This Small Cap Stock Is In The Right Sector At The Right Time For 2021 - Mike Swanson (01/04/2021)
Here Is Why Sonoro Gold Is My Top Stock Pick For January
I own lots of stocks in my accounts and even some ETF's, but when I look back on what happened with my investments in 2020 one stock went up more than all of the rest to make me most of my money. It was Aftermath Silver, a small cap mining stock I came into the year owning and am still owning. I bought it in 2019 for under 8 cents a share and today it is trading well over $1.00. The year before I had a similar situation with a different stock that had a similar massive gain. Big winners like this can make a huge impact on an investment account.
Most stocks don't go up like this. The trick is to find a stock that is in the right sector at the right time. It has to be a company poised for some big developments. I believe my top stock pick for this month, Sonoro Gold Corp, is set to be a big winner this year.
For one thing, a lot of money is now flowing into gold and gold mining and exploration stocks. Last year the S&P 500 went up 16.1%, but the price of gold went up 24.8%. And when the S&P 500 fell 33% in the Spring of 2020 the price of gold only pulled back 14.7% from its high.
So, gold is actually trading in a less volatile and more stable way than the US stock market is doing, while providing nice returns to those that invest in it. That is bringing a lot of interest to companies involved in mining and discovering gold deposits for simple profits, but, with interest rates at zero, gold is also becoming a necessary investment for diversification purposes and a growing play for high-net worth and institutional investors. When gold goes up the best mining stocks simply go up even more than the metal does.
Expect these trends to only accelerate now going forward. My best mining stock investments have been in companies poised to increase or begin mining production that are still priced cheap. Sonoro Gold is in such a situation. It trades as SGO on the Canadian market and as SMOFF on the US OTC exchange, where I bought a position myself last week.
The stock is currently trading with a market cap of roughly $14 million USD. In gold bull markets most simple pure exploration gold stocks, with no production, reach market caps of $25 million USD. Sonoro, though, is poised to become a brand new gold producer before the end of this year. The company plans to develop a heap leach mining operation (HLMO) at its flagship property, the Cerro Caliche gold project, located in mining friendly Mexico, and utilize the generated cash flow to fund further exploration and development of its properties. Sonoro has a highly experienced management team of mining, business and finance professionals with a successful track record in discovery through to resource development and production.
This is not their first rodeo.
First let's take a look at the current position the stock is in now.
As you can see, shares of Sonoro Gold broke out in July and rallied from 14 cents up to 33 cents by Labor Day, showing that when its shares move they can move. They doubled and then began a consolidation as the price of gold itself pulled back into November. Sonoro stock is now stabilizing with support at its 200-day moving average. It's only a few cents away from that level now making its current trading level a good entry point.
What is more in the Fall the company did a private financing raise for proceeds of $8 million, much of it bought by Palisades Goldcorp Ltd., at 22 cents. Buying now gets you in at about the same level as recent big investors have gotten in at. The money raised is going to be used to fund mine development and a very active and exciting exploration program that has high potential to demonstrate more value to its properties. I'm expecting a year of good news flow from Sonoro Gold.
On December 18, the company issued a press release stating that it was "pleased to report very favourable results from its current step-out and infill drilling programs. The current programs have demonstrated a material expansion of several mineralized zones, most notably at Japoneses, Buena Suerte, Veta de Oro, El Rincon and El Colorado."
"Based on these results, the Company is revising the parameters for a planned Preliminary Economic Assessment (PEA) to assess the viability of Heap Leach Mining Operation (HLMO) by increasing the target conceptual capacity from 8,000 tonnes per day (tpd) to 20,000 tpd."
It also said that "on November 18, 2020, Sonoro reported engaging McClelland Laboratories of Sparks, Nevada to conduct independent metallurgical testing of the mineralization at Cerro Caliche for its upcoming NI 43-101 compliant mineral resource update and PEA based on all drilling results to December 15, 2020. Sonoro expects that this independent metallurgical testing will confirm and expand on the results of its preliminary in-house column leach tests."
And stated in this release, "as reported on December 8, 2020, and as a key component of fast-tracking the proposed Cerro Caliche mine development, Sonoro contracted D.E.N.M. Engineering Ltd. to prepare a NI 43-101 compliant PEA and Micon International Limited to prepare an NI 43-101 compliant updated resource estimate, based on all drill results up until December 15, 2020. The realization of the Company’s goal of commencing gold production by December 2021 remains dependent on several material conditions, most notably the satisfactory completion of the current metallurgical testing, a
favourable PEA report, securing required environmental permitting and securing project financing."
Remember the current internal assessment is for an 8,000 tonnes a day mining operation.
That assessment can improve with more data and analysis from drill programs, which will be happening.
Sonoro management put on a webinar presentation outlining 2020 corporate developments and plans for this coming year.
You can access the PDF slides using for this presentation by clicking here.
I will be watching this stock closely now and will keep you up to date on any new developments or news from the company. Of course you can get more details from the company's website www.sonorogold.com.
Disclosure: Mike Swanson owns shares of Sonoro Gold Corp. Because it is a small cap stock with a market cap of less than $100 million he has put himself in 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 Inca One Mining. This third party paid Timingwallstreet Inc., $10,000 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 (1/04/2020). 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.
You have come to WallStreetWindow, the website founded by former hedge fund manager Michael Swanson. Join his free email update list and every morning you'll get his market insights and trading ideas before the opening bell and even the top posts he sees of note that day from his friends. To begin put your email into the form on the right now and it's all free.