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Gold miners, because the number of discoveries was falling and existing
deposits were being quickly depleted, have had to diversify away from the
traditional geo-politically safe gold producing countries, ie Canada, the U.S. and Mexico. The move out of these
“safe haven” countries has exposed investors to a lot of additional risk.
In many parts of the world capitalist hating Marxist governments are
becoming greedy. Many countries might come to mind as places where
shareholders could, without warning, receive news that their operations have
been taken over, expropriated,
by the government and/or its friends, or that permits are suddenly suffering
delays or have been cancelled outright.
One of the most serious and unpredictable risks facing mining operations
and investor interests is "country risk" - where the political and
economic stability of the host country is questionable and abrupt changes in
the business environment could adversely affect profits or the value of the
company’s assets.
We’ve seen far too many instances of companies losing assets that were
lawfully theirs.
If the management side of the companies we invest in is so important then
maybe we should start regarding the management of the country they operate in
as at least as important? There is nothing quite so heartbreaking to an
investor as having his company’s flagship project taken over, nationalized,
by the "El Presidente for life" of the country they’re working in.
Gold Production
Below is a chart from statista.com showing slowing global gold mine
production.
 
According to the World Gold Council; Gold demand rang in
at 4,212t for 2015, virtually the same as in 2014. Annual gold mine
production increased at the slowest rate since 2008 and re-cycling has
dropped to multi year lows.
Gold Demand
Gold demand growth rose in the fourth-quarter 2015 - demand was 1,117.7
tons, up 4% from the same period a year earlier.
World Gold Council
“Back in 2012, mining companies slashed their corporate costs, their
exploration and development budgets [and so] the pipeline of new gold mines
is really thin.” Alistair Hewitt, World Gold Council
Mining.com
Juniors, Company stage – risk v. reward
I believe junior resource companies offer the greatest leverage to
increased demand and a rising gold price.
Juniors, not majors, own the worlds
future mines and juniors are the ones most adept at finding these future
mines. They already own, and find more of, what the world’s larger mining
companies need to replace reserves and grow their asset base.
Juniors are risky, managing that risk is what investing in the junior
resource sector is all about – in a nutshell it’s all about when you
invest. Some people invest extremely early because of management,
some on the possibility of what a property might host, some people will wait
and invest as you start to drill and build resources thus reducing their
risk. Only you can decide the level of risk you can tolerate and how much
patience you have to sit while developments, the story, plays out.
The greatest risk, and by far the most upside, comes from buying a junior
when they are exploring and make an initial discovery. Great drill assay
results can send a juniors share price skyrocketing. The reverse can also be
true. Junior explorers, the green field plays, are the riskiest plays by far.
My favorite stage junior’s mediate some of the risk, these juniors are in
the post discovery resource definition stage. Our chosen junior has already
discovered something, and they are going in to see what they have – to
hopefully produce a 43-101 compliant resource estimate, or
build upon an existing resource. The risk for an investor at this stage has
been greatly reduced, the waiting time for a discovery non-existent and the
reward very nice considering the much lower amount of risk. If there’s still
enormous blue-sky discovery potential on the rest of the claims, so much the
better.
New Carolin Gold Corp. TSX.V – LAD, OTC - LADFF has
acquired 100 per cent of the Ladner gold project just outside of Hope, British Columbia Canada. New
Carolin has consolidated, after 4 years and considerable effort, a 100 per
cent ownership of the 144-square-kilometre contiguous land package, which
includes the Carolin mine, under one roof.
Near-term plans include:
- Updating a 3-D geological model created in the fall of
2014 with detailed geological and structural mapping and surveying of
the underground and surface areas. The preliminary 3-D model has
provided a more thorough understanding of the Carolin mine gold
mineralization and, with the additional work during this program, will
provide clear exploration targets for drilling of new areas, as well as
within the resource areas.
Recommendations in the current technical report
indicate that a 3-D
geological model will assist with grade and geological controls to the
resource estimate. The 3-D model was not available to assist with guiding
estimation in the company's latest resource estimate. As a result, not all
available data were used, as potential grade boundaries were established
without key structural and geological controls.
- A diamond drill program with specific targets and
objectives will follow the first phase of mapping and surveying at the
Idaho zone (which includes the Carolin mine and former Aurum mine) and
at the McMaster zone, which is 1.2 kilometers northwest of the Carolin
mine along the Hozameen fault.
- The company also plans to undertake exploration work at
two of the several additional known mineralized gold zones located on
the Ladner gold project.
Consolidating ownership of what your author believes is a new gold
district is a major milestone for the company. New Carolin’s Ladner gold
project has been vastly underexplored and has considerable upside potential
for increasing the existing global gold resource of over 700k ozs.
Conclusion
The Incas believed gold was the “Sweat of the Sun.” Gold represented the
glory of their sun god, Inti.
In ancient Egypt, gold was considered the skin or flesh of gods, in
particular the Egyptian sun god Ra. Gold was unavailable to anyone but the
Pharaohs.
The Egyptian word for gold was “nub,” taken from gold-rich Nubia - shown
on the Turin Papyrus as a major gold producer in antiquity.
Consider these two facts:
- The world’s governments and central banks are buying
gold, a lot of gold
- The supply of fiat paper money is infinite while the
supply of gold is finite
It’s my opinion New Carolin Gold Corp (TSX.V - LAD, OTC – LADFF), should
be on every precious metal investors radar screen.
Let’s leave the last words to King Ferdinand of Spain who said, in 1511; “Get
gold, humanely if possible - but at all hazards, get gold.”
aheadoftheherd.com
Richard lives with his family on a 160 acre ranch in northern British
Columbia. He invests in the resource and biotechnology/pharmaceutical sectors
and is the owner of Aheadoftheherd.com.
Richard’s articles have been published on over 400 websites, including:
WallStreetJournal, USAToday, NationalPost, Lewrockwell, MontrealGazette,
VancouverSun, CBSnews, HuffingtonPost, Beforeitsnews, Londonthenews,
Wealthwire, CalgaryHerald, Forbes, Dallasnews, SGTreport, Vantagewire,
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SeekingAlpha, BusinessInsider, Investing.com, MSN.com and the Association of
Mining Analysts.
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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.
Richard owns shares of New Carolin Gold Corp TSX.V – LAD
New Carolin is a paid sponsor of Richard’s site aheadoftheherd.com
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