Gold and silver have been beating the performance of the S&P 500 so far year to date in 2020, but have actually been doing so for over two years now. It all started in the Fall of 2018 when the S&P 500 dropped 20% going into Christmas while gold and silver began to break away from that key stock market average to rally even while it fell. But few people paid attention then at the time, but as the metals have continued to go up this year mining companies began to make more money and more and more people began to get into the sector for the first time.
Last month we saw the high profile story that Warren Buffett took a position in Barrick Gold. The reality is big money is investing in mining stocks and in small cap exploration and development stocks too. This is creating opportunities for small investors to get involved themselves on the right side of emerging companies in this space. Emgold Mining (TSXV: EMR) is one such stock I own that I believe is now positioned to begin to rally after it closed a key $2.4 million CAD financing last week. Take a look at the chart.
Emgold Mining trades on the TSXV under the symbol EMR and on the US OTC as EGMCF. As you can see from the chart at first glance the stock is currently trading in a nice entry point range at 11 cents. Stocks like this typically will float at a specific price point and then turn up to start to rally. You can see this stock did this when it rallied through 9 cents at the end of last month. Take a look though at how the volume started to come into the stock in July to cause the on balance volume indicator to jump up. This company started to do a string of acquisition this spring that brought it attention.
In the past few weeks though volume has been a little low in comparison. This is because Emgold Mining has been doing a private placement financing. These financings happen when a company sells shares directly to investors (typically big money individuals and funds). The companies then use this money to fund their operations and in the case of exploration companies to begin drill programs on their properties to make them more valuable. Buying before such programs begin usually is the best time to buy stocks like this.
The only problem with financings is while they go on a stock can just sit there with less buying coming into it on the stock exchange, because the big money players buy the shares via the private placement instead of the stock exchange. That makes for less volume on the exchange and on the charts. But when the financing closes that problem is gone and often a stock will begin to rally.
That moment is now for Emgold Mining and is why I am updating you on the stock this morning. This stock is also a value play.
Now in summary the company itself: “is a gold and base metal exploration company focused on Nevada and Quebec. The Company’s strategy is to look for quality acquisitions, add value to these assets through exploration, and monetize them through sale, joint ventures, option, royalty, and other transactions to create value for our shareholders (acquisition and divestiture (A&D) business model).”
“In Nevada, Emgold’s Golden Arrow Property, the core asset of the Company, is an advanced stage gold and silver property with a well-defined measured and indicated resource. New York Canyon is a base metal property subject to an Earn-in with Option to Joint Venture Agreement with Kennecott Exploration, a subsidiary of Rio Tinto Plc (NYSE:RIO). Buckskin Rawhide East is a gold and silver property leased to Rawhide Mining LLC, who operate the adjacent Rawhide Mine and represents a royalty opportunity for the Company.”
“In Quebec, the Casa South Property, is an early stage gold property adjacent to Hecla Mining Corporation’s (NYSE:HL) operating Casa Berardi Mine. The East-West Property, which Emgold has an option on to acquire up to a 55% interest, is a gold property adjacent to and on strike with Wesdome Gold Mine Ltd.’s (TSX:WDO) Kiena Complex and O3 Mining Corporation’s (TSX:OIII) Malarctic Property (Marban Project). Emgold also has a 1% NSR in the Troilus North Property, part of the Troilus Mine Property being explored by Troilus Gold Corporation (TSX:TLG).”
The markets are giving Emgold Mining a market cap of $9 million USD based on these properties. In bull markets exploration stocks like this typically get to market caps of $25 million USD. That’s why I’m so bullish on this space right now and getting heavily involved in stocks like Emgold Mining.
But there is even more when it comes to Emgold Mining. Over the past few years Emgold Mining bought options on properties that it then developed and sold to other companies in return for money and shares.
In 2018 it optioned, acquired and then sold a mining property in Quebec to Troilos Gold Corporation for $250,000 in CAD and 3.75 million shares of Troilos Gold Corporation, whose stock closed on Friday at $1.06 USD.
They also sold two properties to Ximen Mining for $100,000 in CAD and 1.275 million shares of Ximen Mining and 1.275 purchase warrants of Ximen. Those 1.275 million trading shares of Ximen closed Friday at $0.36 USD.
So add that value to the balance sheet and realize that these are stocks that can go up themselves and aren’t being factored into the market cap of Emgold Mining by investors. The property sold to Troilos Gold has a preliminary economic assessment that “supports a combined open pit/underground mining scenario with low initial capital costs and high rate of return for a 35,000 tonnes per day (“tpd”) operation over a 22-year mine life.” Emgold Mining maintained a 1% royalty net smelter interest in it.
In my opinion this stock chart is lined up and the stock remains a value play. That’s the combo to play this sector and I am only talking about a few of the highlights in the company when it comes to its holdings. You can check out Emgold Mining’s full corporate presentation by clicking here.
Disclosure: Mike Swanson owns shares of Emgold Mining. Because it is a small cap stock with a market cap of less than $100 million he has put himself on a trading blackout on the stock and will not buy or sell a share of it for at least 30-days from the date of this post. Wallstreetwindow.com, is owned by Timingwallstreet, Inc., which is being compensated by a third party (Leadgopher LLC DBA Pinnacle Ad Network) to conduct an investor awareness advertising and marketing campaign for Emgold Mining. This third party paid Timingwallstreet Inc., $12,000 to produce and disseminate this and other similar articles and send traffic to them through paid advertising online campaigns for 30 days beginning September 1, 2020. This compensation should be viewed as a major conflict with our ability to be unbiased, more specifically: This communication is for entertainment purposes only. Never invest purely based on our communication. For more on trading risks read our policy statement by clicking here.