My top stock pick for this month is small cap exploration stock Norseman Silver, which trades on the TSXV as NOC and on the US OTC as NOCSF. I own shares of it and believe that on a technical basis it is in a very similar position as my stock pick for July was in, because it has been outperforming its sector. It also is consolidating in a range, which provides it with a great entry point, and should lead to a nice rally to the upside once it is broken.
You can see what I mean from the chart.
As you can see, Noresman shares have been trading in a range with 41-43 cents as resistance and 32 cents as support. This makes for a clearly defined entry point for a great trading set up. Stocks that consolidate like this typically have big rallies once they break their range. For instance, when this stock cleared 30 cents in December it more than doubled by rallying up to 75 cents.
There are two key reasons why a big move can happen.
First, as my stock pick for July (which did great), was doing in June, shares of Noresman have been outperforming mining stocks to position as an emerging sector leader.
The indicator on the bottom of the price chart is the NOC/GDX relative strength ratio, comparing the performance of Norseman with that of the GDX mining stock ETF. When GDX and gold fell in June this ratio simply went sideways. It acted firm, because Norseman simply remained in a range that month while most mining stocks went lower.
In other words, when it comes to the technical price factor of relative strength NOC has now risen to the top of its sector. It is in position to become a leading mining stock starting this month, if not now.
Secondly, Norseman is trading with a market cap of roughly $13 million USD. Most small cap mining stocks are now trading with market caps over $20 million USD and in past bull cycles just about all small caps gold and silver stocks get to market caps over $25 million.
In other words, this stock is cheaper than most stocks in its sector and is trading with great relative strength.
The company is also planning to launch an accelerated drill program, which should bring it positive news flow.
Norseman’s property portfolio includes the Cariboo, Silver Vista and Silver Switchback projects, all based in mining friendly British Columbia. In March the company also issued a LOI “with the Bussandri-McMillan partnership (the “Optionors”) to acquire a 100% interest in the Taquetren Silver Project (the “Project”), which is located in the Rio Negro province of Southern Argentina. The Optionors have agreed to work exclusively with Norseman.”
This project, Noresman explained in a press release, “covers approximately 285 square kilometers (110 square miles) and is located the within the Somun Cura Massif. The geologic setting of the Project is calc-alkaline, bimodal Jurassic Taquetren Formation volcanic rocks, within the Gastre fault zone. The Gastre fault system is a transcontinental shear zone, which extends from the Andean Cordillera to the Atlantic coast resulting in a series of half grabens and tectonic basins and associated faulting. Work to date has suggested favourable hydrothermal alteration. However, the Company wishes to note that the Project is an early-stage exploration property.”
Sean Hurd, President and CEO for Norseman, commented: “We are very excited to potentially enter one of the most under-explored mining districts in Argentina. The region contains significant discoveries, Patagonia Gold’s Calcatreau (Gold-Silver Deposit) and Pan American’s Navidad (one of the worlds largest undeveloped silver deposits) with a resource in excess of half a billion ounces of silver. Our team and our new partners have extensive experience in Argentina, and in the Rio Negro province in particular. Our entry into Argentina could be a significant move forward as we seek to expand Norseman’s commitment to becoming a premier silver exploration company.”
Last month Norseman announced a private placement raise of up to $1.5 million to augment its existing $1 million in cash on its balance sheet and to fund a drill program on its B.C. properties and advance its Argentina project, which being new for the company, has the potential to really get people’s notice.
“- Located in the Navidad-Calcatreau Mining District, Argentina”
- – “An under explored district hosting one of the largest silver deposits in the world”
- – “In the SW of Rio Negro Province ~30 km N of the border with Chubut Province”
- – “Comprised by 3 cateos (Prospecting Licences) selected to cover key stratigraphic and structural elements associated with the newly-discovered Navidad-Calcatreau mining district.”
“- Argentinian team includes first-hand participation in the discovery of the Navidad Silver Deposit (M&I: 632M Oz Ag contained in 155.2 Mt @ 127 g/t Ag, 0.85% Pb, 0.05% Cu, 150 g/t AgEq)- Permits have been obtained to conduct initial geological, prospecting and geochemical sampling with work is commencing May 2021- Accessed by high quality and well maintained paved and gravel roads.”
You can find the full corporate presentation for Norseman here in PDF form.
So, Norseman is in an interesting key moment for the life cycle of a small cap mining stock. This could be the reason why its shares have been displaying powerful relative strength and are now in position. It is my top stock pick for this month.
-Mike
Disclosure: Mike Swanson owns shares of Norseman Silver. Because it is a small cap stock with a market cap of less than $100 million USD he has put himself in a trading blackout on Norseman Silver and will not buy or sell a share of its stock for at least 30-days from the date of this post (08/03/2021). 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 Norseman Silver. This third party paid Timingwallstreet Inc., $13,000 USD to produce and disseminate this and other similar articles and send traffic to them through paid advertising campaigns for 30-days from the date of this post (8/03/2021). 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.
