Dave Erfle – Key Resource Investing Takeaways From The Precious Metals Summit In Beaver Creek
Dave Erfle, Founder and Editor of The Junior Miner Junky, joins us to review some of the key resource investing takeaways from the Precious Metals Summit in Beaver Creek, Colorado last week. We start of reviewing the low volume trading and poor sector sentiment translating over into many gold and silver companies struggling to finance their work programs, and simply doing their best to survive long enough for sentiment to turn higher again.
Many of the more advanced exploration and development projects are juggling options of taking on large amounts of debt relative to their current market caps, or giving up part of a project to a larger producing strategic partner, or taking on royalties or streams that may limit future acquisitions, or issuing share dilutive equity raises to advance or build projects. Overall most investors are not that excited about any of those options where they’ll essentially own less of the project moving forward, especially when these deals are being negotiated after very large drawdowns in share prices and market cap valuation over the last few years of the bear market action.
The other concern that Dave highlights is that we may see more “takeunders” where longer term shareholders don’t get their expected returns and get clipped off near lows after sticking with companies through their value creation efforts. This is in stark contrast to the more takeovers for nice premiums and solid valuations that we’ve seen in prior bullish cycles. He points out that it would be more constructive to see more mergers of equals between single asset companies, to bulk up into larger more attractive and liquid companies, with better costs of capital and market participation.
We also address the question of if we even need most of the thousand explorers perpetually starting new drill projects? It’s hard to rationalize more companies drilling out new targets, when the best of the mature assets and most derisked development projects aren’t attracting investor interest, or M&A deals, nor are they getting valued anywhere close to where development project have been in prior cycles.
.
Like moths to a flame Goliath has garnered attention now from Rob McEwen and again from Crescat Capital. They are providing funds in a non-brokered Private Placement for Goliath Resources. Follow the leaders they can see the results of Goliath’s drill program and one wants in and the other wants to increase their position. Want is a powerful signal that Goliath could be the next New Found Gold. Like Dick Clark would say, “without further ado, here is their latest press release hot off the airwaves this morning.” DT
+1 Yes, there are not many companies right now garnering that kind of interest to put more money in and biggie size the drill program. Out of all the exploration plays I reviewed in Beaver Creek, Goliath was one of the very few that really caught my attention where I was really intrigued, and I took out a position on Monday as a result of the meeting I had with Roger last Friday. Personally, I’m mostly in producers, royalty companies, and some of the better developers, but very few drill plays.
GOT is one that I’m willing to throw some money at because they are definitely starting to hit paydirt and some unique mineralization in their 2 shear zones, and more importantly, underneath it in the volcanics. Additionally, they have this new land package up north called the Ice Fields, and I watched a corporate video of the exploration team up there doing rock chip samples that are quite eye-popping on all this land that has been under glaciers for thousands of years… but as it recedes all this new prospective exploration ground is sitting right at surface.
Goliath has my attention for a speculation bet on exploration success over the year to come, where I’ve passed on 99% of the other drill plays out there. (not investment advice… just sharing my candid opinion after meeting with management and seeing some of the recent drill core in person).
The PM junior sector needs to consolidate. Too many companies chasing to little capital.
Hi JT: there are always too many companies with nothing but bluster, money eventually goes where it is loved. You must figure out where that is before the herd does and be a contrarian and sell when others want to buy. DT
Or get the blatant and easy signal of the chairman exercising warrants when stocks trading at almost a 50% discount to the exercise price…. GASX comes to mind. 😜
/GC weekly is a Buy Signal…Awaiting for BUY Mode…Basically when MACD crosses positive….glta
Someday “Supply and Demand” has to matter. There are shortages and it cost a lot of money to mine metals. You can’t steal from the people and mining companies indefinitely.
Looks like Wall Street and Corporations might have an agenda that they have, again, failed to share with retail. Very concerning.
Intentional acts seem to be the last thing we consider.