We’ve come a long way over the last month. Unfortunately for gold bugs, it’s been in the wrong direction. But there remain some exceptional bargains in the junior mining sector, and I suggest that you take advantage of this buying window just like the big miners are. Avino Silver & Gold Mines (ASM) is one name I like, explains Brien Lundin, editor of Gold Newsletter.
In our February issue, published in the last week of January, I stressed that gold was in a bull market. It had gained nearly 20% since the lows of early November and the junior mining stock market was only beginning to respond.
Technically, I noted that gold had gone from over-sold to over-bought in a flash, but frankly I didn’t sufficiently stress that a correction was likely. And then the correction came.
That said, one thing that has been notable in recent days is that the pace of mergers and/or attempted mergers has picked up. First, we saw Newmont (NEM) go after Newcrest, albeit unsuccessfully so far. This prompted Barrick Gold (GOLD) CEO Mark Bristow to publicly muse that he’d like to get ahold of the half of Nevada Gold Mines that Barrick didn’t own.
Moving down the food chain, B2Gold (BTG) has taken out Sabina Gold & Silver, while Integra Resources (ITRG) has announced a merger with Millennial Precious Metals. There’s even been a rumor that Tesla (TSLA) will buy Sigma Lithium (SGML), which has helped to send the latter’s share price soaring.
That indicates that bigger companies are getting more bullish about the long-term trend and simultaneously antsy about their level of resources going into that uptrend. I hope, and frankly expect, that we’ll see more mergers and take-outs over the months just ahead.
Meanwhile, I like mining plays such as ASM. It just announced a very impressive, updated resource estimate for its Avino Mine in Durango, Mexico. The update included the Elena Tolosa, San Gonzalo, Oxide Tailings, Guadalupe and La Potosina deposits.
The project’s total measured and indicated silver equivalent ounces came to 161 million silver-equivalent ounces, a 38% increase over the most recent resource estimate in 2020. That included 70 million ounces of silver, 136,700 tonnes of copper and 596,000 ounces of gold. The inferred resource total came to 70 million silver equivalent ounces, a 90% increase over 2020.
Avino added these silver equivalent ounces extremely cheaply, with new ounces coming in at a cost of $0.05 per discovered silver equivalent ounce. In addition to increasing the grade at Elena Tolosa, the update also included a significant increase to the measured and indicated resources of the Oxide Tailings deposit and brand new estimates for Guadalupe and La Potosina.
Combined with the mineral resources of its neighboring La Preciosa project, Avino boasts a global silver equivalent resource of 368 million ounces in the measured, indicated and inferred categories.
Recommended Action: Buy ASM.
