Why juniors could trade higher, and what could hold them back

With all the money raised, juniors should have the means to post lots of drill results this fall, said James Kwantes, editor of Resources Opportunities.

Kwantes was joined by special correspondent Paul Harris; editor Neils Christensen; and mining audiences manager, Michael McCrae, to record a podcast on Friday. In recent months the financing tracker Oreninc noted some exceptional weeks for juniors raising funds on the back of higher precious metal prices and easy access to capital.

To create some buzz, exploration companies typically publish their drill results in the fall to coincide with some of the industry's key conferences, such as Beaver Creek Precious Metals Summit and Denver Gold Forum.

Kwantes, a former resource reporter for the Vancouver Sun, said there are a mix of factors that could help and hurt junior stocks. Some juniors won't have a lot to publish due to spiking demand for drillers and the logistical challenge that come from managing COVID-19 restrictions.

There's also the nature of the financings. Kwantes warns about a "flood of paper" potentially hitting the market, which could depress the sector later in the year.

"[Juniors] have raised a lot of cash in the last few months. Everybody's excited about the higher gold price," said Kwantes. "It will be interesting to see what happens when all the holds come off in the four-month paper. There's been a lot of money raised, quite a bit of drilling activity."

"Financings typically have a four-month hold placed on them. So if you buy into a private placement, you can't do anything with the stock for four months. Typically, the company will try to generate news or hopefully make a deposit--make a discovery."

The panel also discussed Barrick Gold, the world's second-largest gold producer, and AngloGold Ashanti Limited, and their decision to sell their combined 80% stake in the Morila gold mine in Mali to Mali Lithium (ASX:MLL) for cash consideration estimated at between $22 million and $27 million.

Paul Harris also noted the surprising uptick in copper production from Chile despite the pandemic.

By Michael McCrae

For Kitco News