The junior resource stocks we’ve dug up were investor favourites even before the COVID-19 stock market plunge
SmallCapPower | March 25, 2020: The recent COVID-19 stock market selloff has hit penny stocks particularly hard, as investors need liquidity to deal with margin calls, living expenses, etc. Ultra-low global interest rates and historic monetary and fiscal stimulus, however, should boost the prices of hard assets in the medium to longer term, as witnessed by the gold price surge during the past two trading sessions. This should eventually trickle down to the junior resource space. Today we have discovered four junior resource stocks that have experienced the best recent buying interest.
*Returns are based on closing stock prices as of March 24, 2020
New Pacific Metals Corp. (TSXV:NUAG) – $4.70
New Pacific Metals is Canadian exploration and development company that owns the Silver Sand Project in Bolivia as well as the Tagish Lake gold project in the Yukon. Its flagship Silver Sand Project is located near the world-famous Cerro Rico silver-base metals deposit. On February 19, 2020, the Company announced assay results from the final 37 drill holes from its 2019 resource definition and discovery drill program at Silver Sand, which included 279.25 metres of 91 grams per tonne (g/t) silver. Large, notable shareholders of New Pacific Metals include Silvercorp Metals (29% ownership interest) and Pan American Silver (17%).
- Return Since Low on March 16, 2020: +101%
Bear Creek Mining Corporation (TSXV:BCM) – $1.49
Bear Creek Mining explores for, and develops, silver and related projects in Peru. The Company considers its flagship Corani Project “one of the largest undeveloped silver deposits in the world,” containing in excess of 225 million ounces of silver, 2.7 billion pounds of lead and 1.8 billion pounds of zinc. Bear Creek expects Corani to produce more than 9.6 million ounces of silver and 165 million pounds of combined lead and zinc annually over a projected 15-year mine life, and the Project is highly leveraged to metal prices, with a $113 million increase in NPV for every $1 increase in silver price with proportional changes in lead and zinc prices. On March 3, 2020, Bear Creek Mining announced that it has engaged BNP Paribas and Société Générale on a best-efforts basis to arrange a US$400 million senior secured credit facility.
- Return Since Low on March 16, 2020: +99%
Lion One Metals Limited (TSXV:LIO) – $1.24
Lion One Metals has a flagship asset in its 100%-owned, fully-permitted Tuvatu Alkaline Gold Project located on the island of Viti Levu in Fiji. Recent drill results included 3.60 metres of 13.12 g/t gold. The Company currently has about $17 million in cash and a nearly one million ounce gold resource at more than 9 grams per tonne.
- Return Since Low on March 19, 2020: +72%
Ely Gold Royalties Inc. (TSXV:ELY) – $0.77
Ely Gold Royalties currently has 37 royalties/stream with three producing royalties/stream. Significant upside could be realized from the Company’s 2% NSR on Wallbridge Mining’s Fenelon Gold Property in Quebec, which could commence production later this year. Eric Sprott and Rick Rule are significant shareholders and ELY is hoping to initiate a dividend program either this year or next. In a recent interview with SmallCapPower, Ely Gold Royalties CEO Trey Wasser said he expects the Company to generate nearly $4 million in revenue in 2020, with that number anticipated to double by 2022. On March 17, 2020, Ely Gold announced that it has agreed to acquire a 3.5% net profits interest on the Ren Property in Nevada for a total consideration of US$500,000 in cash. The REN Property is part of the joint venture between Barrick Gold Corporation and Newmont Corp.
- Return Since Low on March 16, 2020: +64%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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