Legendary junior gold stocks investor Eric Sprott continued his buying spree this week as he snapped up the lion’s share of Golden Predator’s latest equity issue.
Golden Predator Mining Corp. (TSX.V:GPY) originally announced a private placement of worth $6.08m, in which Sprott had agreed to acquire 5 million shares - moire than a third of the latest batch - to increase his total ownership to 13 million shares in the junior gold miner.
Just a few days later, however, Golden Predator said that due to “strong investor demand,” it was increasing the fund-raising to $8.84m. The proceeds of the private placement will be applied to the company’s Brewery Creek and 3 Aces projects, and general working capital.
Golden Predator is advancing the past-producing Brewery Creek Gold Mine towards a resumption of mining activities. Drilling continues to expand the numerous open ended resources and untested targets across the 186 square kilometer brownfield property.
Chief executive Janet Lee-Sheriff said: “The response to the private placement illustrates the favourable reaction from the financial community to the planned restart of the Brewery Creek Mine in Canada’s Yukon. With gold prices picking up, a low capex and short timeline to production combined with the support of the Tr’ondek Hwech’in and Yukon Government, Golden Predator will accelerate its activities and advance the timelines at the Brewery Creek Mine.”
Sprott’s investment comes just two weeks after he acquired the majority of a C$32.5M bought deal financing by Pure Gold Mining (TSX-V: PGM), the company focussed on advancing the Madsen Red Lake Gold Project in Ontario to become Canada’s next major gold mine.
While Eric Sprott’s preference for promising for junior mining stocks is well known, analysts at Australian broker Morgans recently added their voice to those pointing out that real value is currently available at the small cap end of the mining market.
Tom Sartor, senior analyst at Morgans, said: “Normally the juniors accelerate ahead of the producers, both to the up and down-side, however their current underperformance looks stark. Larger miners (S&P XJR index) are trading at roughly two thirds of their all–time highs. Smaller miners (S&P XSR) are at less than one–third, while the micro–caps (no index) are faring far worse. The prioritisation of cash flows in a low returns environment and competition for capital from the tech boom are contributing to this.”
He added: “We’re not calling for another speculative mining boom, but think Junior valuations look disconnected from a far healthier reality, with the sector therefore likely concealing several opportunities.”
Three Canadian stocks that may have outgrown the ‘junior miner’ moniker but were tipped this week are Taseko Mines - owner and operator of the Gibraltar Mine, Canada’s second largest open-pit copper-molybdenum mine; Copper Montain Mining Corporation - producer of approximately 90 million pounds of copper equivalent per year at their flagship mine in southern British Columbia; and Capstone Mining Corp, the Canadian copper miner with operations across North America. The stocks were featured in the Globe and Mail under the headline “Three Canadian mining companies with strong upside potential” after broker BMO Capital initiated coverage on the trio.
Finally, there was good news for nickel stocks and more bad news for cobalt producers as battery metals tracker Adamas Intelligence reported that EV battery manufacturers were increasingly favouring the former in their design. The Toronto-based research firm said electric vehicle manufacturers deployed 57% more nickel in batteries in May this year, compared to 12 months ago.
The two metals’ respective fortunes on the commodities market already reflect the shift: nickel is up almost 20% in 2019, while the price of cobalt has plunged in the last 12 months or so, in part due to increased global supply.