Now that the Fed has met and increased interest rates for the third time, I expect more capital to rotate from overvalued stocks to the junior miners similar to what we saw after the dot com crash. This bubble in stocks could be on the verge of a precipitous fall which could abruptly wipe out the capital chasing stocks higher into nosebleed levels.
Bitcoin and paper currencies are losing favor while gold and silver may come back later this year and certainly in 2018 when many of the major producers are set for a supply shortfall. As stocks correct and treasury yields rise with rising inflation more investors will flock to our illiquid junior mining sector seeking tangible assets for protection and a hedge against hyperinflation.
The junior mining sector is small compared to the 70’s and 80’s when gold was much higher when inflation is considered. I expect to see more gold and silver mining funds get started. Once we breakthrough old highs of 2011 with gold and silver things will go ballistic for junior gold miners especially new emerging producers who are coming into production while the tired old producers are looking for new high grade, low cost replacement reserves.
That is why I scour spending hours searching the junior markets for the 3-5 emerging low cost gold producers which could be rerated as they progress into commercial production and get noticed by the general market and value funds.
I recently discussed a new optimization plan with Northern Vertex Mining (V:NEE) $NHVCF #northernvertex CEO Ken Berry on the Moss Mine just south of Las Vegas in NW Arizona. They recently put out news about proposing a power line be built to the property which could save the mine $16 million over five years. This is exciting for all the fundamentals of the project which is already extremely impressive.
The job creation could create an economic boon to the region especially if the company finds more mineralization below the vein at depth. They are actively drilling and had some exciting results weeks ago showing some exciting upside potential. The power line is much better than the generators that were planned as it will reduce emissions considerably.
The mine could definitely help out the region which has been hit hard with high unemployment and could improve some of the nearby infrastructure and roads. Remember this company owns one of the lowest cost gold mines going into production with all in sustaining costs way below $700 per ounce. I am shocked that more mid-tiers or majors have not at least taken an equity stake in this project of just under 20% or 10%.
If you are a miner this is a project you want to work at as Bullhead City, AZ is just 20 minutes from the site. So miners with families can be home for supper which is a rare opportunity. Construction is underway and over 45 million has been put into this project to date. Its a tremendous location for a new mine near Vegas and Phoenix and it should be put on your radar.
This company is on the doorstep of production however pay attention to the step out drilling they are doing which could significantly expand mine life and resources. I would say the next couple of months could be quite exciting for Northern Vertex $NEE.V $NHVCF as they advance the Moss Mine closer to production in 2017.
After highlighting the company earlier this year the stock shot up in price allowing some of the existing warrant holders the opportunity to exercise their positions strengthening the treasury and improving the balance sheet of Northern Vertex. The stock has pulled back to its breakout point.
Disclosure: I own Northern Vertex and they are a website sponsor so please be aware I have conflict of interests and hope to benefit from price increases. This contains forward looking statements which may not come to fruition as small cap stocks are incredibly risky. Buyer beware! I am not a financial advisor and this is not investment advice or a solicitation to buy or sell stock. This should be considered an advertisement and not investment advice!