3 TOP GOLD STOCKS IN 2024 – Adrian Day

3 TOP GOLD STOCKS IN 2024 – Adrian Day

Today I have the pleasure to chat with Adrian Day.
He’s one of the sharpest minds in the business.
We’re going to be talking about gold and silver
stocks today, and he’s a wealth of knowledge.
He’s been managing money in the sector for decades.
He’s one of the smartest people out there.
So I highly recommend that you listen
carefully to what he has to say.
Thanks for joining me today, Adrian.
Well, thank you very much for asking me today.
I want to talk to you about precious metals.
Where are you finding the best value
in the precious metal sector today?
Well, of course, that begs the
question that I am finding value. Sure.
Yes, your assumption is correct.
I am finding value.
I’ll answer the question about value, but I’ll change the
question a little bit, if I may, and say, where
do I think the best place to be buying right
now is? At the beginning of a bull market
The senior stocks, the large miners, the large
royalty companies, they will always move first.
They will always move before the juniors,
the intermediates, juniors, the explorers, unless those
smaller companies have something company specific.
And so at this point in the cycle, frankly,
when the large cap stocks, despite the move that
we’ve had in the last six weeks, the large
cap stocks are still very undervalued.
They’re very under-owned.
You know, I think that’s the place where people should
be putting most of their money for the time being.
And not only are those the first to
move, but another important consideration is the larger
companies are also the more certain to move.
And by that, I mean if you bought, I’ll
just say, you know, I’m not saying I like
these, but just if you bought Newmont, Barrick, Agnico,
Franco and Wheaton, I can pretty much guarantee you,
As much as the SEC allows me to
guarantee anything, I can pretty much guarantee you
That if gold goes to 2500, those five
stocks are all going to go up.
Whereas if you buy Consolidated Moose, Pasture and Amalgamated Ajax
and so on, they may or may not go up.
So the big cap stocks are the first
to move and a more sudden to move.
So I would focus at this point more of
the money in the large cap stocks. Now, and
that’s both the miners and the royalty companies.
But you know what?
There’s some astonishing values among the
juniors and the exploration companies.
I just think you have to be a lot more selective.
The smaller the company, the lower down the food chain
you go, the more selective you have to be.
And one of the things that I would be
really focused on at this point with the smaller
companies, apart from all the normal stuff.
But one of the things I would
really focus on is the balance sheet.
And it’s not just how much money
they have, but what’s the Runway.
How much time do they have with that
current balance, current cash, before they would need
to go out and raise more money?
So they either have to have a strong balance sheet,
lots of cash, or they have to have… and no
debt, or they have to have cash flow.
And some juniors do have cash flow. Or they
at least have to have ready access to capital.
Some companies can always raise money.
I mean, in a bad market, they have to pay
a little more, but they can always raise money.
But there are other companies.
But if the market tightens, they simply won’t
be able to raise money at all.
So you need to make sure that the
company has a runway and that they’re good
for, I would say, at least 18 months. At least.
Okay, excellent.
You mentioned starting with the biggest companies, so I
remember you being pretty bullish on Franco Nevada after
the whole Cobre Panama fiasco a few months back.
I was looking at the gold price when that
happened and at the share price when that happened.
And back in late October, this was before the mine
totally got shut down, but there was bad news coming
out, and this was before it started crashing. Right.
And then the gold price was $2,007,
and the share price was $138.
Today, the gold price is over 2300,
and the share price is $119.
So the gold price is up about 15%, and at the
same time, the share price is down 17% from there.
So do you still think that’s a good value? Sure, No,
Absolutely!
I mean, the thing you’ve got to remember is
that Cobre Panama represented 19%, almost 20% of their
revenue and 15%, 16% of their NAV.
So when 16% of your NAV just gets
taken away from you, it does two things.
First of all, and remember, Franco’s
trading at three times NAV.
So, arguably, if you lose 15% of your NAV,
if you lose, you know, the stock should be
down three times what your NAV is, because the
stocks trading is three times NAV.
But when you lose…
When you lose your largest asset, you lose not only
the revenue, but you also lose a certain amount of
credibility, because up until that point, I think it’s fair
to say that Franco was a company that even since
going back into the eighties, before they merged and then
unmerged with Newmont, they had a reputation for sort of
never putting a foot wrong.
You could argue this wasn’t their fault.
But nonetheless, people say, well,
where was your due diligence?
How come you put so much of your
money into this mine, et cetera, et cetera?
So there’s a little bit of credibility,
particularly with generalists, that are lost.
But no, I mean, I think when you look
at Franco right now, if you look at Franco
right now, you’ve got a company, certainly great management,
but you’ve got a company with a rock solid
balance sheet, 1.4 billion in cash, no debt.
They’ve also got access to a line of credit.
So they have a total of 2.5 billion, 2.4
billion in available credit, but 1.4 billion in cash.
They’ve got revenue from over 100 different
assets, including the oil and gas assets,
and no single mine at the moment.
Now, they’ve written Cobre Panama off.
They’ve written it off completely,
As you know. No single asset represents
more than 15% of their NAV.
But most of them, there’s three of them that are
over 10%, and then you go down under 10%.
In fact, it’s very well diversified.
But truth is, Franco, even when Cobre
Panama was up and running, Franco was
more diversified from both Wheaton and Royal Gold.
It’s just that they had the bad
luck of having their mind shut down.
And the thing to remember with the royalties, of
course, is that they’re not the operators.
So they are really limited as to what they can do.
When Panama was negotiating the First Quantum, they were
really limited in what they could do, how they
could influence those negotiations, other than putting pressure on
First Quantum to do this or to do that.
So, yeah, so I think it’s an extremely strong company.
And the other thing I’ll end on, which
is critical, they’ve written Cobre Panama off completely.
They are assuming zero income from Cobre Panama
this year, which, remember, was their largest asset.
But even without Cobre Panama, their GEOs gold equivalent
ounces, their production, if you like, is actually going
to go up this year, even without Cobre Panama.
And so I’m not trying to dismiss or
diminish how important Cobre Panama was and still
is, but the truth is, the company is
growing, continues to grow, even without Cobre Panama,
which is pretty astonishing when you think.
Yeah, for sure.
And you mentioned them trading at
a significant premium to NAV.
I know they are relative to what the analysts
say the NAV is, but I would argue that
the analysts are calculating the NAV wrong, because the analysts,
number one, they don’t take into account an increasing
commodity price over the years.
And over the years, the commodity price tends to go up.
And number two, they don’t take into account
the expansions that aren’t planned at these mines.
And when you have these super long life mines
like Franco Nevada has and they’re low cost mines,
well, those tend to expand over time.
So do you think that maybe it’s not so
much that they trade at such a high premium,
but rather that the analysts calculate the NAV wrong?
No, I think you make a good point.
And I think the analysts calculate NAV wrong for all
of the mining companies, because if you use NPV
eight or something, you’re basically putting zero value on
anything that’s more than twelve years out.
And that’s just not reality for the mining business.
But I think it’s particularly important, as you
say, it’s particularly important with Franco because Franco
tends most of their big streams other than
the gold strike royalty that they have, Barrick’s
gold strike, their very first gold royalty that
they bought back in 1983 or 1984.
But other than that one, all of their
big assets are streams and most of them
are gold byproduct streams on copper mines.
And the copper mines are 40, 50, 60, 70, 80 years long.
So one can debate and argue how much value
should I… how much should I pay today for
revenue 80 years old, 80 years into the future?
But I would argue it should be
a little bit more than zero.
And certainly if you’re talking 30 years,
it should be more than zero.
And yet the analyst’s net asset values
put zero on that kind of revenue. Sure. Right.
You said twelve years out, you’re getting zero value.
I mean, today it’s 2024.
Let’s rewind twelve years and pretend we’re
in 2012 years out is today.
Are we supposed to say that in 2012
they were supposed to assign zero value, zero
to the revenue we’re getting today, this year?
I think if you look at it, it diminishes very,
very rapidly after ten years on an NPV8.
And yeah, you’re right.
I mean, it’s worth something.
I mean, the question is, is a mine that’s only going
to last ten years, everything else being equal, production being
equal, is a mine that’s going to last ten years worth
less than a mine that’s going to worth 30 years?
Last 30 years?
Of course it is.
Of course it is.
And the NPV model simply
doesn’t take that into account.
So I think you’re right, Franco, and
this is true of Wheaton as well.
Wheaton’s mines tend to be very, very long
life as well, although the duration on Franco
is longer than wheaton, longer than Royal, the
other two big royalty companies.
So I’m not afraid of the
valuations of which these things trade.
I think there’s a reason that they trade
at high valuations or supposed high valuations, including,
frankly, cash flow, because they have the upside
without additional cost, whereas a mining company has
the upside, but they also have the costs.
And as we all know, sometimes when the price of gold
moves up, so does the price of all of your costs.
And your margins actually get squeezed
with a higher gold price.
Whereas the royalty companies, without having to pay
the costs, they get the full benefit, or
their streams, not necessarily the full benefit.
The stream costs can adjust, but they get
certainly most of the benefit of the upside.
So, yeah, they deserve to trade.
They should trade at higher cash flow multiples.
I think it’d be really good for Franco shareholders
if Barrick Gold got their hands on Cobre Panama,
because I don’t think there’s anyone better on earth
to get that back into production than Mark Bristow.
Have you heard anything more through
the grapevine, through your contacts?
No. Bristow.
Well, first of all, Bristow, as
you know, doesn’t like to overpay.
He doesn’t like to overpay.
I think Barrick would be the perfect company to
take over all of First Quantum, frankly, because most
of First Quantum is in Panama and in Africa.
And Bristow, you know, he is african, south
African, he’s african and he’s got a very
long, long record of successful operation in Africa.
So I think Barrick’s the obvious candidate.
The problem is he doesn’t like to overpay.
I think you have to pay a premium.
If you want to buy a big company,
you’ve just got to pay a premium.
And the other thing, frankly, is
he doesn’t like to overpay.
But as he says, we don’t need to overpay because
we’ve got such a lot on our plates anyway.
And if you look at the Riko Diq in Pakistan,
you could hardly find a more risky jurisdiction, of course.
But if you look at that, that’s going to keep
the company going for another 40 years or something.
So they don’t need to make a
big acquisition, but they would be perfect.
The problem with the stream, as you
know, royalties are normally on the ground,
so it doesn’t matter who’s operating it.
It doesn’t matter if there’s a change of government.
Unless the communists take over,
you’ve still got your royalty. It’s on the ground.
A stream is with the company.
And typically, when a company does a
stream with, let’s say, with Barrick.
Let’s say Royal Gold did one on Pascua Lama.
Well, you have a backstop of collecting some, not
necessarily all, but some of the, some of the
gold you were expecting from Pascua Lama.
You have a backstop from all of Barrick’s operations.
And so even if the mine, in the case of
Pascua Lama doesn’t come into production, you’re still getting some
kind of revenue from other mines that the company owns.
In the case of First Quantum, well, First Quantum, first
of all, wouldn’t do it, and they couldn’t really do
it because they had no other gold anywhere.
You know, their mines in, in Zambia are pure copper mines,
so there was no way for Franco to get a backstop.
So there is no backstop.
So the problem is, First Quantum were to sell their
assets on a friendly or unfriendly, but were to sell
the assets to another company, they would have to include,
they would have to include Franco Stream with the sale
or Franco is just going to sue them.
The worst happens, and Panama were to confiscate the
mine and sell it to someone else or do
an auction, then that stream would not follow.
So that’s the big risk there.
I don’t think that’s going to happen.
I mean, Panama’s actions here were not
good, which is an English understatement.
But I mean, Panama is not
like, it’s not like North Korea.
They’re not going to confiscate the
mine, I don’t think, without compensation.
So the question is open.
Is first quantum going to get it back up
and running, or is First Quantum going to sell
it to someone else who then comes in and
probably has an easier chance negotiating with the government
and gets it back up and running.
But the First Quantum would have
to sell Franco stream with it. Sure.
And even if none of that happens,
well, then there’s a pretty good chance
that Franco recovers something in court.
But that might take a while. Sure. Yeah. Worst case?
Yeah. Yeah.
No, all the lawyers I’ve talked to
say, based on what we know, they
would definitely win in an international arbitration.
The question is, a, it takes a long time, as
you said, and b, once you get an arbitration award,
you then got to recover the assets, which a Panamanian
government is probably unlikely to just hand over.
So you have to capture a Panamanian aircraft when
it lands in Colombia, and you’ve got to capture
a Panamanian ship when it’s sailing through the Caribbean.
That kind of stuff takes time.
Besides the majors, are there any other
specific companies that you really like today?
Yeah, well, I like to look at companies.
Well, I like to look at a lot of different
ways, but one of the things I do look at
is great companies with great management that have what I
think is a temporary decline in the price.
So you look at a company like B2Gold, for example.
B2Gold is a great company.
They’re great operators.
They’ve got a solid balance
sheet, million or something.
They pay a dividend that’s around 6% right now.
So it’s one of the highest, if not
the highest, in the gold mining business.
They are very, very good
mine builders and mine operators.
They have a very, very strong record of
building and operating mines and also in community
relations, because they’ve worked in some pretty, pretty
difficult places over the years.
So the stock is down at the moment for two reasons.
One is because they bought Sabina’s Sabina mining,
which I probably call Goose Bay, up in
the Yukon, which near the Arctic Circle.
So b two is building that mine.
And any time a company is building a
major mine, the stock price is always weak.
We saw that with Equinox building greenstone, which
is in Ontario, not in the Arctic Circle.
But it always hurts the stock price when you’re
in process of building a mine, because when you’re
building a mine, things can only go wrong.
You very rarely have pleasant, pleasant
surprises when you’re building a mine.
Maybe you finish on time, on
budget, but that’s what people expect.
So it’s not a surprise.
I mean, it is a surprise, but you know what I mean.
Sure.
So, anyway, it’s down because
they’re building a new mine.
And if they’re building a mine in,
let’s face it, a difficult, difficult area.
You know, the Arctic Circle can.
The cold can affect equipment.
Equipment can freeze and break and so on.
And then, of course, more recently,
they’ve had the issues in Mali.
Mali is where their largest mine is,
Fekola represents about 27% of their NAV.
So it’s significant to the company.
And, you know, Mali, the military took over.
There’s no elections.
And, you know, I think their view
in mining business as a cash cow.
So they had an audit of all the mining companies.
They’re looking at revamping the mining code.
And then just recently, there’s been a
report in the canadian global mail that
they’re looking at nationalizing Barrick’s
big gold mine there.
And that’s really hurt all of
the companies operating in Mali.
But I think whatever happens, the
company will come out of that.
I mean, even if worst case…
Worst case, they lose Fekola.
You know, they’ve got other things in
the hopper that they can accelerate.
So I like that one.
I won’t be so long on the others.
I like some of the junior explorers
again, that either have strong balance sheets.
Midland will be one.
It has a very strong balance sheet of about $8 million.
It has,
Don’t quote me on the numbers, but it
has joint ventures, active joint ventures with about
eight different companies, including Rio and BHP.
So, you know, good solid companies.
And then down from there, Soquem and so on.
So they have a lot.
It’s a prospect generator.
So they have a lot of active projects with
senior companies have good balance, a strong balance sheet.
And they’re in Quebec, great jurisdiction.
So I like that model.
Another one I like is a company called Orogen.
Orogen is a royalty generator.
They’ve changed the name to a royalty generator.
They’ll go out and generate projects.
So the same as a prospect generator.
But instead of, you know, having someone earn in over
time and keeping 50% and keeping 30%, they will sell
100% of a project in return for a decent royalty.
And right now they’ve got $18.5 million
in cash, a super strong balance sheet.
And they’ve got positive cash flow from a royalty
that they have Ermitaño, which is first majestic.
First majestic has the central Santa Elena mine in Mexico.
And then most of the ore going through that mill
now is coming from the adjacent deposit, which is called
ermitaño which Orogen owns a royalty on.
So they’re getting…
So they’ve got a strong balance sheet.
They’re getting positive cash flow.
But in addition to that they own a 1%
royalty on Anglo Gold’s new discovery down in southern
Nevada at the bottom of the Beaty trend.
Well, sorry, bottom of the Walker Lane trend.
The town’s called Beaty and they own a 1% on two
of the deposits in that sort of district, Silicon and Merlin,
which right now contain over 13 million ounces of gold.
So that won’t come on stream probably
until 2028 and probably even after that.
But Ermitano is going to last until then.
So if a company’s going to have, you
know, God willing and the mule don’t die,
they’re going to have cash flow all the
way through to when Silicon and Merlin come on.
And the truth is they will probably get
an offer from one of the senior mining
companies in the meantime that they can’t resist.
Regarding b2gold, based on my analysis, basically you
buy all of the assets in the company at a
fair value and you get the Mali assets for free.
You get Fekola for free.
So yeah, there’s major problems there, but I feel
more comfortable with BTG because of that discount.
And you mentioned that they’re building a
mine up in the arctic Circle, but
that management team has done that before.
They did that in Russia, if I remember right.
Well, no, absolutely.
That was not B2, of course.
But it was the same team. You’re right. Right.
Same management team.
Yeah, no, good point.
I should have mentioned that.
No, you’re absolutely right.
And that’s what I love.
Now look, there’s no question, there’s no question that if
the Mali government sends their troops into Fekola to seize
the mine and kick out all the expats and maybe
put a few of them in jail just for icing
on a cake, there’s no question that in the short
term the stock price will come down.
Theres no question about that. But I agree.
No, you raise a good point fundamentally,
and thats what I love fundamentally.
If they lost it, just lost it.
Its still a good company with upside. Sure.
The company in a way that first, in
a way that Cobre Panama potentially could destroy
first quantum, because first quantum has debt.
That’s a problem.
Whereas, whereas B2, you know, they do have
debt to build, build goose bay, but debt is offset.
They don’t have net debt.
Mali does concern me, though.
In January of this year, the government nationalized
the largest artisanal mine in the country.
Now, an artisanal mine probably isn’t giving the
government the revenue that the Barrick mine or
the b2gold mine is giving.
So it makes more sense that would be
the first one they would nationalize. But also
something not directly related to mining.
On April 10, the Malian government
banned political parties and groups.
And then the following day, on April 11, the
government banned media from reporting on political matters.
So I don’t like the direction that that’s going.
And so there’s definitely some concerns there for me.
Absolutely.
And as you know, also they have russian troops in
the country, you know, the Wagner group that was, you
know, pretty vicious in Ukraine, a sort of unofficial arm
of the US, of the russian government.
Well, they were, they were in, in Mali and
basically, you know, just in cahoots with the government.
So, yeah, no, it’s not, it’s not a
good place and it’s not getting better.
We’re going to get right back to the interview, but I
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And you also mentioned that you really like Orogen.
I love how careful they are with their spending.
Theyre super careful with their G&A.
In addition to being a cash flowing
company, thats still a small company.
Do you have any idea of how much
they could sell their silicon royalty for?
I know its growing like crazy and has grown
a lot in the last twelve or 24 months.
Yeah, no, that’s a good question.
I’m not as sort of optimistic or as maybe some people.
I think it’s going to continue to grow, but
of course with all these things, there’s a sort
of optimal time to try to sell something.
And right now you’ve got 13.2 million oz.
It has grown dramatically.
Everybody assumes it’s going to continue to grow.
So to me this is the optimal time to do it.
When the blue sky is still there, you certainly want
to sell it before they start doing a PEA and
putting, you know, engineering around it and so on.
So I think right now I think this will be a
very, very, I’m just going through my thinking on this.
This will be a very, very attractive asset for
any of the major major gold royalty companies because
first of all, it’s a royalty which is obviously
better than stream in terms of cash flow.
It’s a royalty.
And also it’s got anglo gold, which is
a major mining company and it’s in Nevada.
So this will be an asset that all of them would want.
So I think there’ll be a
bidding war is what I’m saying.
And as we know in these bidding wars,
sometimes things get grossly overpriced or arguably overpriced.
I mean, we can think of examples from a couple of
years ago where, let’s say Royal Gold would buy Great Bear
and then Royal Gold bought the second Cortez royalty.
And I’m reliably informed that on the Cortes, they
were bidding at least 25% more than the second
highest bidder, who already was 20% above everyone else.
So in a bidding war, in an auction
situation, you can get some crazy prices.
Having said all that, Orogen right
now is trading a little bit…
So I was looking at it on a price per share
basis, if you’ll excuse me doing that, I was thinking they
could probably get $1.10-$1.15 for silicon.
But that’s on the assumption that everything else, the
cash, the Ermitano royalty, and then all of the
other exploration they have, is spun out.
So that will put a value, you know, 17 million
plus Ermitano is probably worth 35 to 40 million US.
And by my calculation, and then
everything else, maybe 5 million.
You know, the 17. Sorry.
The 18 and a half (million dollars) is canadian,
so let’s say 15 there, 40.
You know, you’re talking.
You’re talking 55 to 60 million extra on
top of whatever someone buys silicon orogen for.
So I think that would be, you know, we
wouldn’t get a huge premium, but when you consider
everything to spun out, they’d buy the company and
spin everything else out for tax reasons.
When you consider the value of everything that would be
spun out, I think it’d be a very attractive.
A very attractive offer.
And the other thing to remember about this. Yeah.
This is not a ten for one or anything
like that, but the downside is as low as
you could possibly have in the junior space. Sure.
And it’s all about the risk reward, right? Yeah. Yeah.
I wanted to ask you about Equinox’s purchase
of Orion’s 40% of the Greenstone mine.
When I first saw that number, I was a
little shocked at that price tag, $995 million.
I was like, wow, they’re paying almost a
billion dollars for 40% of that mine.
And Orion’s portion, if I remember
right, has Sandstorm stream attached to
that, whereas Equinox’s portion does not.
I did some quick back of the napkin math
here, and Equinox is guiding $890/oz AISC
after reaching commercial production on their 60% portion.
And then sandstorm stream on
Orions adds about $110/oz. to that.
So that’d be about $1,000 per ounce.
That would put the annual annual cash from operations
for that 160,000oz for that 40% at $212 million,
which is a payback period of 4.69 years.
And then you have a 16 year mine life to start.
So although that number looked pretty big when I
first glanced at it, doing some quick math, I’m
actually thinking that it looks like a pretty good
purchase price, especially considering the upside there.
Sure.
Yeah, no, I agree.
I’m not sure about the.
I’ll just take your word on the Sandstorm royalty, that
it covers the Orion part, not the other part. Sorry.
So I’m just… Stream rather. Because again that could
be, streams are done with companies, not with mines.
I’m just saying I don’t know.
Yeah, when I first saw that
I thought boy that’s expensive.
But yeah, the more I think about it, I think not.
And I think Equinox is right to try to buy it
now before weve got a years worth of production and maybe
the gold price is up but a years worth of production
which shows everybody, wow, this really is a good mine.
We knew it was but it really is.
I think it clearly makes sense for Equinox
to want to buy the whole thing.
So yeah, so on reflection, its not quite as
expensive as it first appears.
They’re raising money as you know they’re raising money
at a reasonably good price given where their stock
price has been for the last six months.
So the dilution is not as bad as lets say could be.
Another thing I dont like to be honest is a lot
of this is it 30% of it is in Equinox shares.
I think its 700 (million) and something they get in
cash and the rest is in Equinox shares.
Maybe 20% in Equinox shares.
Equinox is not a company I’m completely on
top of as you can see tell.
But Orion, I mean there’s obviously going to
be some lockups in those shares but Orion
is not in the business of holding shares
in other people’s companies for the long term.
So they will be an opportunistic seller.
So that is a bit of an overhang on the market. Sure.
And the market clearly didn’t like it.
It was down eight or 9% today, if I
remember right, or if I last I saw.
But at the same time, that purchase is
improving the political risk profile of Equinox.
It’s getting it, it just got it to about a
million ounce producer because in 2024, equinox’s other mines are
set to produce 590,000oz at the midpoint of guidance.
And then after greenstone is
in full production, that’s another 400,000 oz.
That’s 990,000 oz, which basically gets them to that million
ounce mark. Almost to the million, aren’t they? Yeah.
And also it improves their cost profile a lot.
No that’s, I’ve made two comments if I may.
I’m not sure I completely agree with you on
the first part about the stock price coming down.
You know, when you look at
Equinox, it was yesterday was what? 550?
At 550, I think.
Let me just pull it up so we can
get, since it’ll only take me a second.
We may as well.
So, yesterday, it closed at, oh, 570. Sorry. Yeah.
So it closed at 572, but the offering
is a 530, and it’s now a 524.
So it’s not unusual when a
company does an overnight offering. Right.
It’s not unusual for the stock price to
go right down to where that price is.
And it’s also, I would say, it’s normal for them to
go down to where the stock price is, and it’s not
unusual for them to go a little bit under.
So to go only $0.06 under.
I’m not surprised at that at all, frankly, especially if, when
you look at Equinox for the last sort of month.
I’m just pulling it up. Sorry.
So we have the exact numbers.
You go back one month from today, and you’re basically
at the same price we were a month ago.
So I don’t think this is extreme, to be honest.
I think your second point is very valid, though,
because they’ve got the Brazil mines, they’ve got the
California mines, moderately small, both of them, and then
they’ve got the Los Filos, which is
in Guerrero state, as you know.
And they’ve had all the problems there, and
they have to redo the mine plan, which
essentially means laying off a lot of workers.
So, you know, there is a sort of.
There’s a question mark over that.
They want the workers to,
All of them, all of the villages, all of the groups,
they want to sign on to the new mining plan, because
there’s no point in, you know, having a new plan and
then, you know, having continued blockades and so on.
So this now having 100% of greenstone, not only is
Greenstone a great mine in a great jurisdiction, which it
is, but it also gives them a little bit of
whatever you want to use leverage in negotiations, because now
they can say, look, we’ve got another mine.
We don’t actually need you.
We only need you if you cooperate.
Sure, sure.
And in fairness, they’re all in sustaining costs
ex-greenstone are atrocious.
They’re well north of $1,800 an ounce, but with
owning 100% of greenstone, that brings it down closer
to $1450 (per ounce), which is much more respectable.
Yeah, it’s not exactly low, but it’s much, much better.
Yeah.
No, no, you’re absolutely right.
You’ve hit the nail on the head. For the company
It really changes their dynamic and their
profile, and it allows them flexibility.
It allows them flexibility with Los
Filos in the negotiations, but it also
allows them flexibility with California.
If there’s permitting issues or all sorts of things,
they don’t have to be in such urgency to
get these other things up and running.
Yeah, and they do have a lot of debt.
They had something like 900 million in debt before
this and they just add another 500 million.
And most of that is around 9% interest rate.
So that is a significant interest payment.
However, after greenstone is in full production, based on
my numbers, they should have a cash from operations
So I don’t see that being a problem.
Well, I hope they’re going to make it clear to the
market that they intend cutting debt with the cash flow.
Cutting debt aggressively with the cash flow, because you’re
absolutely right in that last raise they did back
in September was something that the market was not
expecting because they had told the market they had
all the money they needed to finish building Greenstone.
And in September they came
out and did that convertible, right?
It was a convertible (debt) back in
September, which really shocked the market.
And the stock crashed at that point, or I don’t
think crashed as an exaggeration, but went down a lot
at that point because people were not expecting that.
So, yeah, I think that’s an important thing for them to
get the debt under control, but I think they will.
Now, Greenstone’s up and running, as you say, they’re
almost at a million, so they don’t need to
go out and buy anything or build it.
You know, they don’t need to
go out and buy anything else at this point.

Mining stock expert and industry veteran, Adrian Day, joins me today to chat about his favorite gold stocks in 2024.
Get my newsletter: https://miningstockmonkey.com/products/vip

In this video we chat about the major gold miners and gold royalty companies such as Franco Nevada (FNV), Barrick Gold (GOLD), Wheaton Precious Metals (WPM), Royal Gold (RGLD), and Newmont Mining (NEM).

In addition to the majors, Adrian tells me about a few other companies he’s really bullish on in 2024 such as B2Gold, Midland Exploration, Orogen Royalties.

We chat about the risks that B2Gold faces in Mali as well as their new Goose mine that they’re building in Canada. We talk about how much Orogen Royalties could sell their Nevada “Silicon” royalty for. And we chat about Equinox’s purchase of the remaining 40% of the Greenstone mine that they just finished building in Ontario, Canada. Did they get a good price or did they overpay. In this interview we discuss the pros and cons.

Never make any investment decisions based on my videos. This sector is very risky and this should not be considered investment advice. Always do a lot of your own research before investing your hard earned money.

0:00 – Intro
0:20 – Best value in the precious metals stocks
2:20 – What to look for in the junior stocks
3:30 – Still bullish on Franco Nevada?
7:44 – Do gold analysts get the NAV wrong?
11:44 – Barrick Gold buying First Quantun?
13:00 – The problem with the Cobre Panama stream
15:13 – FNV’s chances against Panama in court
15:54 – Adrian’s favorite stocks today
16:14 – B2Gold (BTG)
18:50 – Midland Exploration
19:28 – Orogen Royalties
21:17 – Pros and Cons with BTG
22:55 – Problems with mining in Mali
24:29 – Potential sale price of Orogen’s “Silicon” royalty
28:12 – Equinox Gold buys 40% of Greenstone Mine
36:33 – Mining Stock Monkey VIP newsletter

This sector is very risky and what we talk about in this video should not be taken as a recommendation to buy or sell any security. It is very important that you always do a lot of your own research before investing any of your money.

#miningstocks #goldstocks #adrianday