Posted by Cambridge House..... Below
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Cutting exploration, high grading and sterilising deposits. More M&A in 2015, more exploration. Discusses "Rules of Thumb" - [posted previously] - Too many computer based resource estimates & economic studies without thought. Investors need expert help. Looking for Top quartile targets offering real upside to major miners. Get to know management - honesty over concerns, technical competence. Transparency, sound business model.
3 year bear over. Selective bull. 600 with no working capital continue to fail. Bids cleaning up oversold assets. Gold supported over $1200 by China buying. Supports private placements to non-accredited investors. Industry is past the resource definition stage (re-working old projects at higher metal prices with faulty cost assumptions). Need discovery which works at the metal prices we have. Need retail risk capital to replace institutions for advanced projects. Interested in Zinc mines in the development queue at advanced deposit stage.
This year time to buy. Valuations off 75% . Big money has landed. Adequate funding available, Sprott landed some and more to come. Issuers have not yet capitulated to mark the bottom of the cycle. Capital is available at market terms. Goldcorp Osisko bid good. Add cash to the market to redeploy. Recent winners will be more aggressive. Industry needs lower G&A by rationalisation. Markets Ben Graham's voting/weighing machines. All agree market cheap, afraid to pull the trigger. Capital intensive and cyclical markets, must be contrarian, not when it's popular. Likes commodities priced below cost of production, zinc, platinum, palladium, uranium, gas a few months ago. Water - political vs market pricing. Fukashima uranium supply surplus 60/200m lb - when not if increase. Misallocation of credit in China will see a reckoning, supercycle pause.
Seen 3 year bear. On the fence for 2014. Can't see catalyst in 2014. Party time when the tide comes back in. Bear sows seeds for strong market, low exploration, not building, slows metal supply. Anything bought today will do well in 1-2 years. Hasn't bought in the last couple of years. Now is the time to get involved in deals due to compelling valuations. Cheaper to buy a gold company than to explore and discover, better to 'sleep'. Ecological limits to growth. 10 year party in metals will be much more difficult going forwards. Will see less growth less demand for most. Energy prices remain high - slow down. Renewable energy into mining. Looks for carbon pricing to drive renewables. Hard to accept long term costs of carbon emissions. Low returns - do for love - Alterra Power. Into wind, solar, hydro move away from geothermal, grid parity in the right areas. Loves solar. Solar opportunities around mines.
Mining a value not growth industry. Gold companies moved to quantity for growth not quality. Mine higher grades, raise cut off grades. Stock exchange making it easier for failing companie to hold on to earn fees. Better to have less better choices not 1700 small explorers and miners. Default/ delist not quick. Majors need to improve balance sheet, improve grade of production. Bullish uranium but probably not this year - 2015/16. Bull copper as world electrifies.
China gold backing for Yuan. To declare increased reserves.
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