drop to $0.04 a share from $0.23 in the prior quarter... which is explained away as paying deferred taxes ($14 Million) and Currency exchange losses as the Mexican Peso fell ($3 Million)... they also bumped up the treasury holdings from $91 million to $122 million in the quarter... adding $9 million in cash to the $91 million held before, while also squirreling away $1 million in gold, and holding onto $19 million in silver bullion... which adds up to a total addition to the treasury of ~$29 million... or $0.195 per share... on top of the $0.04 a share reported as earnings... making it $0.235 per share... slightly more than the prior quarter's $0.23/sh.
They describe that as...
Increased retained earnings by 30% to $28.0 million, from $21.5 million at the end of Q1 2024.
Ended the quarter with treasury assets totaling $122.3 million(1) ($98.3 million cash and $24.0 million in bullion), an increase of 34% from $91.1 million at the end of Q1 2024.
So, there's the point of owning the lowest P/E producer... at a time when the metals are moving higher... and the mining stocks are moving lower... as they're making money hand over fist... and keeping it...
Future growth will be a function of "timing" in how they use the war chest... to acquire other producers... or to buy developers, finders, or explorers ? Likely IMO that they'll seek to diversify out of Mexico... but just a guess...
In the ideal result... the metals will continue higher... as the prices of the things they want to own continue lower... while they continue to add 34% (or more) to the treasury each quarter...
Particularly interesting that they've opted to use the success enabled by higher prices now... to hold onto and build an already quite large pile of cash ($0.66 per share... and adding $0.05/sh/quarter)... while ALSO growing a stack of gold and silver bullion rather than selling it...
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The 285 Aug 30 puts, today, up 3,500%... and that's after its mid day bounce back of + 10%...
Timing aside... charts now suggest its got another 50% downside...
Over $1000 in mid June after $1200 in March... it was touted as "the next NVDA"...
NVDA down (only 1.5%) today, too... "in sympathy" perhaps... or just over nagging uncertainty in its reporting later today... or, perhaps, whatever it reports... its just not likely now that excitement over NVDA is enough to keep the market moving up... and perhaps "meets estimates" won't be enough to keep NVDA up, either ?
Odds are good that NVDA might have an outsized beat in store... with major customers (MSFT, GOOG) ramping up purchases as the drive to not lose the AI race to competitors shows no signs of abating...
But... SMCI suddenly displacing NVDA as an AI leader ? That was never gonna happen...
The financial reporting irregularities... put a not so fine point on it... but the excess in expectations re AI hype were more than enough... Today, at $440... its a P/E of 22... so it looks like the excess has been wrung out of it... only that leaving precious little to anticipate other than "shoes yet to drop" in news on financial irregularities... which are the numbers the P/E is based upon... ?
Whatever the value impact in the future news... Timing... is pretty bad... and can't really be set aside.
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The sell off August 9 to 12 seemed rather overdone, to me... having RAK.V falling from $0.12 down to $0.05... and even a bit less in the last few days trading in the U.S., the Canadian $0.05 equivalent price being around $0.0375... and apparently its traded as low as $0.021 recently... even including today ?
But the selloff wasn't without reasons. They whiffed on two of three targets (results are still pending on a third) in exploring a high profile RIRGS prospect. It's still considered an interesting potential, at least... but the vectors taken looking for higher grade proved up lower grades nearer to and within the cores of the intrusive bodies where they'd hoped to find the grades increasing with depth and persisting into the structures...
Before that... they'd skipped out on most of the Victoria Gold / Yukon related price impacts others felt following the June 24 disaster at the Eagle Mine... and they mostly skipped the August 7 to 9 blood-letting in the shares of mining stocks, too... but once the bloom came off the rose with the negative exploration results... they took on a double portion of that whoop ass... on August 12... dropping from $0.12 on Friday to an open at $0.05 on Monday.
A bit too much, probably... given partial results from an active early stage explorer with a quite large land package... located in an highly prospective area... which still has huge swaths of high potential but un-staked ground. There's a serious "gold rush" ongoing in the region... following Snowline's discovery of RIRGS style mineralization... but, oddly... it seems a gold rush to which almost no one has paid much attention... before Victoria Gold's debacle... and after it... almost all the attention has ranged between "negative" and "apocalyptic"... with "doom and gloom" probably near the average.
Worth noting... compared with others in the region... that Rackla's Yukon risks are much less... as they've got more exposure than others do, still in the same geologic province... but just across the border to the east in Northwest Territories.
Also worth noting that the immediate moratorium on exploration in Yukon has ended... and Seabridge and Snowline are both actively engaged in exploration again. There are years of time necessarily arrayed between any exploration results and the sort of impacts as Victoria Gold's failures impose... in actually mattering in mine development. No one in Yukon seems to have any interest in downplaying the problems, there... or in fostering more of that sort of risk as was realized... including least of all the companies and investors in all those other efforts who are still engaged in exploring and mining... while doing so responsibly. Everyone seems to agree, now, that the regulatory efforts were and are underfunded, and under-manned... and were and are not manned by people as skilled or capable as they need to be. So, its good to see the industry is not ignoring the problem, but are taking a pro-active role in addressing the issues cooperatively.
Snowline has recently recovered all of what it shed during the period following the event... and Seabridge trades $1 higher today than it did before the accident...
Victoria Gold has been taken over by the courts... They've lost everything... and no one is going to quibble about that being a proper outcome. It appears the death penalty having been applied by Yukon is sufficient to mollify some of the more strident voices expecting they'd "get away with it".
Today's news from Rackla... pushing Yukon risks further aside... manages to combine all those positive elements noted above:. a highly intriguing new find... solid high grade samples in hand... sampling showing the relevant geochemical signatures.... and showing it in a place where the preferred structure is clearly apparent... in a recently staked prospect that is still surrounded by wide open land, which they're also now staking... And its not in Yukon...
And where the prior exploration failed to show gold values persisting into the intrusive bodies... the current find includes "quartz sulfide veining noted... within the intrusive body"... and includes grab samples of 15.85 g/t and 92.4 g/t... both taken from quartz veining in outcrop and from within the intrusive body...
That's a pretty solid indicator. "The preliminary observations from the intrusive stock and these results indicate a multiphase intrusion with stockwork veining, which may represent the upper carapace of a mineralized Reduced Intrusion-Related Gold System."
Fish on...
RAK.V bouncing hard... up 40% today... from $0.05 to $0.07.
RMETF... pretending to not notice ? Yahoo says it traded 13,500 shares... up from the average 2,000... even while Yahoo still lists it trading at $0.021 ? Yahoo's quality of coverage of smaller stocks, not just at RMETF, seems it is in steep decline. Their charting says the last trade was on August 23rd... on a red candle with 24,000 shares sold.
As RAK.V it traded "a bit more" today at 683,500, up from the average of 83,000.
The news seems it isn't very widely distributed as yet... It's not on Yahoo... and the two new buy recommendations on CEO.CA... both lagged the news being posted by 3 hours ? Hmmm.
Follow up work already done has results pending on rock chip sampling conducted across the exposed face of the intrusion in outcrop... so more news flow coming...
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