Gold Mining Bull: Top News for June 2019
It's about that time again to take a look at this past month's top news in the gold mining sector.
After making quite a run in June, gold prices have started to cool off a bit. This should not come as a complete surprise, though. I called for a short-term pull-back in gold prices, and stated the following in a June 2 subscriber post, with gold trading at US$1,418/oz:
"Gold never moves up in a straight line - more of a zig-zag pattern - and I think prices look overbought in the short-term and could be due for a pullback; for one, gold prices have reached 83.65 on the relative strength index."
As of writing, gold prices are trading at US$1,398/oz. Not quite the pullback I expected, but a pullback nevertheless, and perhaps a necessary breather for gold.
[Has gold formed a "double-top" pattern? Gold currently trades just below $1,400/oz. Credit: GoldPrice.org].
I will caution readers that while I remain very bullish on gold in the medium term (6+ months) to long term, I think the short-term picture (1-2 months) is a little less certain.
The June jobs report beat expectations as the economy created 224,000 jobs last month. However, wage growth missed estimates, with wages rising just .20% over the prior month and 3.1% over last year, and the unemployment rate increased as more workers joined the labor force.
Many still expect the U.S. Federal Reserve to cut rates in July, which would be bullish for gold. But from a short-term technical perspective, gold prices have appeared to form a double-top pattern, which is a bearish sign that forms after an asset reaches a high price two consecutive times with a moderate decline between the two highs.
Top News for June 2019
I've scoured gold mining newsletters, websites and press releases to give you the top news for June 2019, in no particular order. I've provided more details to my subscribers, who also get access to my portfolio holdings and top picks.
Hecla Mining reduces spending at Nevada operations
Hecla Mining (HL) announced that it will significantly reduce investment in its Nevada operations, including shutting down the Hollister mine, as it grapples with high costs and debt. Its revised guidance calls for 60,000 ounces of gold production at $1,700 all-in sustaining costs.
Hecla was named one of my 5 gold and silver stocks to avoid for 2019 due in large part to these issues.
Victoria Gold nears production at Eagle mine
Victoria Gold (OTCPK:VITFF) announced in early June that its Eagle mine in Canada is 95% complete (ahead of schedule) and on-track for production by September 2019. Eagle is expected to produce 200,000+ ounces of gold for at least 10 years and it will be the largest gold mine in Yukon history, according to the company.
Orion Mine Finance appears to have confidence in the company as it recently bought 154.5 million shares of Victoria Gold owned by Osisko Gold Royalties (OR) at a price of $.46 per share, a 15% premium to the stock price. Meanwhile, Osisko maintains a significant interest in Eagle through its 5% NSR.
Sandspring reports PEA study for Toroparu gold project
Sandspring (OTCQX:SSPXF) has announced a $428 million NPV with gold prices at $1,250/oz and $628 million at $1,400/oz; the PEA estimates 4.5 million ounces of gold production at $808 AISC over a 24-year mine life. Its net financing requirement, including the funding from Wheaton Precious Metals (WPM), totals $272 million.
Continental Gold closes $25 million financing with Sprott
Continental's (OTCQX:CGOOF) Buritica project is approximately 70% complete. It carries a gold reserve base of 3.71 million ounces at 8.4 g/t gold, is on schedule for first gold pour in H1 2020. The mine is estimated to produce up to 300,000 ounces of gold per year at $600/oz AISC.
Novo Resources to advance Egina gold project with Sumitomo
Australia-based gold explorer Novo Resources (OTCQX:NSRPF) announced that it has entered into a $30 million JV agreement with Sumitomo (OTCPK:SMMYY) for its Egina gold project. Sumitomo can earn up to a 40% interest in Novo's project by spending up to $30 million over three years.
Novo also announced that it has secured the right to explore De Grey Mining's tenements for gold-bearing lag gravel deposits, as it seeks further consolidation of the region.
However, the news and rising gold prices haven't helped Novo's stock price; the once promising junior's stock has cratered since hitting highs of $6 per share in late 2017.
New Pacific hits near-surface silver mineralization
New Pacific Metals (OTCQX:NUPMF) has reported the first drill results from its 2019 drill program, and they did not disappoint. The junior says it hit high-grade silver intersections, which included 169 g/t silver over 144.2 meters and 150 g/t silver over 76.32 meters at its Silver Sand project in Bolivia.
New Pacific is well-capitalized and estimates it will have $37 million after completing the current drill program and $19 million by the end of its next drill program by June 30, 2020, according to its corporate presentation. Major shareholders include Silvercorp (SVM), which owns 27.8%, and Pan American Silver (PAAS), owning 16.2%.
New Pacific was named as a top silver stock for 2018 and has been a strong performer.
Alacer Gold declares commercial production at Copler sulfide plant
Alacer (OTCPK:ALIAF) has proven that doing business in Turkey can be quite profitable. The miner has declared commercial production at the new sulfide plant, with sulfide ore expected to add 20 years of mine life and 3.5 million ounces of gold production at $645 AISC. Construction of the plant was completed 11% under budget, according to the company.
Alacer's 2019 production guidance calls for 355,000 - 415,000 ounces of gold at $675 - $725 AISC.
Alexandria Minerals gets improved takeover bid from Chantrell
Shareholders will get .018 common shares of a new entity formed from the reserve takeover of Chantrell by Osisko Mining, to be named "O3 Mining Inc."
Maverix Metals to be listed on the NYSE exchange
Junior gold and silver streamer Maverix Metals (MMX) is now listed on the NYSE American exchange. This is likely to bring in new investors and increased trading volume, which may benefit the share price. But I still think the stock is looking overvalued and may be due for a correction.
Did I miss any big news this past month? Let me know in the comments.
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Disclosure: I am/we are long SVM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.