Grid Metals
Speaking of McEwen Mining, Grid Metals (GRDM/MSMGF) CEO Robin Dunbar is on McEwen Mining's board of directors. Grid is my top (and only) big bet on palladium, and they are gearing up to drill what could be a massive discovery at East Bull Lake in 2 weeks! This is a tiny sub $10M USD market cap undiscovered gem. If you missed my initial note on Wednesday, you can read the summary below.
Today, I'm happy to share a Zoom recording that I hosted recently with the CEO and VP of Exploration David Peck, to better understand the details of the East Bull Lake property. It is absolutely worth your time to learn about these huge targets that they have identified, because if they hit early in this program, which I think is a strong possibility, GRDM could trade multiples higher than it is now....overnight.
Closing above .225 today, to end the week, is a technical breakout, and the next major resistance level doesn't show up until .50 CDN, more than 100% higher than yesterday's close. If you already read my introduction to Grid on Wednesday, you can skip the part below here and go directly to the video at the bottom.
There is nothing guaranteed in mining exploration, that is for sure! But once you hear and see the targets in the presentation from Peck, who is an extremely accomplished geologist in the nickel and palladium sectors, you will realize quickly that this is no hype job. The drill targets are bona fide enormous anomalies that have massive deposit potential, at high grades.
I'm moving my buy up to price to .28 on GRDM and .20 on MSMGF, because I believe today we'll close above the .225 breakout level on GRDM. Assuming so, the stock could easily see .35-.45 going into the drill program in just 2 weeks, with initial results starting to come out by the end of June. And again, as you can read/reread below, the backstop here if they miss, are the nickel assets.
May 27th Intro:
Palladium
I feel that silver could be the most undervalued "precious" metal out there, followed by platinum. But what about palladium? It has crushed even gold in terms of performance over the past 2-4 years, hitting $2,800 in February, and it was only $500 per ounce in May 2016! It has pulled back, as you would expect after doubling from last May to the February 2020 highs. It's back around $1,900 today, quite a ripe price for producers or explorers looking for new PGM deposits.
The problem for investors is that the opportunities are SCARCE! Stillwater Mining and North American Palladium were the two big primary public palladium producers, and both were acquired (Impala bought NAP for $1 Billion CAD in December 2019). There are some interesting juniors, but for every say, 100 companies that give us exposure to gold or copper, there might be 2 that are primary palladium plays! And most Platinum Group Metals assets out there are 2/3 platinum and 1/3 palladium. So you buy the drag with the platinum price being so low, and only a partial kicker in palladium, via most cases.
Grid Metals
I own physical platinum, but not physical palladium. However, I've made a substantial "call option" bet on palladium through a junior mining company called Grid Metals (GRDM/MSMGF). This situation is actually quite incredible! At .21 CDN on GRDM, the company has just a $7M US market cap. Yet, they already have more than $2 Billion US in nickel, copper, and PGM resources in the ground at their legacy Makwa Mayville project (past PEA stage).
But now the torque in the story is going to come from drilling their East Bull Lake palladium property, and they're starting in less than 2 weeks! The targets on this property are HUGE. A massive validation for me to get involved was when Grid landed David Peck as the new VP of Exploration in Q1. He was instrumental in building up the Lac De Iles mine at North American Palladium that they sold for $1B CDN in December, making him a highly coveted free agent.
I conducted a Zoom webinar with CEO Robin Dunbar and David Peck last week about East Bull Lake. They have a lot of data, and have conducted significant MT surveys, geophysical, and surface work earlier this year to firm up targets for this initial program. Peck breaks down the similarities to Lac de Iles' geology in the webinar, except he believes that East Bull Lake could be 5-6 times larger!!!!
The drill bit will test their theories, but I like the assessment from one of the top geologists in this space! It seems like quite a high probability that we'll see some very strong intercepts on this first go around (4,000 plus meters). If so, it could blow the doors off of this little company's share price. Plus, the backstop here on risk is their other assets, which have real value already, and major leverage to nickel especially.
Check out their updated investor presentation here:
https://gridmetalscorp.com/site/assets/files/5137/2020-05-grdm-cp.pdf
The geology in this part of Ontario (80 km west of Sudbury) is such where a 2 to 1 palladium to platinum ratio is expected, which I like. This was a $5 stock in 2011 based on a fraction of what they have now! Our premium members have accumulated millions of shares over the past weeks and now it is officially a strong buy for all of our GIL readers. We had a very brief chance to buy some in March under .10 during the crash on light volume, but most of our position has been acquired between the mid teens and low .20's. It closed yesterday at .205, which is still exceptionally cheap in my view, and not much higher than our cost.
Next Steps
Palladium doesn't have to go up for this to be a monster winner. In fact, if Pd stays above even $1,300-$1,500, and they hit on one of these large anomalies, the value should sky rocket. If Pd rises back into the mid $2,000's or higher....forget about it. This is a new palladium story. For years it was all about nickel, so we are very early in having this on our radar as a major palladium play. This summer I expect many more investors to catch on.
I wouldn't pay over .25 CDN today/tomorrow (.19 on MSMGF in the US). Let's see if some sellers arise at the previous high around .24, which I'm sure they will to some degree. Next week when the drills are mobilizing at some point, is when I expect organic anticipation to start giving the stock a tailwind. So the next few days should be a good time to take initial positions. The stock is tight, however. So, sitting with a limit order a penny or two below the market will be a futile exercise in my opinion. Buy some offers if you want in this stock, then sit back for the rest over the next 2-3 sessions.
We'll see the first batch of actual assays by the end of June or so. This isn't the Golden Triangle (!), so drill results will be turned around in 10-14 days. Once you hear the story from the company directly on Friday or Monday (probably Friday I will release the webinar), you will want to buy more, I'm just letting you know in advance! The odds of Grid hitting a bunch of dusters on this initial program are quite low, and you won't need to come to that conclusion from me.