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2016/11/30

[Exclusive Video] Three Junior Miners

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Brought to you by The Oxford Club Wednesday, November 30, 2016
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[Exclusive Video] Three Junior Miners


Sean Brodrick I've been traveling around, talking to interesting companies working in the precious metals space. I've met with everyone from explorers just sizing up a dusty patch of ground... to developers working to bring a new project online... to miners pouring molten gold.

One thing is for sure. These are exciting times for gold and silver. And the miners, developers and explorers I talk to have a lot to say.

I like junior miners. There is a lot of value in them. (Note: Before you invest, be sure to review my vetting process for good junior miners.) Sure, they have more risk, and some might not work out. But those that do can have 10-bagger potential.

Today, I'm going to let three of these companies tell you their own stories. I'll also bring you along on a tour I took of one of their gold projects that is in the works.

Millrock Resources

Millrock (OTC: MLRKF) is a project generator. That means it searches for rich ore-bodies that it can then joint-venture or outright sell to other companies that want to build and run a mine.

Millrock is a small operation. It has a market cap of just $15.9 million. But it has a track record of success. It has had some big partners on previous discoveries, including Teck, Kinross, Centerra Gold, Vale and more.

And as Millrock's CEO, Greg Beischer, explains, the company has a lot cooking right now.
(Click here to watch video)

Millrock trades on the OTC in the U.S., but its primary listing is on Canada's Venture Exchange (TSX-V: MRO). You can see that Millrock bottomed in October. It has zigzagged higher ever since. This company has working relationships with larger miners, and it knows how to find gold.

Bottom line: If and when gold prices start to go higher, Millrock could leverage that move.

Pershing Gold

I recently trekked across Nevada, checking out projects. Here's a tour I took of the Relief Canyon project owned by Pershing Gold (Nasdaq: PGLC). This is a project that Pershing bought out of bankruptcy. And it got a real bargain-basement deal on the property and the mill.
(Click here to watch video)

I got my main briefing from Chief Operating Officer Tim Janke, whom you hear from in the video. It's a fascinating tour of a fast-tracked project.

Along with the Relief Canyon Mine in Pershing County, Nevada, Pershing Gold bought a crusher and mill that were built between 2007 and 2008. On their own, those infrastructure assets cost more than Pershing Gold paid for the whole property.
 
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Pershing Gold has not only the mine and mill, but also 25,000 acres, including at least eight prospective targets that Pershing is very eager to drill.

Pershing Gold is still figuring out how it wants to reopen the Relief Canyon Mine. It will either use contractors, or hire the miners itself and buy more equipment.

Either way, this one has potential. But like the stocks of many gold companies not in production, Pershing Gold's stock has gone through the wringer. Pershing Gold recently broke support from August. But it's still 25% higher than the lows it hit earlier this year. This just shows how a developer - a mine project that is not producing yet - can tumble when gold prices slide.

On the bright side, when gold prices break their recent slump, Pershing Gold has rocket potential.

Goldsource Mines

How often can you buy a producing gold miner trading for pennies? That's the case with Goldsource Mines (OTC: GXSFF). It just started up production this year.

At a meeting a few months ago, Ioannis Tsitos, the president of the company, gave me the scoop on what Goldsource hoped to accomplish at its Eagle Mountain gold project in Guyana.
(Click here to watch video)

So why is this producing miner so cheap? Well, it just started up, so it doesn't produce a lot of gold yet. And it recently lowered the amount of gold it will mine this year.

Goldsource Mines cut its forecast for 2016 production to a range of 600 to 800 ounces. That's down from the original range of 1,400 to 2,100 ounces. The company is having recovery issues and water-related throughput constraints. It has had to push back its planned ramp-up of a night shift.

The recoveries are problematic. Goldsource needs to recover 30% of throughput material for economic viability, and it's aiming for 45%. But in October, it managed only a 17% recovery.

So Goldsource is a gold producer. But it's not a profitable gold producer, at least not yet.

To be sure, half of all new mines have problems along the way. What matters is if these problems are fixable or not. So can these problems be fixed? The company has hired a special engineer to make it happen.

Goldsource would be the kind of company that someone who doesn't mind higher risk for potentially higher reward would look at.

Goldsource trades on the OTC, but its primary listing is in Canada (TSX-V: GXS). Here's the chart... The bounce off the lows perhaps means that value-minded investors think Goldsource can fix its problems. But more cautious investors will want to hold back until the company delivers proof.

So here you have three small companies, each with its own level of risk. Of the three, the project generator is the least risky, while the producing gold miner is the most risky. That just shows how the wild world of gold mining can sometimes turn life on its head.

But all three offer opportunities. You just have to be comfortable with the level of risk involved.

Be sure to do your own due diligence before you buy anything. And remember, when gold blasts off, there will be plenty of golden rockets to ride. Just make sure you hop aboard before it's too late.

Good investing,

Sean
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