Hello Anthony,
Gold and silver are both up today, although they have given back some of their early morning gains. Weak retail sales, increasing inflation expectations and oversold conditions are leading money to flow back into the precious metals sector.
CDX is not offering leverage today, but over the last five trading sessions it is up 6X the gold price advance and 3X the silver price advance. As we head into the close today, it appears to be gaining momentum versus the metals, which is a positive sign.
Eldorado Gold has announced it will acquire one of our positions, Integra Gold, for C$590 million to develop its Lamaque project in Quebec. This is a 52% premium to the closing price of Integra on Friday. We are sitting on gains of 100% year to date and 203% since we bought shares of Integra Gold during February of last year.
I think this deal is very good for Integra shareholders at a 50% premium. I am not as bullish on Eldorado Gold as I was on Integra Gold, so I decided to sell my shares of ICG today at C$1. 12 and book profits.
This pushed our cash position to 30% and I think this is an opportune time to put some of that cash to use. I still want exposure to the Val d’Or region of Quebec, where 70+ million ounces of gold have been produced and millions more discovered in the past few decades. So I picked up shares of a company with a highly- prospective project bordering Integra Gold’s main properties.
I bought Alexandria Minerals (CVE: AZX or ALXDF) moments ago with a 4% allocation in the ASB portfolio. This company has been on our watch list for a number of months and I think the increased interest in the region will benefit their share price going forward. They are a small-cap company (under $30M), but I think they have the potential to be the next Integra Gold and provide the same type of stellar returns that we witnessed with Integra
Liquidity is much better. I believe that Schwab and Interactive Brokers both provide access to the TSE, while some of the other major brokerages do not.
Alexandria owns the Cadillac Break property where they have increased resources by 4X over recent years at a cost of under $20 per ounce of gold discovered. They have 1.2M gold eg ounces indicated and another 950k ounces inferred. They have been returning high-grade drill results over long strike lengths. This includes a May 10 announcement of 9 g/t over 13.9 meters and 3.8 g/t over 64 meters.
Eric Sprott recently invested $5.1 million in the company and now owns 8.5% of shares. Agnico Eagle, Teck and lAMgold have also taken equity positions in Alexandria. Management is experienced and has aligned their interests with shareholders, with management/insiders holding 6% of outstanding shares.
I think there is huge upside potential for Alexandria Resources, as they continue to drill their projects and increase their resource. But it is a small-cap junior explorer and therefore carries a higher risk/return profile. So, it may not be appropriate for risk-averse investors.
If you are looking for a larger-cap, high grade Canadian gold play, I like Pretium Resources (PVG) anywhere under $10 per share. Commissioning is finally underway at their Brucejack Mine.
Congratulations on an incredibly profitable investment in Integra Gold! Not many investors realize a 100% gain in four months or 200% gain in just over a year. Now, let's find the next big winner!
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Jason Hamlin
Founder - Gold Stock Bull
