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October 9, 2019

7 @ 7:00

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1. Gold has traded between $1,499 and $1,512 so far todayas of 7:00 am Pacific it’s up $2 an ounce at $1,507…the yellow metal finished near its high of the day yesterday as markets reacted to Fed Chairman Powell’s comments that the U.S. central bank will start expanding its balance sheet “soon”the level of cash stored by banks at the Fed has dropped to around $1.5 trillion from $2.8 trillion in September 2014“As we indicated in our March statement on balance sheet normalization, at some point, we will begin increasing our securities holdings to maintain an appropriate level of reserves,” Powell stated at a conference in Denver…“This is not QE.  In no sense is this QE”more than 3 years after exiting the Gold market, after it was fined $44 million for its involvement in manipulating the daily fixing process, Barclays is back, now offering the first-ever no-fee exchange traded notes for Gold and Silver on the NYSE…Silver has added 5 cents to $17.75…Nickel, Copper and Zinc are each all relatively flat at $2.55, $8.00 and $1.05, respectively…Crude Oil has rebounded 70 cents to $53.33 while the U.S. Dollar Index has lost one-tenth of a point to 99.03…high-level trade talks between the U.S. and China resume tomorrow…the first indication that these new discussions aren’t going well will immediately drive up Gold and Silver prices…

2. Slowing global growth and geopolitical tensions will force the Fed to introduce more cuts in 2020 which will drive Gold to $1,650 next year, according to TD Securities…the bank has been correctly bullish on Gold throughout the year…in its latest forecast, TD estimates Gold at $1,550 in Q1 2020, gradually increasing to $1,650 by Q4“The global economy is slowing, weighed down by trade and recent tightening, with Germany only one quarter worth of data away from a technical recession – a US-China ‘deal or no deal’ notwithstanding,” TD commodity strategists wrote…“It is also likely that after beating expectations since late-June, we are likely at a local maximum as markets have likely adjusted their expectations too positively, we are now due for disappointments on the data front”…lower growth and geopolitical tensions are likely to produce more dovish Fed policies with rate cuts going into 2020, the strategists added…“This short-term repo market turmoil prompted the U.S. central bank to inject just over $140 billion worth of liquidity into the market with a promise of more.  The associated volatility before the intervention and the resulting speculation of systemic issues that may make it necessary to permanently expand the Fed’s balance sheet, should also help to keep Gold bid”

3. GoGold (GGD, TSX) has announced record quarterly production of 580,711 Silver equivalent ounces…this consisted of 326,625 Silver ounces and 2,921 Gold ounces, representing an increase of 29% from the previous quarter and previous record of 451,011 Silver equivalent ounces…production for the fiscal year ending September 30th was 1,846,835 Silver equivalent ounces, a new annual record consisting of 1,059,438 Silver ounces and 9,149 Gold ounces…“This marks the 3rd consecutive quarter where we’ve set a production record, with a substantial increase this quarter of 130,000 ounces from the past quarter, in what has typically been our weakest quarter of the year due to the rainy season,” stated Brad Langille, President and CEO…“This has been by far our strongest year at Parral, with production of 1.85 million ounces, over 500,000 ounces higher than last year. With Parral running at these rates, the exceptional results that we’re seeing at our Los Ricos Project, and the strengthening of the gold and silver markets, it’s an exciting time for us as we work to build value for our shareholders”…meanwhile, construction on the company’s SART plant (sulphidation, acidification, reneuralization and thickening) continues to be on schedule with construction expected to be completed later this quarter…the plant is expected to bring important economic and technical benefits to the Parral tailings facility…the main economic drivers are the recovery of a high-grade saleable Copper sulphide product and the regeneration of cyanide, which is the largest single operating cost at Parral, and improvement of the leaching efficiency of the heap…in the first year of operation, SART is expected to generate over $3.4 million in net cash flows from copper sales and cyanide cost savings…

4.  SilverCrest Metals (SIL, TSX) has cut 1.6 m (estimated true width) grading 9 g/t Au and 1,424 g/t Ag in drill hole LC19111 (Giovanni Vein) at its Las Chispas Project in Sonora, Mexico…results released this morning have expanded the high-grade footprints of several veins in the Las Chispas area…CEO Eric remarked, “While the veins in the Las Chispas area are usually overshadowed by the exceptional high-grades of the Babicanora area veins, these results have established the potential to expand and improve the average grade of the resources for the Las Chispas area veins.  New drill results from deeper intercepts in the Giovanni Vein are particularly impressive with an average grade of 1,084 gpt AgEq or over 3 times the average grade of 349 gpt AgEq used in the current Giovanni resource estimate.  Drilling completed since the February 2019 resource estimate suggests that these high-grade veins extend to depth, down plunge and are open for further expansion.  With the Babicanora Area in-fill drilling nearing completion, and based on success of expansion drilling in the Las Chispas Area, we will be re-allocating 3 drills for an additional 8,000 m of drilling in Q4, 2019.  With further success, the deeper multi-vein mineralization in the Las Chispas Area may develop into a new higher-grade source of potential production later in the mine life”…more results are on the way as more than 100 drill holes are in he lab being assayed…

5. The Dow, trying to snap a 3-week losing skid, is up 135 points as of 7:00 am Pacific while the TSX has gained 21 points…Marathon Gold (MOZ, TSX), one of the market’s top advanced Gold plays, hit a new multi-year high of $1.61 in early trading…Kirkland Lake Gold (KL, TSX, NYSE), the Apple of Gold stocks, has announced record production for the 3rd quarter of 248,400 ounces and for the first 9 months of 2019 of 694,873 ounces…production at Fosterville in Australia is on track to achieve its full-year 2019 guidance of 570,000 to 610,000 ounces…production at Macassa at Kirkland Lake in Q3 2019 totalled 62,945 ounces and is well positioned to achieve its full-year 2019 guidance of 240,000 to 250,000 ounces…KL’s cash and equivalents jumped to $615 million (U.S.) at the end of Q3, an 85% increase from the end of last year…Tesla (TSLA, NASDAQ) has quietly acquired an Ontario-based battery manufacturer in its latest investment in Canada…Richmond Hill-based Hibar Systems Ltd., which specializes in building “complex high speed integrated battery assembly lines”, is now a subsidiary of the California-based electric vehicle maker…adding Hibar to its holdings could help alleviate shortages of battery parts, a problem the company identified as a bottleneck earlier this year, or it could help with general improvements to its manufacturing capacity…the Venture is off 1 point a 552…one of the early price and volume leaders is Gatekeeper Systems (GSI, TSX-V) which has announced a deal with Southeastern Pennsylvania Transit Authority (SEPTA) to supply and install digital video recorders (DVRs) on SEPTA vehicles and trains in a contract valued at approximately $6.3 millionCrystal Lake Mining (CLM, TSX-V) has made a new Copper-rich porphyry discovery at its Newmont Lake Project in the Eskay Camp, approximately 2 km from Burgundy Ridge at the ’72 zone, well outside of drilling by previous operators…drill hole STDDH19006 returned 22.28 m grading 0.89% Cu, 0.71 g/t Au and 6.7 g/t Ag within a broader interval of 56.35 m @ 0.45% Cu, 0.33 g/t Au and 3.44 g/t Ag starting 225 m downhole…all 4 Crystal Lake holes at the ‘72 zone intercepted widespread alteration and sulphide mineralization associated with large Cu-Au-Ag porphyry systems in the region…Eskay, however, is a high-grade Camp (the 1 producing mine is high-grade Gold) and that’s what investors want juniors to focus on in this prolific area – high-grade, whether it’s Gold, Silver, Copper or Nickel, which helps explain the modest drop in the CLM share price on the news…CLM certainly has no shortage of high-grade possibilities at the Newmont Lake Project, including Burgundy Ridge and a 20-km-long Gold Corridor associated with the McLymont Fault…

6. 19% of mines run 100% over budget due to unrealistic feasibility studies, according to consulting firm McKinsey & Company…McKinsey classified mines that were 15% to 100% over-budget as project disasters, and mines 100% over-budget were corporate disasters….only 20% of mines surveyed actually came in at or under budget…McKinsey blames the feasibility study process, which “lacks rigor.  Many mining executives still rely on the same FS processes they did years ago, when resources were more accessible and projects less risky to plan and execute,” said the study’s authors…“That’s a problem because today’s projects are becoming larger, more complex, and often more remotely located—making them more susceptible to cost overruns.”…feasibility studies could be improved with better and more comprehensive data…“While some standards exist for resource estimation and reporting at FS stage, companies have few benchmarks to go by for a wide swath of other elements, such as engineering definition, execution and operational readiness, business objectives, or commodity price predictions – all of which can change a project calculus significantly.  Other culprits driving up costs are sub-par management practices, lack of proper contractor incentives and poor familiarity with the current state of technology”McKinsey said old methodologies no longer suffice when only a fifth of mines built meet their predicted financial returns….fixing the feasibility problem could be an economic win with McKinsey estimating that a change could be worth over $100 billion to the mining and metals project industry over coming 5 years…

7. The data continue to pile up showing that September was an historic month for the Gold market…in its latest report published today, the World Gold Council (WGC) said that holdings in global Gold-backed exchange traded products surpassed its 2012 levels and hit an all-time high in September…the report said that ETF holdings increased by 75.2 tonnes last month to a total of 2,808“Against a backdrop of easy money monetary policy by global central banks, continued geopolitical uncertainty including the looming Brexit deadline and tensions in the Middle East – as well as rising turmoil in Congress – global Gold demand remained strong through the month,” the WGC said in the report…the surge in investment demand came as prices pushed to their highest levels in 6 years…although Gold has fallen from last month’s highs, the market is still holding within a strong support band between $1,500 and $1,450…North American investment demand saw significant growth last month, rising by 62 tonnes, representing 83% of net inflows last month…across the Atlantic, European funds increased by 7.7 tonnes…in the east, Asian funds were up 3.9 tonnes…the WCG also noted a significant rise in low-cost Gold-backed ETFs in the U.S., which have climbed in 15 out of the past 16 months, and have increased their collective holdings by 51% so far this year…

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  1. Inter-day gaps in the GGI chart have finally filled. So Jon, do we smell news coming in advance of this long weekend ??? Some would argue it is not the best time to release news, but then again if it is blockbuster news, well the US market could drive the price into next week.

    Comment by John — October 9, 2019 @ 1:03 pm

  2. GGI gap filled….

    Comment by Nicolas — October 9, 2019 @ 1:23 pm

  3. Interesting results from Chachi Corridor for CLM…

    Crystal Lake Mining Announces New Discovery of Expansive, Multi-Element Hydrothermal Mineralized System at Newmont Lake

    Crystal Lake Mining Corporation (TSXV: CLM OTC: SIOCF FSE: SOG-FF) (“Crystal Lake” or the “Company”) is pleased to announce the discovery of a entirely new multi-element hydrothermal system in the Chachi Corridor (“Chachi”) containing high grade gold (Au), silver (Ag), copper (Cu), nickel (Ni), cobalt (Co), zinc (Zn) and lead (Pb) mineralization spread over a massive area 8km long x 4km wide east of the Newmont Lake Gold Corridor, along the Eskay Rift, in the heart of the Golden Triangle.

    At least three different styles of mineralization over the expansive area have returned assays from multiple samples, in different occurrences from surface outcrop (in-situ grab and chip samples) ranging up to 21.03 g/t Au (gold), 2,350 g/t Ag (silver), 5.4% Cu (copper), 7.7% Ni (nickel), 0.85% Co (cobalt), 15.2% Zn (zinc) and 6.2% Pb (lead). The mineralized system runs along the eastern side of the McLymont Fault and is coincident with a continuous >2km long geophysical anomaly.

    Maurizio Napoli, President / CEO of Crystal Lake commented “At the start of the 2019 program on CLM’s Newmont Lake Project, the Chachi Corridor was the most underexplored area within the large land package. We carried out an extensive large maiden exploration program and what’s really exciting is that the 2019 surface exploration program has identified a new, large mineral system coincident with a 2019 >2km chargeability IP anomaly and an aeromagnetic anomaly centered on a major fault system which is associated with high grade gold mineralization in the Newmont Lake area to the southwest. Moreover, the discovery of high-grade nickel, copper, cobalt, zinc and lead was unexpected and remarkable. The 2019 program of work supports exploration for high grade Au-Cu mineralization along the Chachi corridor. The presence of high-grade VMS style and Ni-Co-Cu arsenide mineral occurrences highlights the potential for the discovery of base metal deposits along this richly endowed metal corridor.”

    Discussion of 2019 Chachi Corridor Program

    Multi-element soil geochemical data and rock samples from newly discovered occurrences point to a multi-element geochemical anomaly spread over an 8 km by 4 km footprint spatially associated with the fertile McLymont Fault structure including high-grade Au-Ag-Cu sulphide (gold, silver, copper sulfide), high-grade Ag-Zn-Cu-Pb (silver, zinc, copper, lead), and high-grade Ni-Co-Cu-Ag arsenide/sulphide (nickel, cobalt, copper, silver arsenide associated with stockwork copper sulfide mineralization).

    A recently completed Induced Polarization (“IP”) ground geophysics survey in 2019 has detected a chargeable conductive anomaly within the soil chemical anomalies and occurrences in the footwall of the Mclymont Fault. Over 2000 soil samples, 2000 hyperspectral measurements, and 800 rock samples were collected from this area.

    The results highlight a newly discovered Au-Ag-Cu occurrence, named the Leo Zone, associated with quartz veins within the footprint of a 600m long IP anomaly. Multiple samples yielded grades of 5.82-21.03g/t Au along with high-grade Ag and Cu (See assays listed below).

    Exploration of the Cuba showings identified high-grade Ag-Zn-Cu-Pb sulphide mineralization associated with barite along the 3.2 km long Cuba-Thumper trend to the east of the Mclymont Fault corridor. Grades of 5-2,350g/t Ag, 15.2% Zn and up to 5.4% Cu provided reason to undertake follow-up chip-channel sampling which reproduced high concentrations of Ag, Zn, Cu, and Pb over 1.5-4.8 m wide intervals (See assays listed below).

    The hydrothermal Au-Ag-Cu and Ag-Zn-Cu-Pb falls within the footprint of newly discovered high-grade Ni-Co-Cu-Au-Ag arsenide/sulphide mineralization at the brand new Brass Rose and Grey Rose occurrences containing vein-hosted and semi-massive niccolite-gersdorffite-cobaltite with grades up to 7.7% Ni (See assays listed below). Importantly, gabbroic intrusions found within the area of these occurrences are commonly associated with magmatic sulphide deposits.

    These findings will underpin an aggressive exploration effort in the Chachi area that expands coverage of IP, utilizes Electro-Magnetic (“EM”) geophysics survey to locate conductive mineralization, with plans to define best targets for drilling.

    Comment by Jon - BMR — October 10, 2019 @ 6:20 am

  4. The power of good news, that the market is wanting to hear! CLM up sharply so far today! What a rollercoaster of a week thus far.

    Comment by Bryan — October 10, 2019 @ 7:19 am

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