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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

A Good Time To Be Buying Gold

Commodities / Gold and Silver 2016 Nov 12, 2016 - 10:08 AM GMT

By: Richard_Mills

Commodities

There's a lot going on in the world - from Trump being elected in the U.S. to turmoil in the middle east, the China Sea and Turkey, Russia is flexing it’s still considerable might, North Korea’s flinging it’s nukes helter skelter, Japan’s rearming, disease runs rampant and fear escalates about virus mutation, there’s shortages of fresh water with many rivers not reaching their former endpoint and of course climate change is rearing its head to destabilize natural rhythms or cycles. It’d be hard to go back in history and pick a period of time when things weren’t so combustible.

Your author believes gold and silver have never been better safe-haven investments. Inflation, world events, diversification


So too do resource related equities. Junior resource companies, financed to near term production, currently offer the greatest leverage to increasing demand and a rising gold/silver price. This is where the money will be made in the next two years.

It’s a fact junior mining companies outperform senior miners at finding new mineral deposits and generating wealth for stakeholders…

“These are among some of the findings released in a study conducted by resource company strategist MinEx Consulting, which analyzed the performance of explorers and producers operating in Canada between 1975 and 2014. What the consultancy firm found is that, in the last decade, junior companies were responsible for more than three quarters of all new mineral discoveries and were approximately 30 percent more effective than senior companies at generating wealth.”

Aheadoftheherd.com’s editor isn't looking for huge producers with so much overhead that they can't profitably mine an ounce of gold. I'm not looking at huge mines with billions and billions of dollars in capex. I'm much much more comfortable with smaller mines having lower capex and under-control operating expenditures.

If you want to invest in the building of something of value – be there as the company moves it’s mineral deposit down the development path towards a mine there are a very few quality junior companies to choose from. Even fewer with the studies done and money already raised to get into production.

These are the situations that are an enormous opportunity to back excellent management teams with your investment money.

Spending

Let's look at why companies aren't making a profit:

  • One of the biggest reasons is capital expenditures (capex), which is the basic cost of building a mine and its supporting infrastructure.
  • There are lower grades being mined and more complex metallurgy.
  • Companies are increasingly going into more remote areas that lack infrastructure.
  • Environmental regulations are increasing.
  • We are seeing more money-grabbing governments and resource nationalization. Miners are an easy target as mining is a long term investment and one that is especially capital intensive – mines are also immobile, so miners are at the mercy of the countries in which they operate. Outright seizure of assets happens using the twin excuses of historical injustice and environmental/contractual misdeeds. There is no compensation offered and no recourse.

Because everything you can imagine is working in a perfect storm to increase costs, and risks, on mining companies, here at aheadoftheherd.com we’re seeking out the smaller mines with low capital costs, uncomplicated metallurgy, no worry of governments seizing our asset and we’re looking in areas with long mining histories.

Northern Vertex mining Corp. TSX.V – NEE

Northern Vertex has activated the historic Moss Mine area (100% owned by NEE) in north west Arizona. With excellent site access – only a 20 minute drive from Bullhead City and its population of 35,000 people there’s excellent infrastructure to support an operational mine and the skilled workforce close by to run it.

The Moss Mine Gold-Silver Project is an epithermal, brecciated, low sulphidation quartz-calcite vein and stockwork system which extends over a strike length of 1,400 meters and has been drill tested to depths of 370 meters vertically.

The Moss mine is a potential heap leach, open pit project that has been advanced to the Feasibility Study stage.

Measured and Indicted oz gold (Au) 377,000.

Measured and Indicted oz silver (Ag) 4,610,000.

The Feasibility Study shows the Moss Mine to be an economically robust, higher margin, lower risk project in one of the world's premier mining jurisdictions.

Northern Vertex has just signed a US$20,000,000 million credit agreement with Sprott Lending.

With US$8,500,000 in equipment financing under negotiation, US$7,000,000 in the treasury and capital expenses estimated to be US$33,000,000 to build the mine, development of, and production at NEE’s Moss Mine seems to be a certainty.

Exploration potential to further expand the gold and silver resource certainly exists.

Moss Claim Blocks:

  • Moss Mine has 200,000 Oz Gold (M&I) not included in the BFS
  • Moss Mine Resource remains open at depth and on Strike to the East and West for more than 3kms

The Company has also identified four high priority targets - all four are situated in close proximity to planned operations facility - that will be the focus of a proposed upcoming multi-phase drill program.

Because Northern Vertex is well advanced along the development path towards a mine the guesswork about grade, size, costs and metallurgy have been taken out of the equation for us. Company management has done the work necessary to give investors the confidence that their project will be a profitable mine.

Conclusion

Northern Vertex TSX.V - NEE has raised the dollars needed to get into production, investors can see they are going mining and cash flow is just over the horizon.

Buying already paid for near term gold and silver production in today’s current global climate of fear and uncertainty might not be such a bad idea.

Northern Vertex is on my radar screen, is it on yours?

If not, maybe it should be.

If not, maybe it should be.

By Richard (Rick) Mills

www.aheadoftheherd.com

rick@aheadoftheherd.com

If you're interested in learning more about the junior resource and bio-med sectors please come and visit us at www.aheadoftheherd.com
Site membership is free. No credit card or personal information is asked for.

Richard is host of Aheadoftheherd.com and invests in the junior resource sector.
His articles have been published on over 400 websites, including: Wall Street Journal, Market Oracle, USAToday, National Post, Stockhouse, Lewrockwell, Pinnacledigest, Uranium Miner, Beforeitsnews, SeekingAlpha, MontrealGazette, Casey Research, 24hgold, Vancouver Sun, CBSnews, SilverBearCafe, Infomine, Huffington Post, Mineweb, 321Gold, Kitco, Gold-Eagle, The Gold/Energy Reports, Calgary Herald, Resource Investor, Mining.com, Forbes, FNArena, Uraniumseek, Financial Sense, Goldseek, Dallasnews, Vantagewire, Resourceclips and the Association of Mining Analysts.

Copyright © 2016 Richard (Rick) Mills - All Rights Reserved

Legal Notice / Disclaimer: This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified; Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.


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