Starting to look at the “Mining Titans of Tomorrow” from Sean Brodrick

What's being teased by Red-Hot Resource Millionaire?

Sean Brodrick has a new ad out recruiting charter subscribers for his new Red-Hot Resource Millionaire newsletter ($2,500/yr), and in the ad he’s pitching a bunch of his favorite gold juniors. The questions are piling up here on the doorstep at Gumshoe HQ… so let’s see what we can find.

As with most of these lists of “top ten stocks,” there will be quite a few that are referenced very obliquely — and often even the Mighty, Mighty Thinkolator can’t ID all of those stocks without a few decent hints.

But I’ve at least got a quick answer about “Red-Hot Mining Stock #1” for you and, well, perhaps I’ll try to dig into the others if folks are excited about them.

The basic argument is that junior gold miners are going to soar because “gold is on the launch pad” — the headline pretty well sums it up:

“Gold Profit Bonanza

“It’s Time to Buy Microcap Canadian Mining Companies and Go for Massive Gains as High as 974%, 1,481%, even 5,237%!

  • WITHOUT risking more than a tiny fraction of your capital …
  • WITHOUT using debt, options, futures or margin accounts …
  • WITHOUT expiration dates — no time limiton your opportunity, and …
  • WITHOUT the hassles of in-and-out trading!

“Gold is on the launch pad … buyout announcements are already sending some tiny stocks soaring … and my proprietary ‘GOLDS’ system is flashing green lights on a short list of mining shares with life-changing profit potential!”

And yes, you can eschew options, futures, or margin for these kinds of investments — because junior miners themselves are generally super-levered to gold and to exploration success. When you’re dealing with little baby companies that have market caps of $50 million or a few hundred million, with hoped-for claims on large gold deposits underground, then the shares can move dramatically either because the gold deposit gets firmed up or proven, or because gold itself moves higher (that’s just the upward moves, of course — failed drilling or falling gold prices can send these stocks dramatically lower as well, as we saw for almost all junior miners from 2013 until about February of 2016, when gold and gold mining shares bottomed out and started a huge run into last Summer).

So what’s that first one on Brodrick’s list?

“Red-Hot Mining Stock #1: Is a Gold Explorer in ‘Elephant Country’

“This company is currently working a stretch of land that is considered the richest area of gold in the Western Hemisphere. And, not surprisingly, this company is FINDING yellow metal at a rapid clip.

“It has already gotten big investments from two different majors and I think that could be the prelude to a future bidding war for the rest of this small firm.

“All told, I see the potential for a jump from the $2 range to the $7 range as this story plays out … creating the possibility to triple money invested right now.”

Going by those clues and by the chart shown in the ad, the Thinkolator tells us this is almost certainly Gold Standard Ventures (GSV in both NY and Toronto), which now has two substantial properties in Nevada, including, after the Battle Mountain acquisition announced last month, in the Carlin Trend where so many massive gold mines have been pulling ore out of the dirt for decades. It also and does have two gold “majors” with strategic investments (Goldcorp and Oceana Gold).

The stock has come down almost 25% in the last few weeks, perhaps partly because of the acquisition (and gold stocks in general have been drifting down), so I was actually looking at it myself earlier this week. Gold Standard is in an awkward spot in some respects, they’re too big to be an explosive explorer (market cap is about $365 million before the Battle Mountain Gold acquisition, which will boost it by $20 million or so) and they haven’t yet released their preliminary economic analysis for their first mine, so they’re still quite a long way from making money…. but they’re also often talked about as an acquisition target, since there’s a real demand for the kind of long-lived well-understood deposits that Gold Standard thinks they’ve found in Nevada, and Gold Standard has worked for years to assemble their huge and contiguous land package in what they call the “last window” on the Carlin Trend.

They do already have several meaningful discoveries, with initial resource estimates, but they also say they’ll be updating those resource estimates in the second quarter and doing a lot of drilling in 2017. I’m tempted to wait until those resource estimates or PEAs come through to see how much actual gold is really being found, particularly because it doesn’t look like the gold price is going anywhere in a hurry, but I guess the cost of waiting is that they could always be acquired at a premium while you’re thinking it over.

That’s a risk I’m happy to take at the moment, but I have been a bit tempted by this one when it falls and I’ll probably check in on it from time to time — the large land package near to those producing Nevada mega-mines is pretty compelling as we look at the years when Newmont, Goldcorp and the rest will be thirsty for new reserves, and they do have some nice discoveries so far in terms of relatively high-grade intercepts in what is usually a bulk-mined, low grade part of the mining world. There are catalysts coming with their drilling this year, so there might be news that moves things, but a lot of the near term story, of course, is just going to be about the gold price and about takeover rumors and speculation.

If you’d like to start digging into this one, their investor presentation is here, and the Streetwise summary is here (GSV is a favorite of many newsletter pundits, and also has an enthusiastic analyst following). Frank Curzio, who also teased this stock for his pricey Stansberry newsletter when it was in its prior run in early 2012, interviewed GSV’s CEO and co-founder Jonathan Awde a few weeks ago on his podcast, so you can hear that here if you’d like more “color” on the story.

Oh, and Sean Brodrick himself, before he moved from the Oxford Resource Explorer back to Red-Hot Resource Millionaire at Weiss, also pitched GSV as one of his great opportunities almost a year ago,