The last time we were inundated with a junior mining promo from Nick Hodge it was about that “tiny 50 cent mine” that was about to get the “green light” from Trump’s EPA, and that one has done quite well so far — that was Midas Gold, which I wrote about back when they started pitching it early in the year.
This time it’s a little different — it’s still mostly about gold, but he’s talking up a much bigger story than the development of a single mine. Here’s a little taste of the ad:
“We’re at the ground floor of the next resource supercycle.
“One that will create bigger gains — and fortunes — than cryptocurrencies, marijuana, and tech… COMBINED.
“In order to get your share, all you need to do is:
1. Take action immediately…
2. And put a small stake of money on the most explosive supercycle plays. Even a few hundred dollars could suffice.”
And that’s what investors want to hear, after all — they want to hear that they can plunk down a couple hundred bucks and get 25,000% gains (that turns $200 into about $50,000, in case you skipped that day in math class).
So where is it that we’ll be finding this massive fortune? More from the ad:
“The biggest profits will come from a small group of miners rushing to claim a stake in the 8th Continent.
“How can everyday Americans get their share of the 8th Continent’s unbelievable wealth? ….
“You see, I’ve uncovered the “sweet spot” of the 8th Continent.
“It’s a 350-square-mile, remote, and once-inaccessible location.
“This 100% pure untapped area contains unprecedented riches, including:
* 800 million ounces of silver
* 130 million ounces of gold
* 40 billion pounds of copper
“All told, we’re talking about a $2 TRILLION pot of money.”
OK, so is this 350 square miles all owned by somebody? Can we get some specifics?
“In the last gold supercycle of 2011, this tiny miner exploded for 2,500% gains.
“And that was BEFORE the 8th Continent rush was underway.
“Since then, its wealth potential has grown tenfold. And new targets are being identified seemingly every day.
“Which means an upside potential of no less than 25,000%.”
And we get that “regulatory relief/Donald Trump” bit in this ad as well:
“In a little-known provision of the 2017 tax bill, Trump green-lighted drilling in the Arctic National Wildlife Refuge.
“A move that signals one thing:
“The rush for Arctic energy and resource fortunes is on.”
And on the broader “the arctic will be huge” theme…
“… we don’t have to just estimate what kind of wealth is at stake, either.
“Mines that already exist in the Arctic are the world’s biggest!”
And says that he has a few examples… including “the “Rare Earths Mine in Greenland” that has 11 million tons, with a value of $273 billion… and the Gahcho-Kue Diamond Mine in Canada that claims 53 million carats and a value of $106 billion.
There are a lot of resources in the arctic, globally, but citing those dollar values for those ‘mines’ is perhaps bit misleading — just to follow up on those examples: Kvanefjeld, that rare earths project in Greenland, is indeed potentially huge, but it’s still in the feasibility stage as they try to optimize the design of the project, and the owner of that project, Greenland Minerals and Energy, is currently valued at only $67 million.
And that Gahcho-Kue Diamond Mine is really in operation, it’s a partnership between DeBeers and Mountain Province, one of many arctic diamond mines in Canada — it’s big and valuable, but right now Mountain Province, the 49% owner, has a market cap of a little over $500 million so the project overall is valued by the market at a bit over a billion. Not chump change, to be sure, but a far cry from $100 billion cited in the ad.
Which doesn’t mean that the arctic won’t be seeing a huge influx of exploration and mining and drilling, that seems very much in the cards… it just means that we should be a little more subdued when claiming the “value” of these hugely risky, difficult and very capital-intensive projects.
And he cites several other areas that have been watched by investors in recent years, like the golden triangle in northern British Columbia that currently boasts big projects and deposits like KSM (Seabridge), Valley of the Kings (Pretium), and Galore Creek (Novagold/Teck), or the lightning-rod Pebble Project in Alaska owned by Northern Dynasty.
So are we finally going to learn about this stock being pitched today? More clues:
“Owns Not One, But 12 of the Richest Sites in the Arctic….
“… positioned at strategic locations in two of the Arctic’s hottest gold and copper zones:
Alaska and the “Golden Triangle” in British Columbia….
“Two of its properties border the famous KMS reserve in the “Golden Triangle.”
I assume he means KSM, not KMS… but we’ll forgive the occasional typo (I’m known to commit plenty of my own, after all). And apparently some of its properties border “the legendary Pebble deposit” (which got a bit less legendary for owner Northern Dynasty after their partner First Quantum pulled out about 10 days ago, though Northern Dynasty says, no surprise, that they are “confident” they’ll find a new partner).
He also drops some hints about the geologists behind the company:
“Decades ago, this genius discovered that the Pebble deposit was a mineral treasure trove.
“The biggest gold and copper deposit known to man.
“Today, he’s a renowned legend in the mining world.
“And he now works for this tiny miner, identifying metals riches before they buy a property.
“During the gold downturn, they went hunting for prime properties on sale.
“And thanks to this geologist guru, they scooped up a number of super-rich sites in prime locations…”
And the CEO…
“The CEO is also a geologist and Alaska resident who knows the area well.
“In his youth, he explored the ‘Golden Triangle’ area. He even advised on the Pebble deposit.”
We’re also told that they already have the big guys investing in them, it sounds like they must have some partnership development deals…
“The biggest names in gold are investing millions of dollars in this company’s projects…
“Including Newcrest and Kinross, two of the world’s biggest gold miners….
“In exchange for a piece of these sites, the big miners fund its exploration and mining costs.
Something to the tune of $7 for every $1 invested by you.”
And then we get some name-dropping, with mentions that Doug Casey, Rick Rule and Eric Sprott together “own something like 70% of the company.” And Hodge apparently met with Rick Rule about it, which is not terribly surprising (if Rule and Sprott have $5 million staked in the firm, as the ad says, they’re much incentivized to share the news with other investors).
Hodge’s thesis on this one is based on several things he sees happening — not just exploration success at some of their projects this summer, but also a resurgence of the gold and resource “supercycle” that sends prices soaring and investors foaming at the mouth… here’s how he sums it up:
“The tiny $0.30 miner with the richest sites is on the verge of explosive, life-changing profits.
“Already, it surged 200% in a matter of months — and we’re just getting started.
“This summer, the news of discoveries will begin hitting one day after another.
“Just as the gold and resource supercycle enters into a historic price upswing.
“When that happens, the big gold conglomerates will enter a fierce bidding war…
“One that will send its shares to $3… $30… $50 — and beyond. All in no time flat.”
So who are we being teased about here? Thinkolator sez it’s almost certainly Millrock Resources (MRO.V in Canada, MLRKF OTC in the US).
Yes, Casey and Sprott are big holders — according to Millrock’s latest investor presentation, Sprott and clients own 27% and Doug Casey’s fund owns 5%… which ain’t 70%, but there’s also a ton of warrants on the books so perhaps they own a bunch of those, and when the company was moving into that “Golden Triangle” a few years ago it was widely reported that Rule, Sprott and “other influential resource investors” held 70% of the shares.
I’ve followed Millrock loosely for a while since both Altius and Sandstorm, two of my larger holdings, are big Millrock owners (5% and 4%, respectively, and Sandstorm also owns royalties on a bunch of Millrock’s exploration projects in Mexico), but I’ve never owned the shares directly. It has also been teased before, most recently by Gerardo Del Real (who works for Hodge), and is pretty regularly mentioned by other “pundits” in the space — probably no surprise, since Brent Cook and Doug Casey are both tied to the stock and the Rick Rule/Sprott ownership tends to make newsletter editors get sweaty palms.
The clues fit perfectly in other ways as well, of course — not only do they have those two properties adjacent to KSM, Oweegee Dome and Todd Creek, but they do also match on the personnel clues — CEO Gregory Beischer is an Alaska resident and was involved with the Pebble Project, and the head geologist (“chief exploration officer”) is Philip St. George, who is credited with being the first to recognize the porphyry mineralization at Pebble.
And Millrock has been around for a while, and did surge during that last gold bull market — the stock did go up by roughly 2,500% from late 2008 to late 2010, as teased… though the companion to that statement would have to be “and it has fallen 97% since that peak.”
The only part that doesn’t really match is the “already, it surged 200% in a matter of months” tease… the stock is up about 50% in just the past week or so thanks to the attention from Hodge, and it certainly has had big surges in the past, but the last time it rose 200% was back in the first half of 2016, when all gold explorers were surging and Millrock went from roughly 15 cents to 45 cents (it’s at about 23 cents now in the US, or 31 cents Canadian).
Millrock is a tiny company, and they don’t spend much money — they have a market cap of under $15 million and follow the “prospect generator” strategy… they stake out or acquire projects that they think might have value, and then try to bring in partners to spend money to explore and develop those projects, retaining a little taste for themselves for those possible big gains if the project turns out to be valuable (or, alternatively, selling the projects completely to folks who are looking to build their resource base, preferably at high prices during bubble years).
That’s a good strategy, but it does require exploration success every now and then, and it often requires a bit of patience — since even the giant and pretty well-defined KSM project hasn’t been pushed very far into development by Seabridge, and the Pebble mine is not moving particularly fast, we shouldn’t expect that smaller early-stage exploration projects in those neighborhoods are going to become mines in the next five or ten years. And none of these projects, from the already-operating Donlin Creek mine in Alaska to the hopeful Pebble Project and the already-producing-but-disappointing Brucejack mine, require the arctic to thaw further — people have been mining in the north for centuries, and perhaps it gradually gets a little easier and less expensive for these guys, but it’s not like they’re counting on an ice-free northwest passage to develop their mines — these particular projects are northern, but not that far north.
None of that means they can’t generate value, it’s just a reminder that the story is never as simple and linear as it appears in a teaser ad. It’s possible that some of their summer drilling projects might bring exciting news that generates investor enthusiasm and causes the share price to rise, but I’d keep expectations a little more moderated than that. It’s a solid company, but the float is low and the huge influx of attention from Nick Hodge could, if it continues, easily have just as much impact on the share price as any exploration press release in the next few months. Heck, even the fact that I’m mentioning it here could have an impact, regardless of how tepid my feelings are.
There is, by way of background, an interesting piece from Bloomberg here about the impact of the melting arctic on several natural resources markets — though oil and gas is usually the biggest focus, it will likely touch a huge number of markets, not least because of changing shipping patterns.
So I’ll leave you there, dear readers — a reasonable prospect generator with good connections and good partners, but that hasn’t done much to get investors excited in the past five years. You can see their latest investor presentation here to get a sense of what they think the future holds, and what properties they’re focused on. Will they have great news this year, or in the years to come? Will longer drilling seasons in the north make them more valuable? Willing to place a bet with this management team and ignore it for a few years to see if it works out and they stake a bonanza or two? Let us know with a comment below.
Disclosure: I own shares and/or call options on Altius Resources, Sandstorm Gold and Pretium. I will not trade in any stock mentioned above for at least three days, per Stock Gumshoe’s trading rules.
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