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BMR Morning Market Musings... - BullMarketRun.com

February 14, 2017

BMR Morning Market Musings…

Gold has traded between $1,222 and $1,236 so far today…as of 11:00 am Pacific, bullion is up $1 an ounce at $1,225…Silver has jumped 14 cents to $17.93…Copper is off a few pennies to $2.73…Nickel is 4 cents higher at $4.87…Crude Oil has gained nearly 40 cents a barrel to $53.31 while the U.S. Dollar Index is up one-quarter of a point to 101.25

Gold eased off from its morning high, the greenback firmed, bonds sold off and their yields jumped as traders reacted to Ma Yellen’s comment in Congressional testimony this morning that the Fed will likely need to raise rates at an upcoming meeting and that “waiting too long for accommodation would be unwise”…Yellen struck a somewhat more hawkish tone than many traders had anticipated but she did stress that she remains reluctant to base current monetary policy on speculation around tax, regulatory, infrastructure and health care policies that could boost the growth rate under the new Trump administration…Yellen’s testimony continues through tomorrow…Gold remains “boxed in” between Fib. levels $1,215 and $1,235 but the metal’s overall technical posture has to be considered very bullish

Note to readers:  Our tech team completed the last major fix-up this morning from Friday’s server crash, so the site is now 99% back to normal…we appreciate everyone’s patience…smooth sailing from here with a few minor fix-ups over the next 2448 hours but no further service interruptions…

Fiasco In The Philippines

The unprecedented attack on the mining industry in the Philippines continues as projects worth billions of dollars are being nixed…Regina Lopez, the country’s radical environment minister, stepped up her crackdown today, cancelling almost a third of the country’s contracts for undeveloped mines and rejecting any challenges to earlier orders to shut over half of all operating pits…the move turns up the heat in her battle with the mining sector after she ordered the closure of 23 of the country’s 41 mines earlier this month on environmental grounds, causing an outcry from the industry and threats of legal action…

Philippines’ Environment Minister, Regina Lopez, who has also been a vocal critic of open-pit mining in Canada.

The latest 75 contracts, which cover projects in the exploration stage or otherwise not yet in production, are all in watershed zones and would threaten water supply if they went ahead, Lopez stated…

A long-time staunch environmentalist, Lopez ordered the closure of the 23 mines on February 3 for allegedly damaging watersheds and for siltation of coastal waters and farmlands…5 more mines were suspended…the industry says the orders will affect 1.2 million people…

The contracts cancelled today, known as mineral production sharing agreements (MPSAs), include the $1.2 billion Copper-Gold project of Philex Mining Corp., one of the country’s biggest miners, in the southern Philippines…

Also scrapped was the permit for the $5.9 billion Tampakan Copper-Gold Project in South Cotabato province on Mindanao island, the biggest stalled mining venture in the Southeast Asian country…

Oil Update

Just how foolish and naïve are the climate change fanatics who are opposed to new pipelines being built in Canada?…incredibly foolish and naïve – about as bright as the politicians across all parties who have not made the construction of more pipelines a matter of urgent national importance!!!…

More and more Crude in Canada is now being transported by rail, a less safe option, due to a lack of pipeline capacity…looming pipeline shortages will force even more barrels of Canadian Oil onto rail cars over the next few years as Oilsands companies look for alternative shipping options amid a gradual rise in production…

In one sense, the Oil industry’s pipeline woes have eased in recent months after Prime Minister Trudeau approved 2 major pipeline proposals, and after President Trump – a friend of ethical Canadian Oil – invited TransCanada Corp. to resubmit the Keystone XL pipeline permit…

However, the earliest date of completion for any new pipeline project is around the end of 2019 – IF there are no further delays, and that’s a Big IF…with Oilsands production expected to rise over the next 5 years, and with Canada’s pipeline system near capacity, Oil firms are tapping Crude-by rail once again (thanks to radical environmentalists!)…

Volumes of Crude moving by rail rose steadily throughout 2016…just-released stats for November show that Canadian Crude Oil exports by rail surpassed 120,000 bpd, the highest in 13 months…

Recent volumes are nearing their peak of 172,000 bpd in March 2014 when several deadly accidents involving Crude-laden trains turned Oil-by-rail transportation into a contentious topic…Oilsands operator Cenovus Energy Inc. moved an average 15,000 bpd by rail in the 3rd quarter of 2016, up from 6,600 barrels in the 3rd quarter of 2015

There are multiple reasons, including environmental, to be much more concerned about Crude by rail than Crude by pipeline…most climate change fanatics, though, are simply ideologically opposed to Oil no matter how it’s transported – pipelines are just a more convenient political target…

In Today’s Morning Musings

1. Cruz Capital ignites, on pace for a 10 million share day…

2. The Uranium “head fake” fooled nervous nellies…

3. Swinging the bat with Benton

4. Daniel’s Denstay bullish on Oil!…

Stay tuned for an important announcement from BMR…

Plus…coming soon…specific permanent section (24/7) for Eskay “Heart of Gold Camp” coverage!…

Copper Update

Copper is breaking out powerfully which must make one wonder – what the heck is around the corner?…

John’s charts are seldom wrong and they’ve been giving us a very bullish picture of the Copper market since early last year…the trend continues to strengthen, so much so that we’d be shocked if Copper doesn’t leap past the $3 level at some point over the next 4 to 5 months…

That means China won’t crash, as some pundits are predicting, and inflation is likely to gain momentum…

Note the breakout above the long-term downloping flag, the RSI(14) breakout above 50%, the increasing buy pressure (CMF) and the +DI/-DI bullish cross on this 20-year monthly chart…

Wow…at a minimum we expect a test this year of Fib. resistance in the $3.20’s

Today’s Equity Markets

Asia

Asian markets were mostly lower overnight though China’s Shanghai held steady around 3,220

Europe

European markets were little changed today…

North America

The Dow is 62 points higher as of 11:00 am Pacific…in Toronto, the TSX has added 38 points while the Venture has retraced 3 points to 834 after climbing as high as 842 in early trading…

Macarthur Minerals (MMS, TSX-V) has had a great day, surging as high as 16 cents on massive volume after announcing it has entered into a non-exclusive mandate with the Tulshyan Group to raise up to $200 million (Australian) with an initial tranche of $50 million (Australian) to develop the company’s Ularring Hematite Iron Ore Project located in Western Australia…this is a stock we’ve been urging accumulation of under a dime and patience finally paid off…

Many investors, and that includes some BMR readers, are still “behind the curve” – they have yet to fully transition to a very different mindset compared to the one they’ve had much of the past half decade…in a bear market, rallies are selling opportunities…in a major bull market, like the Venture is in now, any pullbacks are buying opportunities…take advantage of any weakness in the best plays…

Cruz Capital Corp. (CUZ, TSX-V) Update

Cruz Capital (CUZ, TSX-V) is one of multiple juniors active in the burgeoning northern Ontario Cobalt district…the individuals behind this deal – soon to be renamed Cruz Cobalt – were wise and quick to anticipate the 2017 boom in Cobalt early last year when we initially made subscribers aware of this company…with “first mover” advantage they assembled a promotable property portfolio mostly based around Cobalt, Ontario, with properties picked up in British Columbia and Idaho as well…

Exploration programs will be carried out soon…CUZ is possibly the “loudest” of the Cobalt juniors and has aggressively pushed the historical high grades at some of its properties including 13% Co on the Coleman prospect and 10.5% Co on the Johnson prospect in Ontario…executing on the ground will be critical for Cruz in terms of maximizing share price potential over the coming months…

Technically, the stock has plenty of momentum at the moment after critical breakouts above Fib. resistance at 15 cents and 21 cents…note the next measured Fib. resistance on John’s 1-year weekly chart…with about 47 million shares outstanding after last year’s 3-for-1 split, Cruz’s current market cap of $11.5 million has room to grow in the context of how hot this Cobalt sector could yet become (the masses aren’t in yet)…

RSI(14), currently 62%, has plenty of room to move higher while the ADX indicator confirms a strong bullish trend…

CUZ is up 3.5 cents at 24.5 cents as of 11:00 am Pacific

Capitalizing on Cobalt

Other situations to watch closely in the Cobalt space – some plays with exceptional exploration opportunities – include Castle Silver Mines (CSR, TSX), Cobalt Power Group (CPO, TSX-V), CobalTech (CSK, TSX-V), LiCo Energy Metals (LIC, TSX-V) and First Cobalt (FCC, TSX-V)…the lowest market caps among those 6 are CSR and CPO and both have competitive advantages that we believe will drive them much, much higher…

Capitalizing on Cobalt (Part 3) – Overlooked Opportunities!

Another Uranium U-Turn!

We had a strong suspicion the recent pullback in Uranium stocks was nothing more than a head fake to shake out the NERVOUS NELLIES, of which there are plenty!…in this kind of a market, astute investors can make a lot of money off NERVOUS NELLIES!…

Below is the updated chart for Purepoint Uranium (PTU, TSX-V) which was a “steal” as expected on a pullback at the beginning of this month to exceptionally strong support between 12 and 13 cents…an aggressive drill program continues at PTU’s Hook Lake JV on trend with NexGen Energy’s (NXE, TSX-V) world class Arrow zone deposit…

PTU is off half a penny at 15 cents as of 11:00 am Pacific…we very much like the chances for a huge breakout in this play at some point during the 1st half of this year…that’s what the chart is certainly saying and we all know how prospective the area is where PTU is drilling…

Benton Resources Inc. (BEX, TSX-V) Update

We’ve written extensively about Benton Resources (BEX, TSX-V) at BMR since Daniel came on board with us around the middle of last year, and patient subscribers who jumped in early have more than doubled their money…

Daniel will provide a fresh update on the fundamentals driving BEX shortly…in the meantime, below is John’s latest chart…we were anticipating a breakout above measured Fib. resistance at 13 cents on this 3-year weekly, and such an event has finally occurred…any weakness, like this morning, has to be viewed in the context of a continuing bullish trend that is interpreted to be in the process of taking BEX to the next measured Fib. resistance at 19 cents…

BEX is off a penny at 14 cents as of 11:00 am Pacific

 

Daniel’s Den by Daniel T. Cook

Done Deal…

Daniel T. Cook

Last Friday, TransGlobe Energy (TGA, NASDAQ and TGL, TSX) announced the execution of a prepayment and marketing contract with Mercuria Energy Trading SA (“Mercuria”) of Geneva, Switzerland. We had been waiting for the news that TransGlobe would refinance $75 million of existing 6% convertible debentures that were due March 31 (this was that news).

In somewhat of a relief rally, TGA jumped from $1.65 to $1.85 (U.S.) on the news.

Analysts around the world are beginning to come around to BMR‘s way of thinking, that Oil prices have bottomed and are headed higher (slowly but surely). After stripping away heightened geopolitical tensions and OPEC’s jaw boning, I’m betting Oil continues creeping higher but mainly because the vast majority of market participants don’t think it will (Mr. Market can be funny like that). Additionally, regarding Oil, we’ve noted a number of bearish news pieces over the past few months that just couldn’t take it down – another bullish indicator.

In addition to TGA, I’m still invested into TAG Oil (TAO, TSX) and if I didn’t have so many other great opportunities competing for my dollars, I’d buy more TAO in a heartbeat.

I like the well-defined trading range and expect the next breakout won’t be to the downside.

No one else is talking about this upcoming catalyst for TAO!…

As we know, TAG Oil has attracted new talent over the past year, one person being Henrik Lundin, its Chief Operating Officer. Long story short, within the next few months there should be an announcement related to TAG Oil’s Cardiff deep Gas well that was drilled years ago (but never produced due to mechanical failures). The market has little to no expectation this Cardiff well (potentially wells, plural) could become commercial producers; therefore there’s no optimism baked into the stock price.

I’d suggest buying a bit of TAO in advance of the news.  If the Cardiff well proves to flow at commercial rates, that would be a big catalyst. Assuming it doesn’t, I can’t imagine much of a negative reaction.

New Zealand’s Oil and gas business was built on deep, tight-sand reservoirs much like the deep, condensate-rich Kapuni play TAG Oil is exploring now. In fact, Shell’s 1.4 TCF Gas and 65 mmbls condensate Kapuni Field is on trend with TAG Oil’s prospects, and the 4.5 TCF Maui Field is the same Eocene-aged Kapuni group formation.

Thinking big…

Yesterday RNC Minerals (RNX, TSX) announced an option agreement with Westgold Resources Ltd. to buy its South Kalgoorlie operations (“SKO”).

According to the news release:

The agreement provides RNC with a lower cost toll milling alternative and the option to significantly expand its Kalgoorlie footprint through a potential acquisition of the SKO mining assets and milling infrastructure located approximately 30 km from RNC‘s Beta Hunt mine.

Mark Selby, President and CEO of RNC, commented: “The option to acquire Westgold’s SKO operations, if exercised, provides significant synergies with our Beta Hunt mine. It would transform RNC’s Gold operation in Western Australia to a multi-mine operation with a 1.2 Mtpa mill generating significantly in excess of 100koz of Gold annually, anchored by a 4 million ounce resource base and nearly 1,000 square kilometer land position in the highly prolific Kalgoorlie Gold region. This is a transaction that can generate real operational synergies for our shareholders. The option structure allows RNC to realize the value from the ramp-up of Beta Hunt and look for opportunities to finance the exercise of the option in a way that maximizes value for our shareholders.”

The new processing agreement could shave $7 million off RNC’s operating costs.

Shares jumped 3 cents on the news but have given the gains back today.

Given SKO’s $80 million (Australian) price tag, it will be interesting to see if RNC can come up with any clever ways of paying for it (besides stock). It’s hard to not see Eric Sprott’s hands pushing for this deal.  He’s a large shareholder of RNC and obviously a guy that isn’t guilty of thinking small.

RNC hosted a conference call yesterday to discuss the proposed acquisition. After I give it a listen I’ll report back to you with any information worth reporting on (I’m assuming Selby has more people listening now).

The old O’Brien Mine has plenty of life left in it…

Radisson Mining Resources (RDS, TSX-V) isn’t a high flyer, but you’d be hard pressed to find a more steady stock that’s locked in an uptrend. At 17 cents RDS is only about 10% above its long-term support of 15 cents, what was the higher end of about a decade long trading range.

The company released a few drill intersections this morning. Nothing to write home about, but the holes (one being 5 g/t Gold over 6 m outside the existing resource) do indicate the old O’Brien Mine has life left in it.

Mario Bouchard, President and CEO commented:  “We are very excited with the results obtained in the current exploration program, as we continue to encounter mineralization outside of the existing resource, as for example, in the “F” Zone.  The synergies derived from the ongoing historical data compilation exercise combined with insights gleaned from the ongoing drilling program will help drive our exploration program. The upside has never looked better on this property which was mined from 1926 to 1957; finding Gold in multiple host rock types – to the west, north, and south of the existing resource – is a potential game changer.

Also of significance, looking toward the future, Radisson is expanding its drill program to 20,000 m.

About the writer:  Daniel T. Cook, the newest member of the BMR team, is from the great state of Texas and now resides in beautiful Arizona.  Daniel has a strong passion for the junior resource sector and has followed the Venture and broader markets with great interest since he bought his first stock 18 years ago at the age of 12.  He’s also a licensed investment professional who was a Bright Future’s Scholar at the University of Central Florida, graduating in 2010 with a major in Finance.  We know our readers will enjoy his material and benefit from his wisdom and insight.  We welcome him aboard!

Note: John and Jon both hold share positions in CSR and CPO.  Jon also holds share positions in CSK, CUZ, LIC and PTU.  Daniel holds share positions in BEX, TAO and TGL.

12 Comments

  1. Tech team has us back to 99% normal on the site after a brief interruption this morning for last major fix-up…will be smooth sailing from here with a few minor touch-ups over the next 24-48 hours…appreciate everyone’s patience!…

    Comment by Jon - BMR — February 14, 2017 @ 12:34 pm

  2. Ok Jon, now that the site is back to normal when are we going to hear the Goldie and Makela interviews? It’s been a long wait.

    Comment by Dan1 — February 14, 2017 @ 12:45 pm

  3. I hear you, Dan1 ! That’s coming…obviously we’ve had some distractions to contend with the last several days re: the full restore from Friday’s server crash…the rest of Goldie (and Makela) will be very soon but first I have something big to handle which just came up and we’ll be announcing likely tomorrow…stay tuned…

    Comment by Jon - BMR — February 14, 2017 @ 12:54 pm

  4. Is that something big thing related to E&L or Heart of Gold Camp?

    Comment by Dan1 — February 14, 2017 @ 2:54 pm

  5. You have to like the news for MMS, you would think a company putting up 200 million has done their homework, that was a boatload of volume today for MMS. Jon, what are your thoughts on the news.Thanks

    Comment by Danny — February 14, 2017 @ 2:54 pm

  6. We’re bouncing several big balls right now, Dan1, between the Heart of Gold Camp, and all that’s happening there on various fronts including the E&L as you alluded to, and the Cobalt Camp in northern Ontario…I wish there were 36 hours in a day and we’d get certain things out even quicker…in addition, providing reliable material takes considerable research…BMR subscribers will get another example tomorrow of the dedication of our team to carry out research that can lead to tremendous trading profits…

    Comment by Jon - BMR — February 14, 2017 @ 3:56 pm

  7. CPO just rocked right up today again. Not much resistance anymore either? 20’s soon? marketcap is low compared to others so far!

    Comment by STEVEN1 — February 14, 2017 @ 5:38 pm

  8. STEVEN1… no doubt CPO is looking good, great volume soaking up the free trading shares from the PP, I expect it to go higher.

    Comment by Danny — February 14, 2017 @ 6:29 pm

  9. Jon: do you think the Cobalt stories are just getting going? sort of like the marijuana stories of last year which are still going today too!? Cobalt hit $19? The cheapest seems to be CPO from what i can find. Also, are you following the XMG/PWM story?

    Comment by STEVEN1 — February 14, 2017 @ 8:12 pm

  10. Steven1, yes, my hunch is the Cobalt train is just getting going…will pick up a lot of speed over the coming months with the usual volatility…huge opportunity for investors, especially if you’re in the right plays…you mentioned one of them, CPO…another low market cap Cobalt play we’ve mentioned is Castle Silver Mines (CSR) which is actually one of the most advanced plays in the northern Ontario Cobalt district but not as well known just yet for its exceptional Cobalt exposure (that will change soon enough)…CSK, LIC, CUZ, ECS, FCC, PLM are some others we’ve highlighted and are doing very well…yes, we’ve been keeping an eye on XMG/PWM to the extent that we can, given all that’s going on…

    Comment by Jon - BMR — February 14, 2017 @ 8:57 pm

  11. Tomorrow can’t get here soon enough

    Comment by Greg — February 14, 2017 @ 10:05 pm

  12. I would recommend not buying CUZ. The same promoters and management behind this as is behind srj and sie. same websites, same office. they turn paper and then you are stuck.

    Comment by Dennis — February 15, 2017 @ 6:05 am

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