The gold market sucks right now… Well, at least it does compared to the first half of 2016.
However, deep in the numbers is where you’ll find the truth. The major mining giants are making money right now. This, of course, is very healthy for an industry that’s been on the outs for nearly 7 years.
At first glance, all seems okay. Gold is up year-over-year, it’s up on the year, and overall, if you’ve been buying gold since 2015, you’re feeling pretty good. Beneath these numbers, though, is something that has me smiling, and I think it’s going to deliver fortunes to many of you reading this.
You see, what’s not being accounted for in the gold market is the absolute devastation we’ve seen on the supply side.
- Few new discoveries have been made in the past 20 years!
- Ore grades have collapsed.
- Even in the friendliest jurisdictions, it takes years and hundreds of millions of dollars to bring a deposit into production.
According to research released by Goldman Sachs, we hit peak gold production in 2015, meaning that in order to produce more, we have to start looking at the harder to get gold, with a much higher cost.
The problem is that markets don’t react until there is a crisis.
Like homebuilders who underbuilt in bad times and then overbuild in the good times, the major mining giants are depleting their current deposits and not replacing them fast enough, to the point that in a few years, they will be fighting over minable gold resources or end up trying to play catch-up with low-quality projects that may take 5 to 10 years to bring into production.
As much as I love to see these 300 to 500% moves in the junior gold stocks like we did in 2016, in my own interest, 2017 has been a great year for us.
It’s the year we can be greedy, with a sizable margin of safety. In order to position for the demand of minable, quality gold resources, the kind that the majors could soon be fighting over, I am looking at one stock…
Consider accumulating shares of First Mining Finance (TSX: FF & US: FFMGF). The majority of its gold portfolio is in Canada, and most importantly, these are minable ounces in the ground surrounded by some of the largest gold producers on the planet.
I’ve been tracking the gold juniors for nearly 17 years now, and I’ve never seen more of a clear winner! In the 1990s, the founder of First Mining Finance, Keith Neumeyer, created a billion-dollar copper company. Then, in the 2000s, he created a billion-dollar silver giant. Now, he’s using the same exact strategy for gold.
Only this time, he holds all the cards…
During 2015 and 2016, they went on an aggressive acquisition spree, and now, they have some of the best gold assets in the world. In fact, they practically cornered the market for gold resources in eastern Canada.
They have one of the largest undeveloped gold deposits on Earth that is economic at today’s metal prices!
And news just put out last month showed that the Springpole project will be another low-cost, minable gold asset owned by First Mining Finance.
With 12 million ounces of gold resources and exploration upside, this portfolio, in my opinion, could see a bidding war from the giants in the industry.
- Springpole is one of the largest undeveloped gold projects in the world, with over 5 million ounces of gold in the ground.
- Goldlund has 2.3 million ounces of gold resources, with terrific exploration upside to grow, and it is perfectly located in NW Ontario, where a highway, power line, and gas line run right through the property.
- Cameron has a resource of close to 1 million ounces of gold. First Mining’s large property package includes a number of satellite projects, with historic resources that could potentially feed a consolidated mining operation.
- Hope Brook is a past-producing mine with infrastructure still in place, as well as a million-ounce, high-grade gold resource that is amenable to both open-pit and underground mining methods.
- Pickle Crow is another past-producing, high-grade mining site with a 200 tonne per day gravity mill sitting on the property and 1.3 million ounces of gold resources, averaging nearly 4 grams per tonne.
All of these assets were once referred to as flagship projects for the companies that previously owned them, and they are all now held by just one company, with one of the best management teams in the industry. In fact, all of these assets combined during the time frame of 2010-2012 had a value of over a billion dollars.
I should highlight Springpole because this one asset alone has a Net Present Value that is worth well in excess of the entire company’s current market capitalization.
Not to mention, the company has over $18M of cash sitting in the bank.
This means that, in effect, you’re getting all of their other assets for free! Like I said, I feel like I’m handing out blank checks with this investment idea.
First Mining Finance is the real deal, and when it gets taken out or begins to spin out some of its assets, the value that will be unleashed could be a lot more than anyone out there is preparing for.
Perhaps the only person who truly sees this is Keith Neumeyer, who’s been buying MILLIONS of shares on the open market since it went public.
In fact, he’s one of the largest individual shareholders of the company!
Consider making First Mining Finance a core stock in your portfolio. In my opinion, don’t look for the 20% move on this one. This is like a trophy asset. You’ll own some of the best gold projects in the world. Just sit on your shares and wait.
I don’t know if it’s going to be in 2017, 2018, or 2019, but this isn’t going to be a normal type of investment. It’s fair to say that a guy like Keith Neumeyer isn’t buying shares and acting as chairman of the company with NO salary so he can make a double – or even a triple. He’s looking for a grand slam, and so am I.
Consider shares of First Mining Finance (TSX: FF & US: FFMGF).
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*12 Million ounces of gold resources (7Moz measured and indicated/5Moz inferred)
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