Eric interviews Timberline CEO Steve Osterberg:
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Eric interviews Timberline CEO Steve Osterberg:
For updates on Timberline Resources and unique ideas on individual mining stocks, please sign up for our free newsletter below.
So you want some action? Ok, we’re going to give you some action! Myself and GIL elite/premium investors have already been seeing quite a bit of action as we have been following the Garibaldi Resources (GGI/GGIFF) E&L Nickel Mountain situation since August. Amazingly, less than 90 days ago, GGI was trading for 17 cents per share and had been basing between pennies and 20 cents for 2 years! On Friday, it closed at $3.89 up over 20 FOLD in less than 30 months. The kicker here is that it is still very likely going much higher despite this massive short term run.
Here is what we know from Garibaldi’s last press release:
Dr. Peter Lightfoot, an internationally recognized nickel sulphide expert and a technical adviser for Garibaldi, commented: “The host rocks at Nickel Mountain comprise a differentiated sequence of variable-textured and orbicular-textured gabbros and olivine gabbro with abundant disseminated interstitial sulphide. The exceptional tenor of the sulphide is a compelling feature of Nickel Mountain. “
“When viewed in a global context,” Dr. Lightfoot continued, “Nickel Mountain is a classic example of an intrusion produced by open system emplacement of silicate and sulphide magma through a dynamic magma tube within a differentiated gabbroic complex. This intrusion represents an open system magma highway along which successive batches of silicate and sulphide magma were emplaced.”
What does this all mean to us non geologists? That this nickel-copper sulphide rich ore body is rare, valuable, and likely massive! This whole situation is very reminiscent of the well documented unfolding of the Voisey Bay nickel discovery in the 1990’s by a small company called Diamond Fields. It is a straight up sin for any resource investor to not have read The Big Score by Jacquie McNish.
In fact, those of us that have absorbed how Voisey Bay played out have realized that it probably isn’t wise to let go of our paper in GGI (or their neighbor Metallis Resources (MTS/MTLFF)-which I will focus on next) easily. The fact is that we have enough information already in my view to know that this is a special discovery. Most people wait for assays, 43-101’s, and more information to be released first but by then GGI will be higher and likely much higher than it is now. Speed is key in these situations and we are already seeing some big money taking swift action to secure stakes in GGI and Metallis (MTS/MTLFF).
Falconbridge moved very fast to take a 10% stake in Diamond Fields/Voisey Bay early on, paying $108MM (over a billion dollar valuation) with zero 43-101 resource. Things moved so quickly that Diamond Fields stock went from pennies to $172 per share within 18 months before it was acquired by Inco for $4.5 Billion. When the ore body is real, and it is big, and it is rich, there is not necessarily a cap on how high it can go. There are already credible people that believe Garibaldi’s Nickel Mountain is bigger than Voisey Bay. Are they right? We’ll find out soon!
Sprott Takes Down a Stake
I met Eric Sprott last Friday at the Palisade Hard Asset Conference in Jekyll Island, Georgia. I greatly respect Eric primarily due to the fact that although “retired”, he is actively helping others in this business succeed. He is a valuable source of capital to junior resource companies with his personal cash, backing entrepreneurs dreams. Additionally, he spoke at the Palisade conference to support a couple of up and coming guys in this business. It’s very encouraging that Eric is still sharing his time and knowledge with younger guys like us that will be the next generation of junior mining financiers.
I bring up ES because not only is he one of the most connected and successful investors that exist in this sector, but because he has been all over this discovery early and heavily. Plus, he is STILL BUYING shares of GGI and MTS in the open market. That is in addition to a seven figure private placement at 82 cents on GGI AND another $5 million he just put in at $3.15 in a $10MM financing (his piece just closed on Friday). He also just bought 400,000 shares in the open market at $3.75 on October 13th so for everyone that thinks you already missed this one, have you?!
Keep in mind that the run thus far hasn’t even included assays on the most recent 12 holes, which are due this coming week. I expect GGI to confirm very high grade massive sulphide intersections as the photos of core on their website show:
Two drill rigs are still turning in the Golden Triangle camp, despite the onset of winter which can be brutal in this area. However, the company has a tiger by the tail here and seem to have the resolve to push through and continue drilling. At $4 per share, Garibaldi has a $330M market capitalization but if this is even half the value/scope of Voisey Bay, the price would have to hit $28 per share on a 50% of the $4.5B buyout comparison. We do not know if this is the case or not, nobody does yet. But it is good to realize now that this deal could have some serious legs. In fact, I am forecasting $7-8 per share by the end of November/early December as a next target , which is why I decided to write this up now to everyone.
If correct, you can buy in, sell half at a double, and see what happens risk free after that. Eric made two key points about GGI/MTS at last week’s conference. First, that Nickel Mountain rocks are showing some similarities to Norilsk, not necessarily just Voisey Bay. Remember, Norilsk is/was even more valuable than Voisey Bay! If that’s the case, this could become one of the most valuable nickel-copper deposits in the world and is a once in a generation discovery. It seems that the rocks are showing a unique blend of similarities to both of these examples and some of its own unique properties as well.
Metallis Resources (MTS/MTLFF)
Dr Peter Lighfoot is a world renown expert on nickel sulphide deposits and is advising Garibaldi on this world class discovery. It seems his theory is that the ore body is actually a string of deposits, a “pearl necklace” of sorts. This part of Garibaldi’s last press release on drilling is telling to me:
“While the nickel-copper-rich system remains open in all directions at Nickel Mountain, at least two kilometres of prospective ground exist to the east-southeast while a northeast trend of geophysical anomalies and surface mineralization continues for at least six km.”
This is important for those of us heavily invested in Metallis Resources whose Kirkham property borders Garibaldi just over 4 KM to the “southeast”. Essentially, GGI just confirmed that we are half way there, to the border at Kirkham. If the multiple deposit theory proves true and extends to Kirkham, Metallis shareholders could become very rich. I have 90% of my exposure to this play in Metallis, not Garibaldi, which I recommended to premium GIL readers initially at 25 cents in early August. Despite selling off a ¼ of my position around $1 to remove any principal risk, last week I bought all of those shares back and extra around $1.40 per share. I realized that this could be an opportunity of a lifetime and plunged back in last Thursday/Friday.
Eric Sprott financed Metallis at $1.10 for 2 million shares just a couple of weeks ago. He has been buying in the open market regularly as high as $1.88 for 400,000 shares on October 13th (the stock closed at $1.45 on Friday). A hugely compelling fact is the tight and tiny share structure in Metallis which barely has a $30MM CDN market cap at $1.45 per share! The leverage here could be enormous and I believe that there is a pretty good chance that MTS can outperform GGI between now and the end of the year. How can that scenario happen?
Metallis moved drill rigs to “Thunder North and Thunder South” a few weeks ago, which is near the border of Garibaldi. It is important to note that initially the company drilled a completely different part of their property testing a gold/copper prospect. Those drill results will be out first, perhaps in the next 2 weeks. But if drilling at Thunder North intersects massive nickel/copper sulphides similar to Nickel Mountain, MTS will fly. For example, if Metallis has one third of the resource along the same trend as Garibaldi, their market cap would almost quadruple from $30MM to $110M if Garibaldi stayed at these levels (again, GGI is currently trading at a $330 ish million market capitalization)
Now, I believe GGI will run to $7-8 into/after their next batch of assays are released. MTS should hit $2.50-$3 just following GGI so that’s lmost a double as well. But if Metallis confirms high grade nickel/copper sulphides in November, their share price could trade to $5 easily, which would still only be a $100MM market cap. Metallis’ extremely attractive share structure just means that there is very little stock available in the float! Buyers will likely have to pay up, probably WAY up, in the coming months.
For what it is worth I only asked Eric Sprott one question last Friday. “Do you believe the Nickel Mountain ore body extends into Kirkham?” His reply was “yes I do”. This is obvious just from his actions in the market but it was nice to hear it as well.
To be crystal clear, there is still a lot of risk in both of these stocks. Even if Metallis is destined for $20 per share, there will be violent pull backs along the way and whip lash like volatility. That said, some circumstances warrant rolling the dice. I’m in a great position because I plan to sell the ¼ I bought back at $3 which will have given me a profit on what I put in as a total initially. Then, I’ll hold ¾ plus of my stake for free versus those of you that might just get in now around $1.50 on MTS. You may want to sell half at a double and let the rest roll if this thing plays out like I think it will. That way, you simply don’t have to sweat the gyrations and can give things time to unfold into 2018.
There is a lot of smoke at Kirkham near the fire than is Nickel Mountain so there is better than a 50/50 chance that Metallis has some of this rich ore body on its property. However, the odds are likely less than 50/50 that they hit some of it with the first few drill holes! These are big properties so some patience may be needed and one thing that may slow this train down is old man winter.
Just remember, it is new discoveries that drive junior resource share prices more than any other factor. Being early in a big discovery can make investors wealthy and that is why we play in this risky and cyclical arena. GGI and MTS guarantee ACTION in the coming days, weeks, and months. I do not think it’s too late to get involved but would encourage adding soon, at least entry sized positions then on any pullbacks. I would suggest adding MTS up to $1.75 and GGI to $4.50. If the gap around $1.21 gets filled on the MTS chart it would be time to back up the truck.
Lastly, I would like to acknowledge the guys at Bull Market Run. They were definitely on top of this situation before anyone else and are the reason that I was tipped off early on. They do great work and have gone the extra mile in keeping investors updated!
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Legal Disclaimer: I am offering ideas for your consideration and education. I am not offering financial advice. I am not a financial or investment advisor and am acting in the sole capacity of a newsletter writer. I am a fellow investor and trader sharing his thoughts for educational and informational purposes only. Garibaldi and Metallis is a paying sponsor of GIL so I have a conflict of interest. Do your own homework before acting on anything that I say. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided on the Website is based on careful research and sources that are believed to be accurate, Mr. Muschinski does not guarantee the accuracy or thoroughness of the data or information reported. The opinions published on the Website belong to Mr. Muschinski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Muschinski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published on the Website have been prepared for your private use and their sole purpose is to educate readers about various investments. By reading Mr. Muschinski’s essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Muschinski, Gold Investment Letter’s employees and affiliates, as well as members of their families, may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
Lithium has gotten my attention this spring as the Global Lithium ETX (LIT) has quietly climbed to 5 year highs ($29.34). Indeed prices have not been this high since the summer of 2012 and there is substantial upside before hitting early 2011 peak of $45. The lithium spot price itself is at an all time high north of $20,000 USD/tonne having quadrupled since 2015.
Goldman Sachs has called lithium the “new gasoline” and there is a supply problem according to GS:
“Total lithium demand today is 160,000mt of lithium carbonate equivalent (LCE) per year. We estimate that a 1% increase in battery electric vehicle (BEV) penetration would increase lithium demand by 70,000mt of LCE/year (or roughly half of current global demand for lithium). In order for electric vehicle penetration rates to hit industry forecasts, significant capital investments to expand commercial lithium capacity will be needed, particularly from producers and/or EV OEMs.”
Annual growth was 11% in the lithium sector from 2010-2015 but is currently forecast to average 16% through 2025.
Lithium prices will remain firm if not strong for years so I’ve searched for unique companies to take advantage of this environment. Millennial Lithium (ML/MLNLF) is in a very attractive position with a terrific asset being fast tracked and a disconnected valuation in their share price. Technically, as I will show below, the stock couldn’t look more setup for a run than it is right now. But first some color on their projects.
Argentina is clearly the place to be to develop a lithium brine asset into production relatively quickly and profitably. Argentina already produces 17% of the world’s lithium and the environment since the election of President Macri is extremely business and mining friendly. There are more than 500,000 people employed in the mining industry in Argentina and the government is very motivated to attract international capital.
Millennial owns a 100% option to acquire the advanced stage Pastos Grandes flagship project in the “Lithium Triangle”. The land size is significant at 25,000 plus hectares and the company is currently drilling to define a maiden 43-101 resource. The initial resource will be defined in Q3 followed by a PEA (preliminary economic assessment) being released by year end (work was initiated in Q2).
Drilling is ongoing and we see a new release out this morning with very robust results (535 milligrams per litre (mg/L) from 93.5m to 475m or 381 meters and open at depth).
I expect more news on drilling and as the company marches towards the resource definition and PEA release the stock price should climb nicely. In fact, once at the PEA stage, we can compare Millennial’s value with the current valuation of Lithium X (LIX) which has a very similar project in terms of size, grade, virtually everything important. To catch up to a LIX comp now, ML.V would need to triple from the current $1.40 price point. The table below pulled from ML’s investor presentation shows that the best value in Argentina based lithium explorers/developers is in Millennial Lithium.
Now let’s look at the charts which is really why I’m so bullish currently.
After exploding in 2016 from pennies to $2.50 per share, Millennial has consolidated for 9 months! Sticking to the 50 week moving average like glue, we see the 3 “hangers” dipping below the trend line then recovering each time. This is a signal that the selling is being exhausted. MACD circled in the lower right corner has flattened and is about to turn higher. Once the dark line crosses above the red line, we will see a multi month new rally, which could be triggered as soon as this week or next. The arrows on the right are close to what I expect of the trajectory although it may be a bit more of an angled movement taking more than a couple of months to trade above the previous high of $2.50.
I think it is an easy call to put a 6-9 month price target on ML.V of the previous high at $2.50, which is over a 70% gain from the current price of $1.43. The time line is along the track of a post PEA release run near year end, giving Q1 2018 as the cushion to make a push into the mid $2’s. However, this could happen much sooner.
Yesterday on the daily chart we saw another “hangman” showing buyers stepping in on the dip intra-day similar to what we’ve been seeing on the weekly pattern. This is bottoming activity folks…very basic stuff and bullish. The top blue line will be the first area of resistance around $1.80 where it hit in early February. After that some $2 overhead but then blue skies to $2.50. The stock may need a couple/few runs at $2.50 to break into new highs but we’ll cross that bridge when we arrive. On the way is a 70% potential gain so I suggest readers add ML.V up to $1.50-$1.55 and MLNLF up to $1.15.
For updates on Millennial Lithium and unique ideas on individual mining stocks, please sign up for our free newsletter below.
Legal Disclaimer: I am offering ideas for your consideration and education. I am not offering financial advice. I am not a financial or investment advisor and am acting in the sole capacity of a newsletter writer. I am a fellow investor and trader sharing his thoughts for educational and informational purposes only. Millennial Lithium is a paying sponsor of GIL so I have a conflict of interest. Do your own homework before acting on anything that I say. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided on the Website is based on careful research and sources that are believed to be accurate, Mr. Muschinski does not guarantee the accuracy or thoroughness of the data or information reported. The opinions published on the Website belong to Mr. Muschinski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Muschinski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published on the Website have been prepared for your private use and their sole purpose is to educate readers about various investments. By reading Mr. Muschinski’s essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Muschinski, Gold Investment Letter’s employees and affiliates, as well as members of their families, may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.
On the heels of big news last week from Orca Gold (ORG/CANWF), I thought it would be a great time for an update from CEO Rick Clark. I’ve been following Orca for years, almost 5 actually, and I’ve never been more excited about the prospects as I am right now. The new water discovery and decision to move directly into a bankable feasibility study versus PFS is very bullish as it shows a lot of confidence in the project.
As you can see from the 10 year chart above we are a LONG way from the 2011 top near $20 per share. The biggest thing to understand here and gleam from the update below is that the reality in Sudan is MUCH different than the perception. But, even the perception is changing and the US government has begun to lift sanctions as Obama went out the door and it looks like the Trump administration will continue this policy. It will open up business considerably in the country and this will benefit Orca tremendously as they have a serious first mover advantage. Those of you unaware of the story should take 30 minutes out of your day to hear about this truly special situation in the gold junior sector. I am reiterating my $1.50 CDN price target within 18 months which is more than a 200% return from current levels. There are many reasons for my bullishness and I think investors will be able to make your own determination if you agree with me after absorbing the webinar recording.
This is one of my top 5 junior gold recommendations. Under a $50MM market cap, it is probably top 3 and is a six figure position for me personally. Enjoy…
Eric owns shares in Orca Gold
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