Experts Continue to Predict Blue Skies for Gold

Source: Streetwise Reports 06/10/2024

After rising to a new all-time last month, the price of gold has settled some, but experts’ predictions of a lasting gold bull market have not. One investment bank says a structural shift in the foundation of the gold market could be shifting levels higher.

After rising to a new all-time last month, the price of gold has settled some, but experts’ predictions of a lasting gold bull market have not.

Gold hit US$2,449.89 per ounce on May 20 and was at US$2,314.34 on Friday.

According to Investing.com, investment bank UBS has raised forecasts for the yellow metal, citing strong structural support and demand.

The bank now expects gold prices to average US$2,365 this year, up 8% from previous forecasts, with a year-end target of US$2,600. Over the next two years, UBS projected gold prices will exceed $2,800.

“This implies that although we expect prices to eventually ease over the long run, we now anticipate that after adjusting for inflation, nominal gold prices should hold at considerably higher levels than before,” the bank said, according to Investing.com’s report on Wednesday.

Large official sector purchases and sustained physical demand have “effectively created a level shift higher in gold’s trading range,” according to UBS analysts.

“This structural shift has anchored investors’ bullish views on gold, supported by macroeconomic uncertainties and persistent geopolitical risks,” Investing.com wrote.

The Catalyst: Prices as High as US$5,000 to US$7,000?

UBS analysts believe the market is entering a “seasonally quieter period,” according to Investing.com, but noted it as an opportunity for gold investors.

“We think any setbacks during this period should offer opportunities to build gold positions,” the strategists said.

Some are predicting it will be a prolonged and substantial gold bull market. Adam Rozencwajg, managing partner at Goehring & Rozencwajg, predicted that prices could go as high as US$5,000 to US$7,000 an ounce before it’s all over.

Research firm Metals Focus predicted that eventual monetary policy easing from the Federal Reserve would drive gold prices even higher later this year, Kitco reported on Thursday.

“Later this year, we expect prices will rise again, with a new all-time high likely,” said Neil Meader, Director of Gold and Silver at Metals Focus, according to Kitco. “After all, the recent (US)$2,450 peak is lower, in real terms, than the 1980 one, which would have been around (US)$3,000 in today’s prices.”

Jay Taylor of Hotline noted that gold is “winning out as the ultimate safe haven, even in U.S. markets,” and is even more true for non-NATO countries like Russia, India, and China.

“There are dozens of other nations that are seeking to get out from under the tyrannical rule of the U.S.,” he wrote. “Hyperinflation of the dollar becomes ever more likely every day . . . Gold miners rose 1,330% in the bull market stimulated by money printed from the 2008 crisis.”

All of this should also benefit gold miners and explorers. Here are some recently in the news that could make attractive investments.

Soma Gold Corp.

Soma Gold Corp. (TSXV:SOMA; OTC:SMAGF; WKN:A2P4DU) is focused on gold production and exploration at its Cordero Mine at its El Bagre complex in Colombia, with a combined milling capacity of 675 tonnes per day (tpd). The El Bagre Mill is currently operating and producing. [OWNERSHIP_CHART-10919]

Soma this month announced its financial results and operating highlights for Q1 2024, reporting a total production of 7,335 gold equivalent (AuEq) ounces in Q1 2024, marking an 8% increase from the 6,796 AuEq ounces produced in Q1 2023. Revenue for the quarter rose by 21% to US$19.3 million compared to the previous year. The adjusted EBITDA for Q1 2024 was US$6.3 million, slightly down from US$6.8 million in Q1 2023.

Looking forward to the rest of 2024, Soma Gold has outlined several key initiatives. The company plans to continue exploration along the Otu fault to build total resources and identify the next mining site on the Antioquia properties. Additionally, Soma aims to bring the permitted Machuca mine into production and complete the permit application process for the Nechi mine to enhance resources for the El Limon and El Bagre mills.

It also amended its offtake agreement with Goldlogic Corp., securing an additional US$3 million to enhance the 2024 exploration budget and complete development at the Aurora Mine, aiming to start production in Q3 2024.

Headquartered in Vancouver, B.C., Soma Gold Corp. has a market cap of US$51.16 million and trades in a 52-week range of CA$0.41 and CA$0.74. As of December 31, 2023, it had CA$1.8 million in the bank, with a monthly exploration budget of CA$330,000.

As a profitable company, it has no burn rate.

According to Reuters, 67.45% of the company is held by management and insiders.

CEO and Chairman Geoffrey Hampson has 18.27% and 0.56% through his wholly owned companies Hampson Equities Ltd. and Lake Forest Development Corp., Vice President Jean-Francois Meilleur has 0.52%, Director Glenn Walsh has 0.31% directly and 44.07% through his wholly owned company, Conex Services Inc., and CFO Greg Hayes has 0.12%.

A further 0.70% of control is vested in institutions.

Palos Management Inc. has a 0.27% stake, and Marmite Capital AG has one comprising 0.33%. Strategic investor Eric Sprott owns 750,000 shares bought in a private placement (0.82%).

2.26% is with strategic investors, and the rest is with retail investors.

Seabridge Gold Inc.

Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT) holds a 100% interest in several North American gold projects, including the massive KSM project in Northwest British Columbia that the company and analysts have called one of the largest undeveloped gold and copper projects in the world. [OWNERSHIP_CHART-700]

Located in Canada’s “Golden Triangle,” this year, applied for “substantially started” status for the project, with which its Environmental Assessment Certificate would be valid for the life of the mine.

At the top of the company’s list of goals for 2024 is finding a joint venture partner for KSM. The company has noted that RBC Capital Markets is running a formal search process.

Close to KSM is Seabridge’s Iskut project. It also has the Courageous Lake project located in Canada’s Northwest Territories, the Snowstorm project in the Getchell Gold Belt of Northern Nevada, and the 3 Aces project set in the Yukon Territory.

The company’s 2024 exploration is focusing on growing resources at Iskut and 3 Aces. Last week, it announced it had started a 15,000-meter core drilling campaign at Iskut, where three helicopter-portable drills are being deployed to test for source copper-gold porphyries for the intermediate sulfidation epithermal mineral systems recognized by the company in 2023.

The company “offers among the highest torque to underlying gold prices,” wrote Mike Kozak, Cantor Fitzgerald analyst, in an April 29 industry report.

Reuters provided a breakdown of the company’s ownership and share structure, where management and insiders own approximately 3% of the company. According to Reuters, CEO and Chairman Rudi P. Fronk owns 1.43% of the company with 1.23 million shares.

Reuters reports that institutions own about 55% of the company. According to Reuters, Friedberg Mercantile Group Ltd. owns 13.56%, National Bank of Canada owns 5.24%, Van Eck Associates Corp. owns 4.06%, Kopernik Global Investors, L.L.C. owns 3.7%, Paulson & Co. Inc. owns 2.4%, and Sprott Asset Management L.P. owns 2.23%.

According to Reuters, there are 86.22 million shares outstanding with 83.74 million free float traded shares, while the company has a market cap of CA$1.75 billion and trades in a 52-week range of CA$12.62 and CA$23.

Dakota Gold Corp.

Dakota Gold Corp. (DC:NYSE American) is focused on the historic Homestake District of South Dakota, where it has 48,000 acres of holdings surrounding the original Homestake Mine, which was first discovered in 1876 and consolidated by George Hearst. The Homestake Mine produced 41 million ounces gold (Moz Au) and 9 Moz silver (Ag) over 126 years. [OWNERSHIP_CHART-7442]

Dakota currently has four drills working at its properties in the district, including Maitland and Richmond Hill 2.3 miles to the west.

On April 30, the company released its initial assessment maiden resource estimate for Richmond Hill, noting an Indicated Resource of 51.83 million tonnes (Mt) at 0.8 grams per tonne (g/t) Au for 1.33 Moz and an Inferred Resource of 58.06 Mt at 0.61 g/t Au for 1.13 Moz.

“It’s been two years since Dakota first began drilling Richmond Hill, and at first glance, the effort has paid off in this initial resource estimate, in our view,” Canaccord Genuity analyst Peter Bell noted in an April 30 research note. “Richmond Hill showcases a global resource of 109.9 Mt grading 0.70g/t Au containing 2.46 Moz of gold.”

The maiden resource was derived from a historical database containing 69,401 gold assays from more than 900 drill holes, including 57 drill holes from Dakota Gold’s current drill program, the company said.

But there is high-grade expansion potential, as drilling done post cutoff for the report on October 5, 2023, has included 22.9 meters of 1.99 g/t Au, 42.8 meters of 1.71 g/t Au, and 60.9 meters of 1.68 g/t Au.

Technical Analyst Clive Maund noted on April 30 that Dakota “has done quite well since it was recommended on the site back on April 4.”

According to the company, approximately 25% of its shares are with management and insiders.

Out of management, Quartermain holds the most shares at 8.43%, Awde is next at 6.82%, while COO Jerry Aberle holds 4.85%, according to Reuters.

About 26% of the shares are with institutional investors, according to Yahoo Finance and Edgar filings. Top institutional holders include Fourth Sail Capital with 5.27%, Van Eck Associates with 3.97%, Blackrock Institutional Trust Co. with 3.65%, The Vanguard Group Inc. with about 3.15%, Fidelity Management and Research Co. LLC with 2.71%, and CI Global Asset Management with 2.63%, Reuters reported.

About 16.5% is with strategic investors, including Orion Mine Finance, which owns about 7.6%, and Barrick Gold Corp., which owns about 3%. The rest is retail.

Dakota Gold has a market cap of US$234.18 million, with 87.7 million shares outstanding. It trades in a 52-week range of US$3.45 and US$1.95.

Blackwolf Copper & Gold Ltd.

Blackwolf Copper & Gold Ltd. (TSXV.BWCG;OTC:BWCGF) last month announced a proposed merger with Treasury Metals Inc. to form a strategic partnership to focus on Treasury’s Goliath Gold Complex (GGC) in Ontario, which is nearing production readiness. The move was strategically timed to capitalize on the potential rise in gold prices. [OWNERSHIP_CHART-1961]

Blackwolf noted that GGC is expected to produce approximately 109,000 ounces of gold annually at competitive costs, and the merger will also lead to a “renewed exploration commitment.”

Technical Analyst Clive Maund highlighted the positive aspects of the merger between Treasury Metals and Blackwolf on May 2. He said the move is poised to advance the GGC significantly.

“This is a strong transaction for Blackwolf and Treasury shareholders that puts the company on the path of a buy and build strategy that I have implemented many times,” Maund wrote. “We see the GGC Project as buildable and expandable on a district scale.”

GGC’s prefeasibility study (PFS), conducted in February 2023, forecasted 13-year mine life. It anticipates producing 109,000 ounces of gold per year at a cash cost of US$892 per ounce and an all-in sustaining cost (AISC) of US$1,037 per ounce during the first nine years, Blackwolf said.

The prefeasibility study projected a net present value (NPV) of US$493 million at a 5% discount rate and an internal rate of return (IRR) of 33.5% based on a gold price of US$1,950 per ounce (gold was US$2,314.34 on Friday).

“This combination (of companies) renders Blackwolf a near-term producer while providing the combined entity some exceptional exploration projects in British Columbia and Alaska,” wrote Taylor of Hotline.

According to the company, management and insiders hold 9.2% of the Blackwolf Copper & Gold.

With this transaction, Treasury Metals, along with other strategic investors, holds 37.03% of the company. The rest is with retail.

Blackwolf currently has a market cap of approximately CA$17.14 million, trading within a 52-week price range of CA$0.09 to CA$0.37.

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Important Disclosures:

1. Blackwolf Copper & Gold Ltd., Dakota Gold Corp., Seabridge Gold Inc., and Soma Gold Corp. are billboard sponsors of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000. In addition, Soma Gold Corp. has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Blackwolf Copper & Gold Ltd., Dakota Gold Corp., and Soma Gold Corp.
3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
4. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

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Disclosure for the quote from the Clive Maund article published on May 2, 2024

1. For this article (published on May 2, 2024), the Company has paid Street Smart, an affiliate of Streetwise Reports, US$1,500.
2. Author Certification and Compensation: [Clive Maund of clivemaund.com] was retained and compensated as an independent contractor by Street Smart to write this article. Mr. Maund is a technical analyst who analyzes historical trading data and he received his UK Technical Analysts’ Diploma in 1989. The recommendations and opinions expressed in this content reflect the personal, independent, and objective views of the author regarding any and all of the companies discussed. No part of the compensation received by the author was, is, or will be directly or indirectly tied to the specific recommendations or views expressed.

Clivemaund.com Disclosures

The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund’s opinions are his own, and are not a recommendation or an offer to buy or sell securities. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund’s opinions on the market and stocks cannot be construed as a recommendation or solicitation to buy and sell securities.

( Companies Mentioned: TSXV.BWCG;OTC:BWCGF, DC:NYSE American, SEA:TSX; SA:NYSE.MKT, TSXV:SOMA; OTC:SMAGF; WKN:A2P4DU, )