Next Giant Gold Discovery?

Next Giant Gold Discovery?

In the past 10 years, we’ve only seen a relatively small amount of new gold discoveries which is a small number when you consider gold’s solid performance this year under multiple crises, from a pandemic and economic recession to all the political uncertainty that is piling up. 2008 was a banking crisis, concentrated in a handful of people. Now we’re seeing a broader crisis. In 2008, people were worried about losing their homes or things of that nature. Now, we have people that don’t know necessarily if the stimulus check doesn’t come, where their next meal is coming from. That kind of fear changes behaviours across everything.
Gold is looking more attractive by the day, therefore why are we so short on discoveries? Because major minors have given up on new exploration. Instead, they’re milling around late-stage gold assets or going back to old producing mines to try to get more out of them. In other words, they’re leaving new exploration to the junior miners which means a phenomenally bigger upside for early-in investors in juniors that make a major discovery. The needle barely moves on large mining stocks when a new discovery is announced. They’ve got too much else going on. They aren’t pure plays but when a small-cap miner starts buying up loads of high-potential gold territory and then hits it home with a major discovery announcement, the stock soars into three and four-digit multiples.

Where will the next big discovery most likely be? Quebec, the ever-friendly Queen of gold and home to at least 30 major venues and 160 exploration projects. And even so, only some 40% of the province’s mineral potential is known today and the latest Holy Grail is the Abitibi Greenstone Belt, where Amex Exploration recently hit very high-grade gold.

And now, Starr Peak Exploration Ltd. is gearing up to try and do exactly the same. So, if you’re looking for the next big gold discovery, look here first: Canada. Quebec. Abitibi Greenstone Belt. Starr Peak.

In A Sea of Juniors, why Starr Peak?
That’s simple: Closeology, money, and management.

The trajectory is easy to follow: Amex Exploration made a huge, high-grade gold discovery at its Perron Gold Project. The company’s shares surged 7000% in the past year alone. Right before this discovery, Starr Peak was savvy enough to acquire a strategic land package adjoining Amex’s property that is on-trend and strike with Amex’s world-class gold mineralization. Now, Starr Peak’s shares are also on a tear:

But this is maybe only the beginning for four reasons:

First, Amex is drilling closer and closer to Starr Peak’s property boundary, and the closer it gets, the higher grades of gold it’s reporting and it is open at depth. In fact, the last drill hole that Amex reported was one of their best to date and it was situated less than 1km away from the Starr Peak boundary. The drills keep moving east and that means a potential direct line to Starr Peak’s property.
Second, Starr Peak has been aggressively making acquisitions--buying up everything nearby and boosting its portfolio over and over.
Third, it’s fully funded to drill and is identifying targets right now.
Fourth, the news flow is fast and furious, and double what it would usually be. That’s because with every move Amex makes, it benefits Starr Peak, and with every bit of progress Starr Peak announces it benefits even more.

The Golden Acquisition Trail
First, Starr Peak bought up property adjoining Amex before Amex made its recent, high-grade gold discovery at Perron.
Then, Starr Peak bought up a past-producing gold mine on the other side.
Now, it’s got 74 miner claims on some 2,280 hectares in the world’s hottest gold venue.

Other companies looking to ride the gold wave:
Buffett broke with his long-held negative stance on gold on August 17th when his Berkshire Hathaway disclosed a massive stake in Canadian Barrick Gold at a time when gold is soaring. Berkshire Hathaway bought more than $560 million in Barrick Gold shares. Buffett has always called gold useless for the most part. But with COVID-19 ravaging the economy, even if the dollar makes a few temporary comebacks, gold is on track for a 90% increase in a very short time frame. That makes gold one of the biggest opportunities in the past few months. Barrick Gold is on track to produce between 4.6 to 5 million ounces of gold and between 440 to 500 million pounds of copper in 2020. At current prices, that could equate to as much as $1.5 billion in revenue from just its gold and copper assets.

Newmont may be the biggest gold mining company on the planet, but that doesn’t mean that it doesn’t still have significant upside potential. Founded in 1916, and based in Greenwood Village, Colorado, Newmont is a veteran miner with one of the top executive teams in the business, and its operations span 11 countries, including gold mines in Nevada, Colorado, Ontario, Quebec, Mexico, the Dominican Republic, Australia, Ghana, Argentina, Peru, and Suriname. The big news for the company last year 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. This year, gold has 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.

Yamana Gold is another gold giant with a massive presence in the industry. And it’s been on a tear this year. Since March, the miner has seen its share price climb by as much as 145%, and it could be heading even higher. That’s great news for investors looking to jump on board the gold rally. Though it weighs in with a modest $5.4 billion market cap, Yamana’s $5.70 per share price is accessible for all types of investors. And if that wasn’t enough, it also has a long history of increasing its dividends which gives investors even more incentive to grab a few shares and hold on for the long haul. Recently, Yamana signed an agreement with 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.

Kinross Gold Corp. is a relative newcomer in the gold world compared to some of its century-old peers, but it’s quickly become a giant in the industry. With operations across the globe, it’s big picture approach is paying off. The $11 billion gold giant has mines in Brazil, Ghana, Mauritania, Russia and the United States, and it’s looking to expand even further. 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, favourable earnings reports, and governments, banks, and retail investors piling into safe-haven assets, it’s likely to continue climbing.

Kirkland Lake Gold is another one of Canada’s top gold companies. Though not quite as established 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. According to a joint press release on August 18th, “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”. 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.

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