https://oilprice.com/Energy/Energy-General/Investors-Are-Betting-Big-On-Canadas-New-Gold-Rush.html
These are unprecedented times of pandemic, US election uncertainty, and the rising fear of the potential for violent upheaval. Even legendary investors are advising people to flee to safe havens like cash or gold--and fast.
With gold now back in the safe haven spotlight like never before, many eyes are swiveling toward Canada, where the makings of a gold boom are just getting started.
Canada--home of the Val-d’Or Gold Rush--is making history.
Again.
And suddenly, a major rush to gold is leading to a surge of investor interest in exploration companies--the riskiest place to pour money into gold-mining, but also potentially the most lucrative.
Liquidity is now moving in major waves into the junior gold-mining sector, and the next big gold discovery is set to mint another round of millionaires, if not billionaires.
When it comes to the next discovery, the smaller the company is that is sitting on it, usually the bigger the reward.
Try a 7000% payback on for size …
That’s what investors earned recently when they piled money into Amex Exploration (TSX.V:AMEX).
Amex surged 7000% in the past year alone on a giant gold discovery in Quebec at its Perron Gold Project.
Now, with Canada’s gold-mining boom just getting underway, the next potential discovery is already being anticipated.
This time, we like the chances of Starr Peak Exploration Ltd. (TSX:STE.V; OTC:STRPF), which is parked right next to the Amex discovery on one side and a major past-producing mine (which it now owns, too) on the other side.
And its shares have jumped 300% in the past 12 months.
Why Warren Buffett Loves Canadian Gold
The observers of legendary investors were shocked in July when Warren Buffett--a long-time value hunter who has never much liked gold--bought big on Canadian major gold producer Barrick Gold (NYSE:GOLD) (TSX:ABX).
That surprise move gave legs to an already emerging Canadian gold boom.
Buffett sees Barrick as a premier hedge against inflation and volatility and he was willing to go to a Canadian based miner to get it.
Buffett’s move speaks volumes about what is likely to come in Canadian gold companies, and why gold is back in fashion as the only serious hedge against the wild uncertainty on our doorstep.
This could be one of the best barometers telling us where gold is going.
But the real money to be made isn’t in a simple hedge against inflation with a giant gold miner like Barrick.
The real risk/reward potential is in the next junior explorer to make a huge discovery.
And some real money is betting on Quebec and the Abitibi Greenstone Belt which is pumping out “world-class” deposits and is still largely underexplored.
Investors are ready for a repeat discovery, but hoping this time through Starr Peak Exploration. That’s why some of the Amex directors have jumped on as shareholders themselves.
Then, Starr Peak (TSX:STE.V; OTC:STRPF) bought up the past-producing gold mine on the other side.
Figure 1: Geological Map of the NewMetal property with the newly acquired claims blocs with respect to Amex Exploration’s Perron Project.
Now, it’s got 74 mineral claims on some 2,280 hectares in probably the world’s best-play gold venue.
And it’s getting ready to drill.
Because of the money pouring into the Canadian junior mining segment, and because this has turned out to be such a compelling discovery narrative, Starr Peak is fully funded for a drill campaign.
Last month, it secured a top geological consulting firm in Quebec, Laurentia Exploration to move things forward. The best news: this is the same firm behind the AMEX discovery.
On September 9th, Starr launched VTEM (Versatile Time Domain Electromagnetic) system surveys on the main bloc of its NewMétal property, which includes the past-producing Normetal mine. It also just launched high-resolution drone mag geophysics surveys over the entire property, including its new plays of Rousseau and Turgeon Lake Gold.
Quebec’s Normétal Mine has turned out millions of tons of ore containing high-grade gold, copper, and zinc. The adjacent mine, Normetmar, shows a historic resource of 306,000 t grading 11% zinc, of which only ~48,000 t has been mined since 1990. It also shows several gold intersections.
Rousseau is a bloc of 12 claims covering over 470 hectares in the Rollmac gold zone of 31,298 tonnes grading 11.99 g/t Au (historical) …
And Turgeon Lake gives Starr Peak two more claims covering almost 113 hectares with samples at the water line assaying up to 168.3 g/t Au, 30.2 g/t Au and 23.7 g/t Au (GM 52490) and a drill hole assaying 18.7 g/t Au over 3.09 m, including 68.9 g/t Au and 10.48 g/t Ag over 0.4 m.(historical). Because these figures are historical, Starr Peak is relying on them just as great indicators of gold mineralization. The company will do its own drilling to get current figures.
Starr Peak (TSX:STE.V; OTC:STRPF) gained exposure after buying up the neighboring property to Amex’s right before Amex’a big discovery. But now it’s going mainstream, and once the drill bit hits the rock, it’ll be completely out of the closet.
What Could Starr Peak Find?
If the Amex discovery is anything to go by, Starr peak has the potential for another world-class, high-grade gold find that would push the Canadian gold boom over the edge.
AMEX’s Perron Gold Project is a massive 45 square kilometers boasting two significant faults that cover more than 15 kilometers of strike.
Now, Amex is in the middle of its own massive, 300,000-meter drilling campaign, and that campaign (cashed up with $25 million) is operating six rigs, nonstop, with four more rigs being added in the coming weeks.
And they’re working their way closer and closer to Starr Peak’s property line. The closer they get, which is less than a kilometer away right now, the higher the grades are getting and the shallower the depths.
With each meter closer that finds high grades, Starr Peak’s potential increases.
If you missed the speeding train that was Amex, which now has a ~$254 million market cap and whose early-in investors have already sucked up all the outsized upside, Starr Peak is one place to look.
Its market cap is only ~C$40 million, which leaves a ton of room for upside in the event of a discovery.
Canadian Gold Exploration: The Best Game In Town
Follow the money.
It will take you directly to Canada’s gold mines.
By 31 July this year, the TSX Venture Exchange (dominated by junior explorers) raised C$1.7 billion year-to-date.
To put that into perspective: That’s 86% more than they had raised by the same time last year.
It also means that junior explorers on the TSX are basically responsible for raising nearly half of all cash raised by miners from January-July.
The money is going to the junior explorers, where lots of the upside is at a time when gold is a real safety net, and when Canada is the most promising venue in the world.
Investor enthusiasm has never been higher, and that is likely to lead to a great deal of exposure for Starr Peak (TSX:STE.V; OTC:STRPF) once it identifies its drill targets and lines up its campaign. Or even before that, every time Amex releases positive new drill results creeping up to Starr Peak’s border.
Gold is back in the spotlight, and nothing will shine more than the next big potential discovery.
Other gold companies looking to strike it big:
Newmont (NYSE:NEM, TSX:NGT)
As the world’s largest gold mining company, Newmont cannot be ignored. Founded over a century ago, this veteran miner has one of the most impressive executive teams in the business and a global footprint to boot. With operations in Nevada, Colorado, Ontario, Quebec, Mexico, the Dominican Republic, Australia, Ghana, Argentina, Peru, and Suriname, Newmont is as diverse as it is powerful.
The big news for the company last year was its acquisition of Goldcorp. Though it was controversial at the time, the $10 billion acquisition has paid off in a big way. As gold climbed to record highs thanks to investors piling into gold due to the COVID pandemic, Newmont has seen a boom in its share price. This year, gold has soared from $1282 to over $2000 at one point, and Newmont’s stock rose with it, earning investors as much as 90% returns on their original purchase.
Tom Palmer, President and Chief Executive Officer noted, “We are pleased to be ramping up operations at our four sites previously placed in care and maintenance and we remain committed to protecting our workforce and neighboring communities,” adding “We continue to respond to this pandemic from a position of strength and Newmont’s diverse portfolio in top-tier jurisdictions provides a long-term, stable production profile with the potential to generate significant free cash flow over time.”
Yamana Gold (NYSE:AUY, TSX:YRI)
Yamana is another gold giant with a massive presence in the industry. And it’s been on a tear this year. Since March, the miner has seen its share price climb by as much as 145%, and it could be heading even higher. That’s great news for investors looking to jump on board the gold rally. Though it weighs in with a modest $5.4 billion market cap, Yamana’s $5.70 per share price is accessible for all types of investors. And if that wasn’t enough, it also has a long history of increasing its dividends which gives investors even more incentive to grab a few shares and hold on for the long haul.
Recently, Yamana released a promising set of exploration results for its Minera Florida, El Peñón, and Jacobina mines, noting that “Exploration results continue to support year-over-year growth, with promising new discoveries in the first half of 2020, indicating excellent potential for new mineral reserves and mineral resources at year end.“
Kinross Gold Corp. (NYSE:KGC; TSE:K)
Kinross is a relative newcomer in the gold world compared to some of its 100+ year old peers, but it’s quickly become a giant in the industry. With operations across the globe, it’s big picture approach is paying off. The $11 billion gold gaint has mines in Brazil, Ghana, Mauritania, Russia and the United States, and it’s looking to expand even further.
Since 2015, Kinross has seen its share price rise by as much as 400%. In fact, this year alone, it’s already up by as much as 85%, and it’s showing no signs of slowing. It has a strong balance sheet, great earnings, and at a time where investors are flocking into safe-haven assets at a record pace, it’s likely to climb even higher.
Even legendary investor Warren Buffett is betting big on the new age gold rush, buying up a $563 million stake in Barrick – a move which could be a sign of things to come.
Barrick Gold (NYSE:GOLD; TSX:ABX)
Barrick is a giant in the gold world, pulling down 140.8 tons of gold in 2018 alone. And while it has been overtaken by Newmont following the company’s merger with Goldcorp, it operates in over 13 countries including Canada, Dominican Republic, United States, Zambia, Saudi Arabia, Papua New Guinea, Cote dIvoire, Chile, and more.
Living up to its massive $54 billion market cap, Barrick Gold is on track to produce a much as 5 million ounces of gold and as much as 500 million pounds of copper this year. At current prices, that could add up to an additional $1.5 billion in revenue from its gold and copper assets alone.
Despite a dip in March due to the COVID-19 pandemic, this year, Barrick has seen a 56% increase in its share prices. And that’s on top of some of the industry’s most appetizing dividends. And now that the Fed has assured the United States that there will be no more rate hikes in the near future, Barrick could see even more growth.
Eldorado Gold (NYSE:EGO; TSX:ELD)
Eldorado is another Canadian giant that’s having an incredible year. Though the COVID-19 pandemic has forced the company to tread cautiously, Eldorado still managed to pull down a massive $43 million in the second quarter alone. And it’s done so while maintaining a healthy cash flow of $63.4-million in the second quarter, increasing significantly from $4.8-million in from the year before and over $7-million from the first quarter thanks to strong sales and record-high gold prices
“Our outstanding operational performance during the quarter positions us to continue to generate significant value for our stakeholders. Even while managing COVID-19, we achieved strong quarterly production while seeing lower all-in sustaining costs,” said George Burns, President and CEO, adding “We are pleased to have made our first scheduled term loan repayment in June. Additionally, we have issued a redemption notice to repay $59 million dollars of principal in August under the equity clawback provision of our senior secured notes. We are committed to reducing our debt, while at the same time maintaining a strong liquidity position as we continue to grow our business."
By. Chris Stebbings
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ CAREFULLY**
Forward-Looking Statements
This news release contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this release include that prices for gold will retain value in future as currently expected; that Starr Peak can fulfill all its obligations to acquire its Quebec property, and acquire the additional properties announced; that Starr Peak’s Quebec property can achieve drilling and mining success for gold; that historical geological information and estimations will prove to be accurate; that high-grade targets exist; and that Starr Peak will be able to carry out its business plans, including timing for drilling. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that the Company may not complete all the property purchases for various reasons; it may not be able to finance its intended drilling program; Starr Peak may not raise sufficient funds to carry out its plans; geological interpretations and technological results based on current data that may change with more detailed information or testing; and despite promise, there may be no commercially viable minerals or ore on Starr Peak’s property. The forward-looking information contained herein is given as of the date hereof and the Company assumes no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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