While popular belief, often erroneously spewed by the mainstream media, is that rising interest rates put pressure on gold prices, the fact is that it is arguable that not only is there no statistically significant negative correlation, but that rising interest rates could actually support higher gold prices. Gold prices sliding since April has likely been more of a response the investors pouring money into equities caught in the longest bull run in history. With rising bond yields and talk about more interest rate hikes apparently causing a market panic recently, gold prices have been rising, suggesting that investors are looking more towards safe havens and value plays and rotating out of some riskier assets.
Furthermore, it looks like gold prices at the end of 2015 reached the end of a downward trend and began to shift into an upward trend – albeit with some large swings – in what could be referred to as the next leg in gold’s super cycle that goes back decades. The lynchpin to the next leg up is a technical resistance around $1,375 (spot price). If it is toppled, technical traders will start looking towards spot gold reaching $1,500 per ounce.
This certainly serves to explain that while most stocks got slayed as the Dow Jones Industrial Average jettisoned over 1,100 points last week, many gold companies of all sizes were on the rise. For instance, industry behemoths Barrick Gold (TSX: ABX)(NYSE: ABX) and Goldcorp. (TSX: G)(NYSE: GG) gained substantial ground on the week. Mid-tier gold producers Centerra Gold (TSX: CG) and SSR Mining Inc. (TSX: SSRM) (NASDAQ: SSRM) also had solid weeks as traders jumped back into gold stocks.
A Tier 2 explorer that had another solid week was Grande Portage Resources Ltd. (TSXV: GPG) (OTCQB: GPTRF), logging its third straight weekly gain as it homes in on a new 52-week high. The new one-year high is nearly inevitable in the next couple weeks considering shares of GPG were below the current level of the stock at the start of November 2017.
Shares have been catalyzed for good reasons, as Grande Portage has been checking all the boxes to build corporate value, including raising gross proceeds of $2.3 million last month to continue development of it flagship high-grade Herbert Gold Project in southeast Alaska.
The Herbert Gold project is an exploration stage, partially drill-tested, high-grade, gold mineralized mesothermal quartz vein system in the historic Juneau Gold Belt. Consisting of 91 unpatented lode claims located 25 kilometers north of Juneau and to the south of Couer Alaska's profitable Kensington gold mine. The property covers six parallel vein structures exposed at surface.
A National Instrument 43-101 report completed this year shows an uncut Indicated resource of 1.11 tonnes containing 257,944 ounces of gold at 7.25 grams per tonne gold. The Inferred category shows another 423,177 tonnes containing 82,206 ounces of gold at 6.04 grams per tonne gold.
That’s 340,150 ounces of gold Indicated and Inferred. Even at $1,200 gold, that’s $408.18 million for a company sporting a market capitalization of just $13.0 million.
Moreover, the 6-vein system remains open along strike and at depth. Grande Portage has been advancing the property for eight years, with drilling, mapping, assays and surveys repeated returning promising data defining the gold-rich mineralization. For example, results during the past year have been highlighted by intersects of 2.64 meters grading 27.93 g/t gold, 6.3 meters at 7.31 g/t gold, 1.9 meters grading 10.50 g/t gold, to name a few.
Adding to the growing body of evidence delineating the resource, a Light Detection and Ranging (LiDAR) survey on the project was completed earlier this month. This information is critical to creating a high quality topographic map used in understanding mineral deposits and defining additional drill targets.
The latest exploration has produced more encouraging results that dovetail with previous results showing high-grade gold. Last week, Grande Portage released results from two surface channel samples collected from the Goat Vein at Herbert. Highlights included on assay of 129.02 g/t gold and 68 g/t silver. Another sample yielded a whopping 290 g/t gold and 224 g/t silver. These samples, which were cut at 90 degrees just east of the midpoint of the inferred strike of the Goat Vein, will be included in an updated resource estimate and lend further credence to the scope of the mineralized quartz vein starting at surface.
Additional results from the channel sampling are expected shortly. Furthermore, the company recently completed a 15-hole summer drilling program, with those assay results also expected to be disclosed upon receipt, giving shareholders plenty to look forward to in the near term.
Grande Resources chief executive Ian Klassen succinctly summed up the optimism about the project in a new release on the latest findings in saying, “The high grade nature of the results further encourage us to believe that the Goat Vein will be as prolific as the Deep Trench and Main Veins.”
Mining executives tend to be relatively low key in their confidence and excitement about the potential for a project and Klassen is not any different with his sanguine words. For shareholders, though, they’re likely shouting the prolific at-surface discoveries from the rooftop, at least that’s what it looks like measuring by shares of GPG climbing from a low of 18 cents in September to a high of 31 cents last week.
Shares of GPG are ahead 60% in 2018 and with their recent break of technical resistance at 25 cents and tailwinds looking to be building behind gold prices, things are looking promising for the rest of the year and into 2019.
To that end, it is time to look at gold companies that have gone largely ignored.
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