Big money is betting on a bull run for gold, and Dutch ABN Amro sees it hitting $1,300 by year-end, and $1,400 in 2018 amid rising global uncertainty. But what they might have missed is one unique junior explorer that has managed to pull off the impossible on the precious metals scene at exactly the right time.
Fiore Exploration (TSX:F.V; OTC:FIORF) has scooped up almost all the best exploration territory surrounding the world-class El Peñon gold mine in Chile in a deal that a junior explorer could only manage if backed by heavy hitters.
With the newest round of drilling results expected soon, Fiore’s timing couldn’t be better. Last week, the big speculators in gold futures increased their net long positions.
The message is bullish, and it’s loud.
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The gold hoarding started in April, with JP Morgan (NYSE:JPM) boosting its portfolio by over 380,000 ounces. iShares Gold Trust (NYSEARCA:IAU) and SPDR Gold Trust (NYSEARCA:GLD) also jumped on this bullish bandwagon, with IAU adding over 26,000 ounces and GLD over a million.
Everyone is scared as North Korea plays games with nuclear weapons, the Middle East flares up with direct U.S. involvement, and talk of recession intensifies.
Where there is fear, there is gold fever.
Warren Buffet knows it—and he’s always advised us to be greedy when others are fearful. He’s been warning everyone about the economic uncertainty for months.
Legendary Canadian billionaire and mining financier Frank Giustra knows it, too. He’s been pouncing on gold lately, and he’s the heavy hitter backing Fiore.
If it’s big money you’re looking to make with gold, then look to the explorers—especially a junior that’s surrounded by giant Yamana Gold’s (NYSE:AUY) El Peñon on three sides.
Follow the Legend…
Giustra has financed several junior explorers recently—but only those with dream teams and exceptional vision. He hasn’t been wrong yet, and his next big bet is Fiore Exploration.
Why Fiore? Because Fiore’s team has been in Chile for over two decades, and it’s clear they can get things done with shareholder value in mind.
Where Giustra goes, mining money follows because the legendary financier is known in industry circles for financing the right deals at exactly the right time. It’s called the ‘Giustra Premium’.
What he’s eyeing this time is CEO Tim Warman, a 25-year mining veteran who—among other major successes—closed a $1.2-billion deal with mining giant Kinross Gold (NYSE:KGC).
Warman has a long track record of making multi-million-dollar discoveries and keeping his shareholders very happy. Warman also ran Malbex--the company that made the 6.8-million-ounce Alturas gold discovery that now belongs to giant Barrick Gold (NYSE:ABX).
Giustra is also keen on two other key figures at Fiore: Brian Paes-Braga and Paul Matysek.
Paes-Braga is the founder and CEO of the most notable junior lithium explorer to rise to fame since the electric vehicle (EV) boom prompted a lithium craze.
Matysek is well-known for creating over $2 billion in shareholder value across numerous resources, including gold, lithium and uranium.
To get Giustra’s attention, you can’t be average—and Fiore is no average junior.
When a Small-Cap Explorer Makes Big-Cap Moves…
In landing the permits to surround Yamana’s El Peñon Gold mine, Fiore has done what no other junior could do: It flanked a major producer on three sides in a highly prospective gold venue.
Yamana's El Peñón mine is one of the most prolific gold and silver mines in Latin America. It’s massive, and it’s high-grade.
El Peñón has produced over 3 million ounces of world-class gold and more than 90 million ounces of silver since it went into production in 2000. This mine accounts for 18 percent of Yamana’s gold production, producing nearly 230,000 ounces of gold annually for the company. That’s worth over $280 million. And there’s still a lot to come: There is about 2.4 million ounces of gold left in the mine, and another 77 million ounces of silver.
Fiore (TSX:F.V; OTC:FIORF) now surrounds this mine on three sides, so they’ve inherited all the infrastructure, and a massive exploration patch in a known money-maker. But they’ve also got wider access due to solid relations with the majors next door, including Yamana and Chilean giant SQM.
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Fiore’s second major project, Cerro Tostado, is also close to Yamana and just north of Anglo American’s El Soldado mine and Austral Gold’s El Guanaco mine.
A third project, acquired by Fiore in April, is Rio Loa—a gold exploration play in Chile’s prolific Maricunga belt. It’s another case of brilliant ‘closeology’: It’s right next to Gold Field’s 3.3-million-ounce Salares Norte discovery, which is one of the highest-grade deposits in this belt. It boasts more than 100 million ounces of gold in reserves, resources and past production.
In the meantime, first drilling results at the flagship Pampas El Peñon project have been impressive.
In December, Fiore completed drilling an 8,000-meter RC drill program, and follow-up drilling will start this summer. The ‘closeology’ has so far worked as expected: After spending more than $1 million on mapping, sampling, trenching and near-surface drilling, the similarities to the major gold finds right next door have become clear.
We expect more results soon from Fiore because this week Fiore will launch drilling at Cerro Tostado, with initial results coming in subsequent weeks. Chile’s SQM has already done advance work on this play, with the results of some 1,937 meters of reverse-circulation drilling in 17 holes confirming the presence of structurally control silver-dominated mineralization, with highly anomalous levels of silver.
If you’re looking at gold, you’re looking at a window that’s closing fast on great buying opportunities, according to Giustra, who predicts gold could pass the $1,900/ounce mark in the medium term.
Everything’s feeding a bullish gold market, and first movers on new gold plays—especially with a junior (TSX:F.V; OTC:FIORF) that is preparing to unleash new drilling results, is fully financed and remains acquisition-hungry.
And when it’s got the ‘Giustra Premium’—even better.
Some other Canadian-listed gold miners to keep an eye on:
Endeavor Mining Corporation (TSX:EDV): EDV has a solid West African mining portfolio and it’s stock has been outperforming lately, with consensus to buy.
Centerra Gold Inc. (TSX:CG): This is a Canadian mining spin-off of Cameco Corporation (NYSE:CCJ), and a major acquisition last year in Kyrgyzstan could make this year great for cash flow and boost valuations.
Nova Gold Resources Inc. (TSX:NG) (NYSE:NG): Nova Gold is worth attention because it’s been underperforming and it’s stocks have lost a lot, but are now starting to make gains.
Torex Gold Resources Inc. (TSX:TXG): This should be a good year for Torex. It’s sitting on the attractive Morelos Gold Property in Mexico’s Guerrero Gold Belt and is nearing full production at its El Limón-Guajes mine in Mexico, which launched the start of commercial production last year.
By Charles Kennedy of Oilprice.com
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