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May 20, 2020

7 @ 7:00

Visit the BMR comments section throughout the day for updates and helpful information!

1. Spot Gold has traded between $1,739 and $1,754 so far today…as of 7:00 am Pacific the yellow metal is up $an ounce at $1,748…Silver, continuing to outpace Gold, has added another 19 cents to $17.53 to extend its gains for the month to 17.5% vs. a 3.7% advance for Gold…this has brought the Gold-Silver ratio to its lowest level in more than 2 months, though it’s still historically very high at 99.7 (long-term average is 60)…the Gold-Silver ratio 600-day moving average, a key technical tracker, is currently 88…Palladium is back above $2,000 an ounce, up $95 at $2,066…Copper, Nickel and Zinc are relatively unchanged at $2.41, $5.56 and 91 cents, respectively, while the U.S. Dollar Index has slipped one-quarter of a point to 99.14…Crude Oil continues to firm, up another $1.23 a barrel to $33.29…data from the U.S. Energy Information Administration, released moments ago, showed that Crude inventory for the week ending May 15 dropped by 5 million barrels…according to estimates from FactSet, analysts had been expecting a build of 1.8 million barrels…“Fundamentals in the market are improving, thanks to supply cuts and recovering demand,” ING said in a note…the UK has sold bonds with a negative yield for the first time after a drop in inflation highlighted how the Bank of England may need to take further steps to revive price growth back to its 2% target…President Trump announced an executive order yesterday that aims to make hundreds of deregulations in the age of coronavirus permanent, something that would amount to a massive overhaul of regulatory policy…acting Office of Management and Budget Director Russ Vought told Fox Business, If a bureaucratic rule needs to be suspended during a time of crisis to help the American people, we should ask ourselves if it makes sense to keep at all. Typically when our country has faced a crisis, Washington responds by grabbing more power. President Trump understands that to get the economy moving, the power needs to be given back to the people and entrepreneur”…more help will be needed both from the Federal Reserve and Congress to get the U.S. economy through its current slump, Dallas Fed President Robert Kaplan told CNBC on “Squawk Box” this morning…at least some of that aid likely will need to go to state and local governments, which have been hampered by lost revenue during the pandemic…his comments reflect those of Fed Chairman Jerome Powell, who told a Senate panel yesterday that governments that are required to balance their budgets likely will need additional aid to survive without have to resort to mass layoffs…

2. The Trump administration is exploring ways to crack down on fraud by Chinese companies listed on U.S. exchanges as tension increases between the 2 countries over the Wuhan COVID-19 pandemic…hundreds of Chinese firms not subject to the same investor protections as U.S. firms have listed on American stock exchanges over the past decade, resulting in billions of dollars of investor losses, administration officials say…“We have learned that Chinese companies are not transparent,” Larry Kudlow, director of the National Economic Council, told FOX Business’ Maria Bartiromo…“A lot of these companies, by the way, have already had scandals and cost investors a lot of money”…there were 156 Chinese companies listed on U.S. Exchanges worth $1.2 trillion as of February 25, according to the U.S.-China Economic and Security Review Commission…notably, Chinese companies listed in the U.S. and elsewhere outside mainland China are exclusively subject to the jurisdiction of the China Securities Regulatory Commission and, as a matter of course, prohibited from cooperating with investigations by foreign regulators…that includes examinations by the Public Company Accounting Oversight Board, a nonprofit created by Congress to oversee audits of publicly-traded businesses after high-profile accounting scandals at firms from Enron to WorldCom in the early 2000’s…Carson Block, short-seller and founder of Muddy Waters Research, has been studying the space for 10 years and believes the “substantial majority of companies” from mainland China listed on U.S. exchanges are “committing some degree of fraud”…Block said a Chinese company that makes up 20% to 30% of its revenue through fraud is “considered a real company”...most “wouldn’t have been able to raise venture capital without the ability and willingness to commit fraud. The problem here is that if you’re a PRC national, then you have nothing to lose by trying to defraud U.S. investors,” he added…“If it works out well, you’ll make tens, hundreds of millions of dollars. And if it doesn’t work well, you know, there’s nothing they can do to you”

3. Wallbridge Mining (WM, TSX), gaining traction above $1 a sharereleased more high-grade drill results from Fenelon this morning (2 separate news releases covering different areas of the property), including 56 m grading 4.8 g/t Au (FA-20128), 19.15 m @ 8.4 g/t Au (FA-20134), 8.50 m @ 9.76 g/t Au (FA-20116), and 6 m @ 16.9 g/t Au (FA-20123) in widely-spaced step-out holes to expand mineralization at Tabasco-Ceyenne (true widths of intercepts estimated at 50% to 80%)…the shear zones remain open to depth and along strike, and drilling has resumed following the March-April interruption due to COVID-19“We are seeing impressive intersections in the western and eastern ends of the so far tested 500 to 600-m strike length of the Tabasco system and are defining a shallow westerly plunge to the wider Gold-rich core of the zone,” stated Attila Pentek, VP-Exploration Exploration of Wallbridge“The intersections on sections 9975-E and 10350-E significantly expand the known extent of the Tabasco shear system and our next drill holes will continue to test the limits of this extensive shear zone system, which remains open in all directions. When we suspended drilling due to COVID-19, hole FA-20-133 was just metres away from reaching the target depth of the Tabasco zone. In addition, the already significant intersection in FA-20134 still has some assays pending due to delays in processing related to the suspension of activities”WM is up a nickel at $1.09 as of 7:00 am Pacific

4. The Dow has rebounded 331 points as of 7:00 am Pacific after yesterday’s pullback…in Toronto, the TSX is up 112 points while the red-hot Venture has jumped another 5 points to 533 as it gains traction above its 200-day SMA…several significant financings in the Gold sector have been announced in the last 24 hours…Marathon Gold (MOZ, TSX) has arranged a $30 million bought deal at $1.50 per share, including a half warrant…Pure Gold (PGM, TSX) is raising $15 million through the issuance of 9.9 million charity flow-through shares at $1.52 per share…Eric Sprott, already an investor in PGM, has agreed to be the back-end buyer of all the flow-through shares…Sprott is also adding to his position in Amex Exploration (AMX, TSX-V) which is raising $9 million in a bought deal flow-through at $2.52 per share (includes a half warrant at $2.10)…Seabridge Gold (SEA, TSX) has announced a $9.9 million bought deal of 300,000 flow through shares at $32.94 per share…Melikor Resources (MKR, TSX-V), which quadrupled in value over 10 sessions, has announced a strategic partnership with Kirkland Lake Gold (KL, TSX, NYSE)…Kirkland Lake is investing $1,000,000 in Melikor through a private placement at 80 cents per unit…in addition, the parties have entered into a non-binding term sheet pursuant to which Kirkland may acquire on option on the company’s Carscallen Property, 25 km west of Timmins…KL would have the right to earn up to a 50% interest in the property over a 5-year period upon incurring certain exploration expenditures…KL would retain the right to acquire an additional 25% interest in the property over a subsequent 5-year period upon incurring additional exploration expenditures…

5. K92 Mining (KNT, TSX-V) has significantly increased global resources at its Kainantu Gold mine in Papua New Guinea…the new estimate is based on surface and underground exploration diamond rilling as well as underground face sampling (grade control)…the Measured and Indicated resource is now 1.1 million ounces (3.13 million tonnes @ 10.45 g/t AuEq, representing a 180% increase from the previous estimate of 390,000 AuEq ounces in October 2018)…Inferred resources are now 3.7 million ounces (12.67 million tonnes @ 9 g/t AuEq, representing a better than 50% increase from the previous estimate of 2.39 million ounces AuEq)…the Kora, Kora North and Eutompi deposits are now combined and shown to be 1 continuous deposit, open at depth and open along strike to the south…the Kainantu vein field has numerous opportunities to expand resources from near-mine high-priority exploration areas including the Kora strike extension, Kora deeps, Kora and Judd South veins, Judd vein, Karempe vein, and Arakompa and Maniape…CEO John Lewins stated, “In 18 months of underground and surface drilling, K92 has significantly increased our resource at Kora and at a very low discovery cost of less than $5 (U.S.) per oz. The resource estimate has also demonstrated Kora’s significant high-grade operational flexibility going forward, with moderate reductions in overall ounces, and significant increases in grade at increasing cut-off grades. Going forward, there remains tremendous potential to increase resources at Kainantu. At Kora, approximately 75% of the originally planned 1,000 m by 1,000 m target area was drilled for this resource. The remaining drill target area is highly prospective and continuing exploration drilling from underground has already shown continuity of mineralization into this area. In addition, there are also multiple high priority near-mine targets that are planned to be drilled this year. With the resource significantly increased, we are working on a Preliminary Economic Assessment for the next potential production expansion phase – Stage 3. This work had commenced prior to the completion of the updated Kora Resource Estimate and we look forward to announce the results near-term”KNT is up 14 cents at $4.22 as of 7:00 am Pacific

6. Exploration excitement is ramping up in Northern Ontario…in addition to Canada Silver Cobalt’s (CCW, TSX-V) high-grade Silver discovery at Castle East (plus Gold potential) which is about to move into a new phase, GFG Resources (GFG, TSX-V) recently cut 71.3 g/t Au over an 8.5-m core length at a vertical depth of approximately 50 m below surface for a new grassroots discovery (drawing in Alamos Gold as a major investor) at its Pen Project immediately west of Timmins and approximately 100 km northwest of Castle…near GFG’s Project, Melikor Resources has been drilling into high-grade Gold at its Carscellan Project (CAR-2005 intersected 25.7 g/t Au over 6 m), attracting interest from Kirkland Lake Gold as mentioned above…meanwhile, near Thunder Bay, Northern Ontario’s emerging PGM district is about to garner a lot more attention as Clean Air Metals (AIR, TSX-V) gets set to commence trading “on or about” this coming Friday according to the Venture ExchangeClean Air will have a war chest of approximately $15 million, some of which came from Eric Sprott, to tackle the highly prospective Escape Lake and Thunder Bay North Projects southeast of the Lac des Iles Palladium mine now owned by Impala Platinum (IMP, JSE)…Jim Gallagher, former CEO of North American Palladium (bought out by Impala) and executive chairman-designate of Clean Air, stated, “The recent acquisition of the Lac des Iles mine by Impala Platinum underscores the globally recognized significance of the PGE-rich Thunder Bay North region. Clean Air Metals has consolidated 2 prospective PGE properties with a significant amount of historical exploration drilling with some impressive PGE-Ni-Cu intercepts in North America and is focused on expanding these results”…with Palladium trading near $2,000 an ounce, and Sprott involved, investor interest in Clean Air is expected to be high…direct beneficiaries should be Benton Resources (BEX, TSX-V), which holds 25 million shares (19.7%) of Clean Air, and Transition Metals (XTM, TSX-V) which owns 100% of the Saturday Night Project and 25% of the more advanced Sunday Lake Project, both right on trend with Clean Air’s properties….keep in mind, all 4 drill holes into XTM’s Big Red Anomaly at Sunday Lake have hit high-grade PGM mineralization including 41.2 m @ 5.5 g/t PGM and 0.57% Cu…Benton’s market cap is only $10 million while Transition’s is only $8 million (XTM has just 47 million shares outstanding). Both are undervalued. Transition just released more solid results from Sunday Lake and also has a lot of other irons in the fire (high-grade Gold, Copper and Nickel, plus ground immediately next to CCW), in addition to its highly attractive share structure…

7. The “psychedelic space” has come to the Venture: Numinus Wellness (NUMI, TSX-V) begin trading this morning with a nearly $100 million market cap as one of the first in-market, fully integrated companies in the “psychedelic space” in North America…CEO Payton Nyquvest stated, “We are on a mission to help address the universal desire to heal and be well. We are looking for like-minded investors who share our belief that new approaches and new ways of thinking are needed to supplement existing options”Numinus says it has put a value chain in place comprising 3 pillars that will be key to the company’s growth – 1) Numinus Wellness; 2) Numinus R&D; and 3) Numinus BioscienceNuminus Wellness plans to offer physical locations where psychedelic-assisted therapies can take place once approved by regulators…the company’s near-term goal is to identify a suitable location and build a purpose-built, flagship wellness centre to conduct psychedelics-assisted therapies in a safe, controlled therapeutic environment when approved by regulators and governing bodies – a process we are helping to support…Numinus Wellness provides a full suite of therapeutic services through a wellness centre in Vancouver; however, psychedelic-assisted therapies are not currently provided…Numinus R&D is creating partnerships with leading research groups to advance practice and understanding in the space…Numinus Bioscience is licensed by Health Canada to test, sell, distribute, and eventually conduct research on psychedelic substances…“We are excited about the future of psychedelics and our focus will solely be on its therapeutic use,” says Nyquvest…“Psychedelics will move forward in a therapeutic and research context, where the application of these substances will only happen in safe, controlled treatment environments. Numinus has these pieces in place today”…the efficacy of psychedelic therapies are gaining attention…Johns Hopkins University recently announced the Center for Psychedelic and Consciousness Research, a first-of-its-kind $17 million research centre designed to study compounds like LSD and psilocybin for a range of mental health problems, including anorexia, addiction and depression…

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13 Comments

  1. Good morning Jon,
    When do you anticipate news for CCW? It has been a while since the last update. Name has changed and Silver is flying. If we have a lot of silver now seems like a great time to take advantage. Thank you.

    Comment by Schimy — May 20, 2020 @ 9:08 am

  2. Hello BMR. As always, thanks for your generous free public access to 7 @ 7:00 comments. Was wondering what your current outlook is for Sona Nanotech. Do you feel they are on track to meet there target of end of May for validation of their rapid lateral flow covid test by third party US lab. Or, are you thinking it may be further out. Thanks.

    Comment by John — May 20, 2020 @ 10:22 am

  3. John, my expectation is that we’ll be hearing from SONA very shortly, and that their end-of-May target is on schedule…U.S. labs don’t screw around – they’ll make it happen…in addition, during this month of May, I believe SONA’s market for this test has grown substantially, both in the public and private sectors…

    Comment by Jon - BMR — May 20, 2020 @ 12:43 pm

  4. Schimy, we don’t have much longer to wait, literally any day now I suspect, and having studied the situation at Castle and Castle East as much as I have, I’m expecting the most significant news in the young history of this company. The Castle East discovery is a gem with world class grades. In a robust Silver bull market cycle, which we’re just now getting into, that deposit is going to be a license to print money. Grade is King, and the address couldn’t be better.

    Comment by Jon - BMR — May 20, 2020 @ 3:44 pm

  5. Hi Jon, any further thoughts on VSBY? Their technology seems great and their recent news seems really good. Thanks

    Comment by Danny — May 20, 2020 @ 4:31 pm

  6. Hi BMR, any idea what’s going on with tailings for CCW?

    Comment by Martina — May 20, 2020 @ 4:43 pm

  7. I’m sure we’ll find out soon, Martina…all I’m aware of is that work has been ongoing with regard to both situations, Castle and Beaver…ideally, you want to position those tailings opportunities to exploit at the perfect time in the cycle…that’s what Halliday is focused on doing…

    Comment by Jon - BMR — May 20, 2020 @ 4:53 pm

  8. Wonder if Boris was talking about SONA. https://m.youtube.com/watch?feature=youtu.be&v=dx-4HwLWQrY

    Comment by Dan1 — May 20, 2020 @ 6:20 pm

  9. VSBY has a lot of interesting things on the go, and revenues have started to kick in, Danny, and will accelerate during 2nd half of year…stock needs to conquer .30 resistance for technical momentum to kick in – will happen, I’m sure, just a question of timing IMHO…chart has looked better in recent weeks…

    Comment by Jon - BMR — May 20, 2020 @ 9:04 pm

  10. Thanks Jon, appreciate your input.

    Comment by Danny — May 20, 2020 @ 9:19 pm

  11. What are your thoughts about some commentary on Kitco and other places cautioning about a “seasonal” weak time for Gold and Silver prices around June? To me, this year isn’t business as usual, so patterns of “seasonal” declines in gold and silver probably don’t apply this year. Also, your chart analysis shows a bullish beginning. But do you think there’s merit to the idea of a temporary seasonal June pullback in silver before the bull really takes off?

    Comment by schiffwasright — May 20, 2020 @ 10:51 pm

  12. These aren’t normal times, schiffwasright, so you can throw that seasonal theory out the window…also, the performance of the Venture doesn’t support that idea…

    Comment by Jon - BMR — May 21, 2020 @ 4:12 am

  13. Anyone following Pyrogenises (Pyr.v)? Absolutel amazing
    Company about to announce billions of dollars
    , yes billions worth of contracts. Better take a look,
    Absolute gem With their plasma torch system

    Comment by Tran — May 22, 2020 @ 7:48 am

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