Every year in early December the junior mining sector becomes host to something called “Tax Loss Silly Season.” As the year draws to a close, many investors pick through their portfolios in order to find stocks that haven’t performed well that they can sell in order to book a loss to offset taxable realized gains on other positions. This tax loss selling reduces an investor’s overall tax liability, and often leads to silly downside moves throughout December in relatively illiquid stocks. This generally means stocks that are down year-to-date, and have performed especially poorly in recent months, see additional selling as investors rush to book their losses.
In past years, I have published a list of tax loss buying opportunities (see 2017 list, 2018 list, and 2019 list) and my track record has been pretty solid on these year-end tax loss buys. This year I have chosen six companies, all of which I own and some of which I may continue to accumulate in the final weeks of 2020.
All six companies have the following in common:
- All of them had much higher share prices at some point between June and September and all of them have seen roller coaster rides in terms of share price action in 2020.
- All of them have seen weak share price performance since August/September as investor sentiment on the junior mining sector turned sour.
- All six companies have been waiting for assays from extensive drill programs (or trenching in the case of Gold Lion) at their respective projects. This extended wait and relative lull in news flow has caused many investors to lose interest, and in many cases, sell their shares.
- None of these six companies have immediate funding needs and all have sufficient cash in their respective treasuries to get through Q1 2021 - however, i’m sure several of them will raise additional capital in 2021 should market conditions become more favorable.
- All six companies have multi-bagger potential in 2021. In addition to steady news flow lined up over the next few months (mainly from drill results).
Here is the 2020 Tax Loss Silly Season Shopping List (in alphabetical order):
Blackrock Gold (TSX-V:BRC,, OTC:BKRRF) - Blackrock Gold has had a transformational 2020. It began the year solely focused on its Silver Cloud Project in northern Nevada and had a market cap of barely more than C$10 million. Today, Blackrock is primarily focused on its Tonopah West Project, and Silver Cloud has become a nice #2 asset. After a year that has seen Blackrock shares sink as low as $.07 in March, and as high as $1.61 at the August precious metals peak, spurned by one of the best drill results in Nevada all year and a personal investment by Eric Sprott, Blackrock shares trade at a modest $.65 today. Make no mistake, Blackrock has had a stellar year. However, many shareholders will probably be disappointed today that the share price isn’t above $1.00.
Technically speaking, BRC shares are nestling just above a rising 200-day moving average - the $.60-$.65 area looks like an attractive entry point to me. Many readers are likely already familiar with Blackrock, so I will summarize the key points and potential catalysts.
The Company has 2 concurrent drill programs ongoing: A 30,000 meter program commenced in June at Tonopah West (a brownfield high grade silver-gold project) and a 3,500 meter, 14 drillhole program at Silver Cloud, a grassroots project testing 4 targets for high grade gold commenced in November. Assays are expected imminently for both projects and should continue rolling in through Q1.
Tonopah West (silver-gold):
- Tonopah Silver District is one of the largest historic silver districts in North America, with historic commercial production of 174 million ounces of silver and 1.86 million ounces of gold between 1900-1930.
- Historic production averaged at grades of 2,125 g/t AgEq and was known for a consistent silver to gold ratio of 100 to 1.
- Tonopah West is a newly consolidated land package representing multiple historic mining companies assets into the largest claim package in the Tonopah silver district, accounting for the entire western half.
- 30,000 meter maiden drill program commenced in June across four distinct target areas
- 40 drillholes reported so far yielding over 30 significant intercepts ranging from 1.0m to 29m in thickness and with grades from +250g/t AgEq to 4,643 g/t AgEq; Weighted Avg. Results (uncut, undiluted): 794 g/t AgEq over 3.3m.
- Resource definition program planned on DPB target, with initial resource estimate to be delivered by Q4, 2021.
- Property-wide upside exploration potential of 2.5 to 6 million tonnes grading between 1,300 g/t- 2,100 g/t silver equivalent.
Silver Cloud (gold):
- 45sq km (572 claims) on the Northern Nevada Rift right where it intersects with the Carlin trend; adjacent to Hecla’s Hollister mine and on trend of Midas
- 3 small rounds of drilling by Newmont, Teck, and Placer Dome, on three separate areas of the project encountered three low-sulphidation epithermal gold systems with elevated grades, none of which have been systematically followed up;
- BRC completed the first drilling the property had seen since 2005 and was able to delineate 250m of east-west trending mineralized strike, with grades including 1.5m of 12g/t Au (within 12 metres of 5.53g/t Au), and 1.5m of 8.32 g/t Au.
- Recent enhanced gravity survey indicates the western half of the project is in a similar structural setting as the Midas mine (with a large graben structure), the largest on the Northern Nevada Rift. Whereas the eastern half looks to be very similar in nature to what is seen at the Hollister Mine directly next door, which is among the highest grading. Both Midas and Hollister were known to produce at grades in excess +30 g/t Au.
- A 3,500m 14 RC drillhole program commenced in November testing four distinct targets: NW Canyon, Quiver, NE Veins, and a geophysical anomaly.
- NE Veins target is an undrilled section of the property where eight veins were found to outcrop at surface, directly west of the east-west trending Hollister vein system. The bulk of the drilling of this campaign will focus on this target area to test to see if this target represents the western extent of that bonanza system.
Gold Lion (CSE: GL, OTC:GLIOF) - I was very optimistic on Gold Lion back in May when I introduced the story when the stock was trading around $.35 per share. The market initially agreed and the stock more than doubled over the next six weeks. However, relatively slow progress during the 2nd half of 2020 has since caused GL shares to tumble to $.28 today.
Gold Lion Resources (Daily)
Gold Lion originally had ambitious plans to drill all three of its Idaho projects in 2020. However, they were slowed down by the Bureau of Land Management and Forestry Service permitting process. Covid-19 made things slower, which is a common theme for all junior mining companies, as the pandemic has slowed down both assay lab and permitting timelines.
The good news is that this disappointing 2nd half of 2020 has offered opportunity to those who can look ahead to 2021. Gold Lion finally received drill permits for its Robber Gulch Project and drilling has now commenced. The company expects to drill three RC holes on the BLM side of its claims at Robber, and then Gold Lion will follow up on the Forest Service side of Robber Gulch in the spring.
In addition, Gold Lion is looking to launch a winter drill program at Erickson Ridge once it receives drill permits from the Forest Service. Erickson Ridge is so close to Elk City, that it wouldn’t be as much of a logistical challenge as Gold Lion’s other Idaho projects, given how close the project is to infrastructure, with good road access.
Gold Lion has less than 40 million shares outstanding, which gives the company barely a C$10 million market cap at the current $.28 share price. Gold Lion has C$3 million in cash at last check, and insiders/management own roughly 35% of the shares outstanding. In my estimation Gold Lion is a buy at these levels and any additional tax loss weakness will give shrewd investors an excellent entry point in a company that is set for a big 2021.
Gold Lion Resources Corporate Presentation
GSP Resources (TSX-V:GSPR, OTC:GSRCF) - GSP Resources recently completed a ~2,000 meter Phase 1 diamond drilling program at the Alwin Mine Project in southern British Columbia, Canada (adjacent to Teck’s Highland Valley Copper open pit). 8 holes were targeted to confirm a shallow high grade zone of copper within 100m from surface, while 2 holes were drilled north and south of the shallow high grade zone.
Laboratory results have been very slow in Vancouver due to a lack of available labor and labs staffing at half capacity due to covid (where have we heard this before?....) However, GSPR hopes to see preliminary results over the next 2-3 weeks (shallow drilling). Assays for holes 9 and 10 are expected to be received early in the new year.
Holes 9 and 10 have the potential to expand shallow copper mineralization north and south of the historic high grade zone. Upon receipt and analysis of these results, GSPR expects to plan and commence a Phase 2 program to expand on Phase 1 drilling. Company treasury is adequate at C$1 million so GSPR is poised to hit the ground running drilling in Q1 2021.
While GSPR shares are still up year-to-date, the soft performance over the last few months is enough to make it a candidate for tax loss sales by impatient investors who may have bought the stock for a trade at higher levels:
At $.28 per share, GSPR’s tight share structure gives it a market cap of barely C$5 million. This makes it a coiled spring that could rally hard in the event of positive drill results. GSPR CEO Simon Dyakowski is one of the young up and coming CEOs in the junior mining sector who runs a tight ship and comes from a family with a strong mining background.
GSP Resources Corporate Presentation
New Placer Dome Gold (TSX-V:NGLD, OTC:NPDCF) - New Placer Dome Gold has had a transformative 2020 which saw the company punch way above its weight class by raising C$12.3 million in the middle of a pandemic and closing on the acquisition of the Kinsley Mountain Project in Nevada.
NGLD began 2020 with its stock halted at a split-adjusted price of $.28 as the company was working to close the aforementioned financing and acquisition of Kinsley Mountain. The deal close in June and the stock subsequently traded as high as $.95 in late July as precious metals sector sentiment went into overdrive:
NGLD shares now sit at $.26, down for the year, and also down ~70% from its all-time high reached just 4 ½ months ago.
New Placer Dome CEO Max Sali is a relentless buyer of his company’s shares on the open market:
Sali has purchased more than 300,000 New Placer Dome shares on the open market since June, including purchases as high as $.81 per share.
New Placer Dome has had many of the same challenges as other junior miners in 2020, including lab delays, and other delays involving covid. Drilling has concluded for the year at Kinsley Mountain, and the company is waiting on drill results. New Placer Dome drilled 60 holes at Kinsley Mountain in 2020 for a total of 17,500 meters. In addition to 4,200 meters at Bolo. The company is still waiting on assays for 9 holes from Bolo, and 60 holes from Kinsley.
The company will end the year with a little more than C$2 million in the treasury and Q1 2021 will be filled with results from 2020 drilling at Kinsley.
At the company’s current C$25 million market cap I view NGLD shares as an attractive risk/reward proposition. The valuation is well supported by the company’s project portfolio which includes Kinsley Mountain, Bolo, and Troy Canyon. In addition to a strong management with substantial financial backing.
I am an eager buyer of NGLD shares in the event of an additional end of year tax loss selling weakness.
New Placer Dome Corporate Presentation
Newrange Gold (TSX-V:NRG, OTC:NRGOF) - Newrange Gold is roughly flat year-to-date after seeing its shares go on a rollercoaster ride from as low as $.07 in March to as high as $.43 in July:
As it stands today, Newrange has a C$17 million market cap with roughly C$500,000 in the treasury, along with 550,000 shares of Goldmining Inc. (TSX:GOLD) that are due to vest as part of the sale of Newrange’s Colombian assets.
While Newrange has projects in Colorado and Ontario, the company’s primary focus is on its flagship Pamlico Project in Nevada’s Walker Lane Trend. Mike Coyle of Inside Exploration does an excellent job of explaining Pamlico and the geological forces driving the potential for a very large discovery at Newrange’s flagship asset in this article:
Inside Exploration: Pamlico Ridge & The Geological Forces Driving Nevada’s Mining Industry
Newrange CEO Bob Archer gave an interview last week in which he showed a significant uptick in excitement including offering the following soundbite:
"That’s something we haven’t seen before - a huge envelope of widely dispersed gold. This is the closest hole into the large anomaly (“big deep IP anomaly”), an anomaly that hasn’t yet been tested. We think that the large one is reflecting a buried, what’s called a porphyry, or a large intrusive that could be driving the entire system at Pamlico. The fact that the anomaly itself (the big deep IP anomaly) is over a kilometer across, and we’re a kilometer away from the old mine workings, then this whole district is at least 2 kilometers across. The implications for something sizable here are pretty significant.”
Newrange CEO Bob Archer has also been an active buyer of the company’s shares on the open market recently:
RC drilling has resumed at Pamlico and management is looking into the possibility of adding a second drill rig to follow up on the discovery made in hole 91. There are still other near-surface IP targets that can be tested before initiating the more expensive deeper drilling to test the larger IP anomaly. Drilling the near-surface targets will provide critical information and improve the interpretation and targeting of the deeper drilling, which could start as early as January.
Newrange Gold Corporate Presentation
Summa Silver (CSE: SSVR, OTC:SSVRF) - Summa Silver is the other ½ of the Tonopah Mining District in the Walker Lane Trend of Nevada (aside from the Burger King and the Mizpah Hotel, Blackrock and Summa essentially have all of Tonopah wrapped up). Summa launched out of the gate in May and ran from $.30 to $3.50 over the span of three months. In hindsight, $3.50 per share and a C$175 million market cap for a company that had yet to announce any results to the market was excessive. However, I'd also argue that today’s $.89 share price (C$45 million market cap) is probably excessively pessimistic.
The Hughes Property is Summa’s crown jewel and encompasses 2,689 acres of prime real estate in and around Tonopah, Nevada. Hughes includes the historic Belmont Mine and hosts dozens of epithermal veins that are up to 15 meters wide. Summa is the first company to do modern exploration work at Hughes, and the prospect of Summa connecting on step-outs to the east of Belmont is probably what got the market most excited during the June/July/August run-up.
At this point the market isn’t giving Summa much credit for success on the remaining 26 holes at Hughes that the company has yet to announce assays for. I wouldn’t be surprised if Summa surprises the market over the next month or so, and I am betting on as much with a healthy long position in Summa shares.
Summa Silver (Daily)
Summa’s Mogollon Project in New Mexico is one which the market isn’t paying much attention to so far. Expect this to change in early 2021. Mogollon is basically just waiting to be drilled. The area around the old consolidated mine that is mineralized is 500 x 200 meters with an average width of about 9-10 meters and average grades of about 500 g/t AgEq. But the historic holes are very widely spaced and not "verifiable" under 43-101, so Summa has a lot of work to do there. Summa thinks it can step into definition drilling very quickly and that mineralized area is just on a very small portion of vein strike on the property, which is more than 30 square kilometers in total.
Summa is well financed with C$7.5 million in cash at last check and a significant number of $1.75 warrants that could come in handy in the event of significant exploration success in 2021.
Summa Silver Corporate Presentation
Please remember that this is a list of ideas, and all of the stocks on it are relatively out of favor at this point in time. My bet(s) is that most of these names will come back into favor at some point during the 1st half of 2021, and therein lies the trading opportunity for those who are able to get in on the cheap in the next couple of weeks. Please do your own due diligence, it's your money and your responsibility.
Disclosure: Author owns shares of BRC.V, GL.CA, GSPR.V, NGLD.V, NRG.V, SSVR.CA at the time of publishing and may choose to buy or sell at any time without notice.
The article is for informational purposes only and is neither a solicitation for the purchase of securities nor an offer of securities. Readers of the article are expressly cautioned to seek the advice of a registered investment advisor and other professional advisors, as applicable, regarding the appropriateness of investing in any securities or any investment strategies, including those discussed above. Companies mentioned in this article are high-risk venture stocks and not suitable for most investors. Consult companies' SEDAR profile for important risk disclosures.
EnergyandGold has been compensated for marketing & promotional services by Blackrock Gold Corp., GSP Resource Corp, New Placer Dome Gold Corp, and Summa Silver Corp. some of EnergyandGold.com’s coverage could be biased. EnergyandGold.com, EnergyandGold Publishing LTD, its writers and principals are not registered investment advisors and advice you to do your own due diligence with a licensed investment advisor prior to making any investment decisions.
This article contains certain forward-looking information and forward-looking statements within the meaning of applicable securities legislation (collectively “forward-looking statements”). Certain information contained herein constitutes “forward-looking information” under Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “expects”, “believes”, “aims to”, “plans to” or “intends to” or variations of such words and phrases or statements that certain actions, events or results “will” occur. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed by such forward-looking statements or forward-looking information, standard transaction risks; impact of the transaction on the parties; and risks relating to financings; regulatory approvals; foreign country operations and volatile share prices. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Actual results may differ materially from those currently anticipated in such statements. The views expressed in this publication and on the EnergyandGold website do not necessarily reflect the views of Energy and Gold Publishing LTD, publisher of EnergyandGold.com. Accordingly, readers should not place undue reliance on forward-looking statements and forward looking information. The Company does not undertake to update any forward-looking statements or forward-looking information that are incorporated by reference herein, except as required by applicable securities laws. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.