This is the type of story that investors only dream about.
It all began about a year ago after a monster gold discovery was made…..and then a savvy junior mining company scooped up the adjoining land plus one of the largest past-producing mines in Quebec’s history, looking for a repeat discovery.
But when this junior mining company started drilling, the results were bigger than some anticipated.
It now appears that they have drilled into what could be the mother lode that other companies have been looking for in this area for the last 80 years.
Amex Exploration (TSX:AMEX) set the stage with a massive high-grade gold discovery in the world-renowned, mining-friendly jurisdiction of Quebec, Canada – home to some of the largest mining companies on the planet.
The founders of Amex knew this area had potential for a large discovery. In fact, numerous companies have drilled in this area for decades prior to Amex; but no one could seem to find the prize.
The attraction to this area came from the past-producing Normetal Mine from which ~10.1 Million tonnes of 2.15% Copper, 5.12% Zinc, 0.549g/t Gold and 45.25 g/t Silver were historically produced.
This massive mine was a huge attraction. As the old saying goes in the mining game, “mother nature doesn’t like orphans. Where there is a discovery there may be brothers nearby!”
Amex decided to focus on their Perron Property, which lies due West of this huge past producing mine.
Fast forward a bit, and voila! Amex hit a massive discovery so big that they were the best performing stock on the TSX Exchange in 2019 and among the top 50 best companies on the OTCQX in 2020. (By the way, if you haven’t heard of it, then you missed the up to 7,000% return on that one.)
As that discovery was busy stunning investors, the team at Starr Peak Mining Ltd. (TSX:STE.V; OTC:STRPF) jumped at the chance to get into this area. They managed to strategically acquire all the land adjacent to Amex’s big discovery and also went one step further and acquired the past producing Normetal mine. We think this was a huge feat for a newly formed exploration company.
And the timing may be perfect.
They then commenced what’s reported as a fully funded 20,000-meter drill campaign in early February of this year.
They announced that after three weeks of drilling, the drilling was going so well that they brought on a second drill rig a month later – a prime indication of success – and they are reported to have now ordered a 3rd drill rig to the property.
On May 3rd, the maiden drill results were released, and they have grabbed the attention of the industry.
While Starr Peak always knew that their drill targets might be very good, what they probably didn’t expect to hit was something better than just gold. What they discovered is evidence of a VMS deposit with rock containing multiple base metals, including zinc, copper, silver and gold.
And it looks like it’s everywhere. In fact, the company has reported on 12 drill holes to date, and apparently they have not missed on any one of them (a good sign in this industry).
Some VMS deposits are included in the richest in the world. VMS stands for Volcanogenic Massive Sulphide, and these deposits are rich in base metals such as copper, zinc, silver, gold and other minerals. They are considered by some to be the holy grail of the mineral world.
There have been very few new VMS-style deposits discovered over the past decade …
The first batch of drill results that Starr Peak just showed off this past week had highlights of 20.94% Zinc, 0.43% Copper, 39,58 g/t Silver and 0.21 g/t Gold over an intercept of over 12.1 meters. And this might just be the start.
They also highlighted a new discovery zone at depth with additional massive sulphides. These results should be back from the lab in the coming days and will be press released no doubt when in hand. No question we think this should be more excitement to come for the company.
Nothing seems to attract the big miners to a junior discovery like a VMS deposit in these current markets because the rock can be so rich and valuable, also making it a play not dependent solely on gold.
Prices of some of these base metals have skyrocketed and are set to hit even new highs as the demand for these metals seems to keep climbing.
With the world on the edge of a copper shortage as demand soars, combined with a global economic reopening, Bank of America sees prices for the metal jumping to $13,000 a metric ton in the coming months, from just over $9,000 today.
Zinc has also reached a multi-year high this month, feeding off this extremely bullish sentiment….
Silver prices are also breaking out….and they may be about to take gold with them.
That puts Starr Peak (TSX:STE.V; OTC:STRPF) in the middle of what could be a potential metals bonanza when at the start, all they were looking for was gold. In fact, a simple gold discovery might have been headlining news in itself for this ambitious junior but this VMS discovery they have made instead may already be getting the attention of some major players.
There was also one more major reason for confidence for the Starr Peak shareholders. One week before the discovery was announced, the Chairman and Founder of Amex Exploration was appointed as Starr Peak’s Chief Technical Advisor, making him the head geologist for this exciting junior. With his world-class reputation on the line and a significant Amex discovery already under his belt, we don’t think he would risk his title on anything less than a pretty sure thing.
Over the past three years, Amex has grown from a small junior gold company to now a major gold name with a market cap of approximately $300 million. Investors have seen monstrous returns of up to 7,000%.
Amex also appears to have a never-ending drill program going on and about $30 million in the bank to get them there. Analysts are calling for this market cap to potentially push $1 billion as they continue to drill.
Just next door, we think Starr Peak has progressed well over the past year. It also started with a small market cap and attracted a couple of directors from Amex in its infancy.
Additionally, there have been several early-stage investors in Starr Peak that were early-stage investors in Amex as well. This VMS discovery has now catapulted Starr Peak from the junior ranks to a serious contender with a market cap of approx. US$75 million. It has just attracted the founder and Chairman of Amex to give his expertise, and the three drills that are currently drilling aren’t likely to be stopping anytime soon.
The upside potential of a VMS deposit is significant, and our belief is that Starr Peak may have found what people have been searching for the past 80 years. This could make it another Amex and then some--very quickly.
Other companies looking to capitalize on a looming gold rush:
The world's third-richest person, and one of the most well known investors who has been against investing in gold for years, has changed his stance. In a recent announcement from Berkshire Hathaway to buy $564 million worth of Barrick Gold (NYSE:GOLD, TSX:ABX) shares at a time when gold was soaring, is a strong indication that he may be changing his mind about the precious metal. This change in attitude towards gold by Buffett could affect how many other investors view it as an investment opportunity. Buffett’s investment in Barrick and change in tune on the gold front shouldn’t come as much of a surprise, however. As the future of the economy looks more-and-more uncertain, and the Federal Reserve continues to print money at a record rate, solid gold miners like Barrick have drawn a lot of attention for investors, especially considering the healthy 0.96% dividend per share that comes with the purchase
Barrick Gold has had a particularly tough start to the year, seeing its share price fall from August highs of $29 to its current price of $23.89. That doesn’t mean the company isn’t still a good buy, however. Barrick Gold still has a healthy balance sheet, with debt down and enough cash on hand to remain well positioned and relatively risk-adverse.
Despite its excellent and higher-than-expected earnings, Barrick’s stock price has closely followed gold’s trajectory, with the price of the precious metal falling due to more positive economic news and a flourishing tech sector. But according to many analysts, this may not last much longer, and it is likely investors will pile back into gold again.
Newmont (NYSE:NEM, TSX:NGT) is the single biggest gold company in the world, but that doesn’t mean it doesn’t still have some room to run. The company has a solid balance sheet with little debt and it’s still growing. It operates in 11 countries, including its flagship mine at Carlin, Nevada; and mines in Colorado, Ontario, Quebec, Mexico, the Dominican Republic, Australia, Ghana and Argentina. As far as management goes Newmont doesn't have any weak spots. Its board includes veteran mining executives like Bob McAdam of Barrick Gold Corp., Tom Albanese of Rio Tinto plc (NYSE:RIO), Joe Jimenez of Dow Chemical Company (DOW) and John Wiebe of Kinross Gold Corporation (KGC).
The big news for the company in 2019 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. Last year, gold 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.
Like Barrick, Newmont has struggled in 2021, however, seeing its share price fall slightly from its November highs of $68 to its current price of $67. This path has been very closely related to the price of gold which has also tumbled in the same amount of time. That said, the company still has a lot of upside potential, and with Biden preparing to unleash a new infrastructure bill that will add more debt to America’s $28 trillion bill, investors will likely look into gold again this year.
Yamana Gold (NYSE:AUY, TSX:YRI), one of the world's top gold companies, has seen its share price hit especially hard this year. The company fell to a low of $3.99 in March before rebounding to its current price of $5.08, which is still far cry from January highs at $6.68 per share, according to Yahoo Finance data . Yamana had been on an upward trend until February when it announced that three mines were closing and more than 1 billion dollars would be cut from their budgets as part of ongoing austerity measures due to slumping prices for precious metals and weak demand for mining equipment across the industry.
Earlier in 2021, Yamana signed an agreement with industry giants Glencore and Goldcorp to develop and operate another Argentinian project, the Agua Rica. Initial analysis suggests the potential for a mine life in excess of 25 years at average annual production of approximately 236,000 tonnes (520 million pounds) of copper-equivalent metal, including the contributions of gold, molybdenum, and silver, for the first 10 years of operation. The agreement is a major step forward for the Agua Rica region, and all of the miners working on it.
In its fourth-quarter earnings call, President and CEO of Yamana provided investors with a glimpse of what’s to come, “In 2022, we are forecasting 870,000 ounces of gold and 9.4 million ounces of silver and in 2023, 889,000 ounces of gold and 8 million ounces of silver.”
Kinross Gold Corp. (NYSE:KGC; TSE:K), one of the world’s largest gold producers, is constantly looking to expand its operations and has found success in many regions. The company mines for gold across six continents, with operations in Brazil, Ghana, Mauritania, Russia and the United States. It also operates a joint venture with AngloGold Ashanti Limited that provides mining services at two sites in West Africa—one of which was recently awarded an environmental permit from the government of Guinea. This year alone Kinross plans to invest $1 billion into expansion projects throughout their global footprint as they continue to grow their business worldwide.
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 Kinross is showing no signs of slowing. With a healthy balance sheet, favorable earnings reports, and governments, banks, and retail investors piling into safe haven assets, it’s likely to continue climbing.
Following the trend of the gold market, Kinross posted positive fourth-quarter earnings but has been weighed down by the falling price of gold. The company’s share price has dropped from $7.98 on the first trading day of the year to its current price of $7.70, after falling to a low of $6.19 in early March. Because smaller miners benefit big on even the smallest moves in gold prices, if the price of the precious metal does see an uptick in the coming months, Kinross will likely be one of the biggest benefactors.
Kirkland Lake Gold (NYSE:KL; TSX:KL) is another one of Canada’s tried and true gold miners. Though not quite as large as Barrick or Newmont, Kirkland is no stranger to striking headline grabbing deals in the industry. In fact, just recently, Kirkland and Newmont signed a $75 million exploration deal that could wind up being a game-changer for the industry. The two companies have agreed to split the cost 50/50 over five years with each company investing $15 million every year into joint projects between both companies for exploration purposes only - at this point it seems like a win
This alliance will provide Kirkland with cash flow to evaluate new alternatives for the future of the mining complex, dive deeper into its existing properties, and weigh other opportunities where the two gold companies may be able to find common ground in the future.
According to a joint press release, “Newmont has acquired an option from Kirkland on the mining and mineral rights subject to a royalty payable by Newmont to Royal Gold, Inc. (the Holt Royalty) in exchange for a $75 million payment to Kirkland Lake Gold. Newmont can exercise the Option only in the event Kirkland intends to restart operations at the Holt Mine and process material subject to the Holt Royalty”
By. Coleen Jessop
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This publication 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 publication include that prices for gold and other base metals will retain their value in future as currently expected, or could continue to increase due to political reasons; that Starr Peak can fulfill all its obligations to acquire its Quebec properties; that Starr Peak’s property can continue to achieve drilling and mining success for gold and other metals; that historical geological information and estimations will prove to be accurate or at least very indicative; that high-grade targets exist; and that Starr Peak will be able to carry out its business plans, including timing for future exploration and drilling; that the preliminary drilling results will be confirmed as further exploration continues; that Starr Peak will gain the attention and interest of larger mining companies; that Starr Peak’s exploration results will continue to show promising results justifying ongoing exploration and possible development efforts. 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 politics don’t have nearly the strong effect on gold and other base metal prices as expected; that demand for base metals may not continue to increase; the Company may not complete all its announced mineral property purchases for various reasons; that the Company may not be able to finance its intended drilling and exploration programs; Starr Peak may not raise sufficient funds to carry out its business plans; geological interpretations and technological results based on current data that may change with more detailed information or testing; that the preliminary drilling results may not be confirmed during further exploration; that Starr Peak will fail to gain the attention and interest of other mining companies; that Starr Peak’s exploration results may fail to find additional promising results justifying ongoing exploration and/or development efforts; and despite promising results from drilling and exploration, 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 we assume no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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