BullMarketRun.com

Daniel T. Cook

Thinking Out Loud 

The Wallbridge-Balmoral Matrimony

Reading through the news release Monday morning, the first thing we learn is that a Letter of Intent was signed February 14.

My initial reaction was oh, how sweet, Valentine’s Day! 

Balmoral (BAR, TSX) and Wallbridge (WM, TSX) sitting in a tree, K-I-S-S-I-N-G!

Two love birds finally unite as one!

Perfect Hollywood ending to a rom-com that began tragically.  Valentine’s Day will forever and always be their anniversary!

Love is in the air, everywhere I look around.

Love is in the air, every sight and every sound.

0.71 is the exchange ratio and based on the 20-day volume weighted average price, that implied a 62-cent share price for BAR, or $110 million.  That’s the second thing we learn, so every 1 share of BAR will convert into 0.71 shares of WM assuming the all-stock transaction closes as planned.

Is this a match made in heaven?

YES.  A resounding “yes”.

Marrying makes strategic sense for both parties.  Darin Wagner and Marz Kord, the CEO’s, then proceeded to lay out benefits of the transaction:

• Significantly expands Wallbridge’s land holdings in Quebec (from 1,050 hectares to 73,900 hectares) along the Detour Gold Trend, improving the  company’s potential for further discoveries in the district as well as additional mine development flexibility;
• In addition to Fenelon, adds multiple Gold-focused properties, including the resource stage Martiniere Gold deposit, that have significant exploration upside within the prolific Abitibi Greenstone Belt, and (Grasset) a resource Ni-Cu-Co-PGE project that has option value;
• Increased market capitalization which has the potential to attract greater support from new investors seeking to participate in funding the potential future growth of Wallbridge;
• The combined entity will have an enhanced capital markets profile and a pro forma cash balance of approximately $67 million, which takes on particular importance given the extreme market volatility experienced over the past trading week, to advance the combined assets and pursue further growth opportunities.

All true.

But I’m struggling to see more than 50% upside for (WM) the combined entity this year.

As much as I like this partnership, the relationship began tragically August 2, 2016 – so let’s start there.

Why tragic?

Why am I thinking about this whole thing like a rom-com?

It’s because you can’t make this stuff up.  With the benefit of hindsight we know the story is ironic, kind of comical, and somewhat tragic for long-term shareholders of BAR.

A stock price chart comparison between the two simplifies the story (it’s below), starting August 2016 when Wallbridge bought Fenelon from Balmoral for $3.7 million.

Kord created wealth for shareholders of WM via a 733% gain!

Wagner destroyed wealth for shareholders of BAR over a 5-year time frame via a –57% loss (yet he’ll walk away from this far wealthier and smelling like a rose, total genius geologist).

I’m pretty sure I got those numbers right with help from Yahoo Finance.  Since selling (giving away) Fenelon for $3.7 million, BAR has declined 57% versus a 733% increase for WM.

One has been a big WINNER and one has been a big LOSER.

In fairness, Wagner didn’t know exactly what he had with Fenelon.  We can only presume he didn’t have any clue how fantastic this property would be given the $3.7 million sale price which now carries Wallbridge’s nearly HALF BILLION dollar market cap.

Hindsight is 20/20.  You don’t know what you don’t know, etc.  Kord and Wallbridge spent a whole heck of a lot of money drilling, too.  Money Wagner and Balmoral didn’t have.  So there’s no telling what position BAR would be in today, or how it would have performed over the last 5 years, better or worse, if it didn’t sell Fenelon.  There’s just no way of knowing.

One thing that is crystal clear, however, is that Wagner’s decision to sell Fenelon for $3.7 million didn’t age well.  Wagner’s decision didn’t age well at all considering Fenelon could host 3, maybe 5, or even 10 million ounces of Gold.

Wagner under-appreciated the value and upside potential at Fenelon yet again by selling Balmoral’s 1% NSR on the Fenelon Mine Property to Ely Gold Royalties (ELY, TSX-V) for $600,000 worth of cash and stock (October 2018).

Since then ELY has been a high-flyer, largely because of the increasing worth of its Fenelon royalty (the royalty Wagner gave away for a pittance).

Look – or as Uncle Joe Biden would say – LOOK! LOOK! LOOK!

I’m not complaining.  My cost basis on BAR is around 15 cents, so I’m a happy camper.  But that doesn’t mean I can’t complain on behalf of long-term BAR shareholders, who’ve lost half their money thus far and were down +90% at one point.

It really sucks to be down 90% when your neighbor is up 900%, all thanks to the property you sold them for $3.7 million!

Looking back you’d think it’s a deal Wagner wishes he didn’t do.

Wagner, if you could take a time machine back to 2016, would you still sell Fenelon for $3.7 million?

I’m guessing he’d argue, “I had to.  I had no other choice,” or something along those lines.  Funds were tight.  Market conditions were tough, etc.

Who knows, he may even go so far as to say, “Selling Fenelon to Wallbridge is really what saved the company.  Look at all the money they spent drilling, which ultimately led to making our surrounding property portfolio more valuable.”

Certainly, that would be putting a positive spin on it!  Talk about a Silver lining.

Anyway, in summary:  This whole story is a rom-com that begins and ends somewhat tragically for Balmoral’s long-term shareholders.

Given their vast acreage (73,900 hectares) along the SLDZ, including high-grade Gold deposits and Nickel deposits, a $110 million buyout price isn’t exactly the huge score most BAR shareholders were probably hoping for, not when a postage stamp sized piece of property (Fenelon) can be worth $500 million or a billion.  Maybe BAR holders with a cost basis of $1 or more will break even or make money by holding onto WM, maybe not.

I’ll continue to hold about 1/3 of my original position and I’m hoping for the best, but I think WM is in somewhat of a tough spot considering their end goal is acquisition.

The combined company (WM) wants to get acquired but Kirkland Lake (KL, TSX, NYSE) is most likely their only natural buyer – and if Kirkland plans on buying Wallbridge, do you really think they’d want the price to get carried away?

WM’s stock price might not be something Kirkland and CEO Tony Makuch care to control, or influence, even if they could.  But over and above that I’m also skeptical about anything more than a 50% price advance in WM this year because they’re now more of a “development” story and less of a “discovery” story, which has been a tougher spot to be in lately.

50% ain’t bad.  I just have a hard time seeing WM doubling or more this year given the circumstances.  And your average WM shareholder is probably expecting a doubling, or more.  So those expectations might be a little too high, that’s all I’m trying to say.

Hopefully I’m wrong, though.  Hopefully WM goes on an absolute tear!  Hopefully Wallbridge shocks and awes the market again and again, like what they’ve been doing.  Hopefully they double or triple from here and get bought out for $2 bucks or more.  That would imply a $1.42 share price for BAR holders and everyone will be happy, or relatively happy (so it goes sometimes in relationships).

Here’s to hoping.

p.s. With those thoughts in mind I’ll leave you with one final thought…

There’s always an outside chance someone else ups Wallbridge’s bid and the marriage is annulled before it even starts.  $110 million is an uppable number in this market, wherein lies increasing levels of “urgency” at the corporate level.

About the writer:  Daniel T. Cook, who joined BMR in June of 2016, hails from Texas and now resides in Florida after recently moving from Utah.  Daniel has a strong passion for the junior resource sector and has followed the Venture and broader markets with great interest since he bought his first stock nearly 20 years ago at the age of 12.  He became a licensed investment professional who was a Bright Future’s Scholar at the University of Central Florida, graduating in 2010 with a major in Finance.

Visit the BMR comments section throughout the day for updates and helpful information!

1. Gold is firming up again, trading between $1,637 and $1,663 so far today…as of 7:00 am Pacific, bullion is up $22 an ounce at $1,668…Silver is 11 cents higher at $17.28…base metals are up slightly, despite global economic fears, with Copper, Nickel and Zinc at $2.57, $5.57 and 91 cents, respectively…Crude Oil is off 20 cents at $46.58…OPEC has agreed to cut oil output by an extra 1.5 million barrels per day (bpd) in the 2nd quarter of 2020 to support prices that have been hit by the coronavirus outbreak, but made its action conditional on Russia and others joining in…the Oil demand outlook has been pummelled by governments’ steps to halt the spread of the virus, prompting OPEC to consider its deepest cut since the 2008 financial crisis…the U.S. Dollar Index has slipped one-third of a point to 96.96…fears about the coronavirus disrupting the global economy continue to drive volatility on Wall Street, and sensational mainstream media headlines, as countries around the world extend quarantines and travel restrictions…California has declared a “state of emergency” after a coronavirus-related death and 53 confirmed cases in the state out of a population of 40 million…the International Monetary Fund has announced a $50 billion aid package to help fight the coronavirus, targeted toward low-income and emerging market countries…it’ll be interesting to see how that gets spent…the Gold market achieved another record last month as the value of the metal held in ETFs rose to an all-time high, according to the latest investment data from the World Gold Council (WGC)…in a report today, the WGC said that market volatility and growing fears that the spreading coronavirus will drag the global economy down prompted investors to turn to Gold as a safe-haven asset…the latest data shows that global Gold-backed ETFs and similar products increased by 84.5 tons last month, with the inflows valued at $4.9 billion…North American Gold ETFs increased by 42 tons, valued at $2.3 billion…European funds saw inflows of 33 tons, valued at $2 billion…Asian funds, primarily in China, saw an increase of 8.7 tons, valued at $425 million…

2. Higher Gold prices and improving investor sentiment wasn’t enough to counter fears of the spreading coronavirus as attendance at the world’s biggest mining conference dropped from the previous year…yesterday, the Prospectors & Developers Association of Canada (PDAC) said attendance at its 2020 mining conference totaled 23,144, down 10% from the previous year and the lowest attendance since 2016…some of the booths were empty with companies staying away from the conference because of COVID-19…although attendance was down compared to previous years, PDAC President Felix Lee told Kitco News he was pleased with the sentiment at the conference…he added that the Canadian mining sector is robust enough to meet all challenges…“The Canadian mining sector faces some difficult challenges but I am completely confident that the sector can continue to grow,” he said…“We have a habit of being able to remake ourselves when times are tough”…Justin Trudeau, who has done more damage to the resource sector in this country than any Prime Minister in Canadian history, including his father, due to his climate change fanaticism and economic illiteracy, showed up for the 2nd year in a row to announce a scheme that makes it more affordable for Canadian miners to invest in zero-emission vehicles and automative equipment…PDAC should have declined his presence…

3. Sign of the times in the cannabis sector:  Canopy Growth (WEED, TSX; CGC, NYSE) has closed large greenhouses in Delta and Aldergrove…the cannabis company says the closures have resulted in the elimination of approximately 500 positions…in addition to the closures in B.C., the company says it no longer plans to open a 3rd greenhouse in Niagara-on-the-Lake, Ontario…Canopy Growth CEO David Klein said in a statement that a review by the company found that the B.C. facilities are “no longer essential to its cultivation footprint.  Nearly 17 months after the creation of the legal adult-use market, the Canadian recreational market has developed slower than anticipated, creating working capital and profitability challenges across the industry,” Klein said…

4. The Dow has retreated 769 points after the first 30 minutes of trading following yesterday’s huge gains…in Toronto, the TSX is 213 points lower with the Gold Index bucking the trend, up 4 points at 277…the Venture has lost 5 points to 521…Silvercrest Metals (SIL, TSX; SILV, NYSE) has released metallurgical test results with increased precious metal recoveries and enhanced process design changes for the continuing feasibility study at the Las Chispas property located in Sonora, Mexico…after 9 months of extensive further metallurgical test work involving all veins in the current resource and multiple metallurgical domains, the results show an increase of recoveries to 96.1% Gold and 93.9% Silver or 95.0% Silver equivalent…Canada Carbon (CCB, TSX-V) announced this morning that it has received an initial order from Analytical Reference Materials International (ARMI), a subsidiary of LGC Standards Company (LGC), a global leader in the life sciences sector…the initial order of 50,000 grams of the Miller thermally purified graphite is to be used in the development of a Certified Reference Material (“CRM”) for the analysis of ultra-high purity graphite samples…the CRM will be developed and marketed by LGC, with a retail selling price comparable to the lower purity BAM S009 (NBG 18) reference material…the order is renewable for 100,000 gram lots, on the same terms…Galway Mining (GWM, TSX-V), which slipped to key support at 30 cents in last week’s panic selling, is suddenly trading at new multi-year highs in the low 40’s…the company most recently reported 10.6 g/t Au over 47 m at its promising Clarence Stream Project in southwestern New Brunswick…

5. The theme of “going deep” in the Abitibi is working remarkably well for the likes of Amex Exploration (AMX, TSX-V), Wallbridge Mining (WM, TSX) and Canada Cobalt (CCW, TSX-V)…all 3 have big discoveries in the works with Wallbridge leading the way with a market cap of nearly $500 million…Amex got knocked down all the way to $1.25 last week and is trading this morning at $1.68, a rebound of 34% with more gains likely…yesterday, Amex reported results from hole PE-20–144 on its 100%-owned Perron Gold Property near Rouyn-Noranda…it cut 59.5 g/t Au over 1.05 m within a broader interval of 9.9 m grading 9.73 g/t (833.5 m to 843.40 m)…Dr. Jacques Trottier, Executive Chairman of Amex, commented: “This was an aggressive exploration hole that extends the HGZ by another 210 m down to a vertical depth of approximately 775 m.  This is very significant as it confirms the depth potential of the Gold system and the high-grade nature of the mineralized body.  We are currently wedging off hole 144 with the objective of confirming grade continuity between these large 200+m step-out holes.  With only 4 holes drilled into the eastern extension of the HGZ, we have defined an additional 400 vertical meters of high-grade Gold mineralization”…

6. Last weekend’s smelly deal that failed politicians struck with the “hereditary chiefs” in Smithers is already creating divisions, even before details are released to all Canadians (taxpayers are being kept in the dark so far)…the elected chief of 1 of 6 bands within the Wet’suwet’en nation says she and other elected representatives should have been included in recent negotiations over rights and title with the provincial and federal governments…Maureen Luggi, chief of the Wet’suwet’en First Nation, a band under the Indian Act, as opposed to the larger Wet’suwet’en Nation encompassing all Wet’suwet’en people, stated: “We did express that in a letter to the Office of Wet’suwet’en (hereditary chiefs), that all of the 6 Wet’suwet’en communities were excluded from the process.  We don’t know who was invited to participate,” she told CKNW yesterday…“We later learned that other Wet’suwet’en communities were excluded”…Luggi said she expects to soon see the tentative agreement through her membership of the Gitdumden clan, 1 of 5 Wet’suwet’en clans…but in the end, she said, reaching consensus on whether or not to accept the proposed deal will require the involvement of all the Wet’suwet’en…“That is what concerned us, that if anyone is going to move forward on behalf of the clan members in this community regarding Aboriginal rights and title, then our people need to be acknowledged and they need to communicate with us,” she said…

7. Growth in the euro zone is likely to be very sluggish over the next decade, experts have warned, and the forecasts were bleak even before the new coronavirus hit the region…“Even before the coronavirus outbreak, dark clouds had been gathering over the euro zone economy, with Italy in the eye of the storm,” economists at ING warned yesterday…“Over the next 10 years, the region’s potential growth rate will likely slow to a crawl while Italy faces a stagnation far worse than anything Japan has seen.  In the next 10 years, demographic and structural headwinds, and a limited appetite for reform, could push the bloc’s potential growth rate to less than 1%, down from the annual average pace of 1.4% of the previous decade”…in the 4th quarter of 2019, euro zone growth was just 0.1% quarter-on-quarter, marking the slowest growth rate since 2013, with its largest economy Germany seeing flat growth, and Italy and France seeing a 0.3% and 0.1% contraction, respectively…

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1. Gold has traded between $1,631 and $1,650 so far today following yesterday’s surge when the Fed suddenly cut interest rates by half a point…as of 7:00 am Pacific, bullion is up $2 an ounce at $1,642…Silver is off slightly at $17.11…base metals are steady with Copper, Nickel and Zinc at $2.56, $5.67 and 89 cents, respectively…Crude Oil has jumped 82 cents barrel to $48 while the U.S. Dollar Index is up one-third of a point at 97.48…the Trump economy remains resilient…U.S. companies kept adding jobs in February despite the coronavirus scare, as private payrolls expanded well above the pace that Wall Street had anticipated…employment excluding government jobs rose by 183,000 for the month, according to this morning’s report from Moody’s Analytics, topping the 155,000 that economists had expected…“COVID-19 will need to break through the job market firewall if it is to do significant damage to the economy,” Mark Zandi, chief economist at Moody’s Analytics, said in a statement…“The firewall has some cracks, but judging by the February employment gain it should be strong enough to weather most scenarios”…Joe Biden’s campaign for the Democratic Presidential nomination got a major boost as he swept to victory in multiple states on Super Tuesday, surprising almost all pundits, although Bernie Sanders claimed the big prize of California where a majority of exit polls showed Democrats in that state have a favorable view of socialism…Michael Bloomberg has dropped out of the race after spending more than half a billion dollars with little to show for it…passenger car retail sales in China, the world’s biggest auto market, fell 80% in February because of the coronavirus outbreak, according to the China Passenger Car Association…the coronavirus epidemic has sparked a bond bonanza in China, with financial institutions and companies rushing to sell debt at low interest rates…since early February, more than 150 Chinese companies, including manufacturers, airlines and property developers, have collectively raised more than 237 billion yuan ($34 billion) by selling so-called coronavirus bonds, which devote a portion of their proceeds to “epidemic prevention and control” efforts within the country…the pace of issuance has picked up as more companies have found they can borrow money cheaply this way…average coupon rates on the new securities, which mostly range from 1.6% to 6%, have in many cases been lower than yields on comparable outstanding debt from the same issuers, according to Wind Info, a data provider…state-owned banks have been the main buyers of the virus bonds…

2. Italy’s government has announced that it will temporarily close the nation’s schools and universities to help contain the COVID-19 outbreak there…the death toll in that country jumped to 79 yesterday, higher than anywhere outside Asia and Iran, up from an official total of 52 on Monday…as of this morning, there are more than 2,500 cases of the virus in Italy…officially, Iran (#2 behind China in terms of reported deaths) has 2,336 cases of the virus and has recorded 92 deaths, although there is speculation that the actual number of cases in Iran is far higher…there are widespread expectations that Italy’s economy will enter a recession because of the outbreak…the euro zone’s 3rd largest economy, Italy was a problematic member of the single currency bloc even before it became the country worst hit by the coronavirus…previously, Italy was expected to grow a meagre 0.5% in 2020…

3. Sona Nanotech (SONA, CSE) has partnered with GE Healthcare Life Sciences to complete the COVID-19 Rapid Screening Test (RST)…Sona’s COVID-19 lateral flow test will incorporate GE’s Fast Flow High Performance Membrane (FFHP), specifically designed to allow for multiple optimization techniques…the aim is to get the RST into markets as quickly as possible and the 2 companies will be working in tandem to accelerate that process…Sona maintains all commercial rights to the RST…currently, the majority of testing completed for the COVID-19 virus utilizes molecular based technology (PCR), a costly testing platform that frequently takes 2 to 4 hours to produce results and requires specialized laboratory equipment and skilled technicians to operate…in comparison, lateral flow assays provide results between 5 to 15 minutes and can be administered by a layperson…Darren Rowles, CEO of Sona, stated, “It’s exciting to work with a best-in-class partner like GE Healthcare Life Sciences, drawing on their expertise and to use the new FFHP Membrane”…Sona expects to provide near-term updates on the development of its rapid-response COVID-19 test…SONA has been on fire in recent weeks and jumped 29 cents to a closing price of 94 cents yesterday in 30 minutes of trading following a halt for news…profit taking this morning has taken the stock down 26 cents to 68 cents as of 7:00 am Pacific…the mid-60’s represents the top of a strong support band…

4. Yet another example of why Canada is broken…less than 2 weeks after Teck Resources (TECK.B, TSX; TECK, NYSE) pulled its application for the $20.6 billion Frontier oil sands project, Suncor Energy says it expects to spend the next 6 years before regulators on an application it has just filed to extend the life of its main oil sands mine (the Base Mine Extension Project which it doesn’t expect to begin operating until 2030)…that’s a timeline that analysts say is exceptionally long for a replacement project and creates new uncertainty for major projects in Canada…Suncor’s current mine operations are 15 years away from the end of their operating life and the company is looking for approvals to replace existing production by mining the ore in a nearby lease…The Impact Assessment Agency of Canada released Suncor’s project description late Monday, which shows that Suncor expects to spend between 2019 and 2026 in the regulatory process…in its application, the company said it expects to use new technologies in the mine extension that “have the potential to significantly reduce the overall footprint, reclamation timeline and GHG emissions” of the project…in addition, the company pledged to continue “aggressively pursuing paths to reduce emissions in other areas of its business and in ways that sequester carbon and produce net benefits”…

5. The Dow is up 502 points after the first 30 minutes of trading…in Toronto, the TSX has added 171 points with the Bank of Canada just announcing a half point interest rate cut…like the U.S. central bank, Canada’s policy-makers cited the spread of COVID-19 for pulling the trigger on their first interest rate cut since 2015…they also made sure it was clear to everyone that more stimulus is possible…“Before the outbreak, the global economy was showing signs of stabilizing,” the Bank of Canada said in a statement…“While Canada’s economy has been operating close to potential with inflation on target, the COVID-19 virus is a material negative shock to the Canadian and global outlooks, and monetary and fiscal authorities are responding”…how the Bank of Canada could state that the Canadian economy has been operating “close to potential”, when that simply isn’t the case, is staggering…the Venture has gained 7 points to 524…Canada Cobalt (CCW, TSX-V) is up 2 cents at 56 cents in early trading…CCW has been one of the top performers during PDAC, climbing 40% on the increasing likelihood of a major high-grade Silver discovery at Castle East alongside a newly-reported Gold find approximately 500 m to the southwest…”going deep” in the Abitibi has proven to be successful recently for the likes of CCW, Wallbridge Mining (WM, TSX) and Amex Exploration (AMX, TSX-V)…

6. Wallbridge Mining (WM, TSX), 2 days after announcing a proposed friendly buyout of neighbor Balmoral Resources (BAR, TSX), released a broad set of new drill results from Fenelon this morning in 2 separate news releases…the latest numbers have expanded the high-grade portion of the Tabasco zone to 500 m of strike length and 500 m of downdip extent with assays such as 4.3 g/t Au over 32.5 m in hole FA-19–096, and 3.4 g/t Au over 43.7 m, including 5.7 g/t over 19.45 m, in hole FA-20–110…holes FA-20–118, 119 and 126 (assays pending) all intersected strong mineralization in the West, while holes FA-20–116 and 123 (assays pending) are pushing mineralization to the East onto section 10350 E where the Tabasco Zone had not yet been identified…the Cayenne Zone is also showing areas of strong Gold mineralization at depth, as shown by the intersection of 4.6 g/t Au over 15.6 m, including 19.1 g/t  over 2.7 m, in FA-19–094, located 75 m down-dip of 17.6 g/t over 11.04 m in FA-19–059 announced last summer…additionally, definition drilling in the Main Gabbro zone has expanded known high-grade shoots with intersections such as 40.7 g/t over 5.96 m in hole 19–0985–013…meanwhile, Wallbridge also reported this morning that it continues to drill into wide intersections of 1 to 2 g/t Gold with narrower zones of high-grade material within the Area 51 vein network in the immediate hangingwall to the Tabasco/Cayenne shear system…

7. Growth in the euro zone is likely to be very sluggish over the next decade, experts have warned, and the forecasts were bleak even before the new coronavirus hit the region…“Even before the coronavirus outbreak, dark clouds had been gathering over the euro zone economy, with Italy in the eye of the storm,” economists at ING warned yesterday…“Over the next 10 years, the region’s potential growth rate will likely slow to a crawl while Italy faces a stagnation far worse than anything Japan has seen.  In the next 10 years, demographic and structural headwinds, and a limited appetite for reform, could push the bloc’s potential growth rate to less than 1%, down from the annual average pace of 1.4% of the previous decade”…in the 4th quarter of 2019, euro zone growth was just 0.1% quarter-on-quarter, marking the slowest growth rate since 2013, with its largest economy Germany seeing flat growth, and Italy and France seeing a 0.3% and 0.1% contraction, respectively…

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1. Gold is taking off on news of an emergency interest rate cut of half a point by the Federal Reserve to combat the growing global economic threat of COVID-19…the move is the first such cut since the financial crisis…markets had been widely expecting the central bank to take some type of action, with anticipation of a 50 basis point cut by the next FOMC meeting later this month…in addition to the cut on its benchmark overnight borrowing rate, the Fed also announced a half-percentage-point reduction on the interest it pays on excess bank reserves…the Fed’s action comes after a conference call between Jerome Powell, Treasury Secretary Steven Mnuchin and finance ministers and central bank leaders from each country of the G-7…the G-7 came out with a vague statement, saying it would commit unspecified tools to help the global economy deal with the threat…as of 7:00 am Pacific, Gold is up $28 an ounce at $1,617…Silver has climbed 32 cents to $17.04…base metals are flat with Copper, Nickel and Zinc at $2.54, $5.72 and 90 cents, respectively…Cobalt is steady at $14.97…Crude Oil is up $1 a barrel at $47.75…OPEC and its allies, a group known as OPEC+, are expected to announce deeper output cuts at their meeting later this week in Vienna (March 5–6)…the group had agreed to cut output by 1.7 million bpd in a deal that runs to the end of March…the U.S. Dollar Index is up nearly one-fifth of a point at 97.52…it’s “Super Tuesday” in the United States as voters across 14 states are starting to weigh in on the Democratic Presidential nomination contest…Bernie Sanders, not even a Democrat, is set to greatly widen his delegate lead as the Democratic Party takes on a doomed socialist agenda…

2. One company that’s destined to get a lot of attention in the battle against COVID-19 is Sona Nanotech (SONA, CSE), halted (pending news) pre-market this morning…we initially highlighted this opportunity for subscribers when SONA was trading in the 30’s last month…it closed yesterday at 65 cents…volume in the stock has picked up dramatically but this story definitely hasn’t yet hit the radar screens of the masses…Sona is deploying its proprietary nanotechnology to produce a quick-response lateral flow test to screen patients for COVID-19…when completed (and this is moving along at a rapid pace), the test is expected to produce results in 5 to 15 minutes…there is currently no lateral flow test specific to COVID-19, which was first detected in Wuhan, Hubei province, China, and continues to spread across the globe…Sona will integrate its proprietary nanorod technology into a disposable lateral flow test platform (similar to pregnancy tests that can be administered without skilled technicians or additional laboratory equipment) for use as a screening tool to help triage individuals…currently, the majority of testing completed for the COVID-19 virus utilizes molecular based technology (PCR), a testing platform that typically costs more than $200 per test, frequently takes 2 to 4 hours to produce results, and requires specialized laboratory equipment and skilled technicians to operate…in comparison, lateral flow assays provide results between 5 to 15 minutes and can be administered by a layperson…

3. TD Securities has hiked its Gold forecast, looking for the metal to average $1,700 an ounce in the 4th quarter and potentially trade as high as $1,800 at some point (a conservative forecast in our view)…the Canadian firm remains upbeat on the metal despite last week’s pullback, which TDS largely attributed to selling to raise money to meet margin calls in other markets as equities and other so-called risk assets plunged…TDS now looks for Gold to benefit from further loosening of monetary policy…Gold prices hit a 7-year high around $1,689 an ounce at the beginning of last week, but then tumbled all the way to $1,563 by Friday despite what TDS described as supportive developments in interest rates, bond yields and moves in the U.S. dollar…“We hypothesize that the sharp decline can be traced to liquidity issues in the broad market,” TDS said in a report issued late Monday…“The yellow metal was likely sold to provide funds to cover margin calls on collapsing leveraged equity positions”…

4. Since globalist Justin Trudeau took over as Canadian Prime Minister, more than $150 billion in capital and 200,000 jobs have left Canada because Liberals have made it impossible to build anything…Trudeau showed up at PDAC yesterday, preaching the same failed strategy that has undermined the Canadian resource sector and overall economy the last several years while shifting capital (and emissions) elsewhere…the Trump economy has been one of the beneficiaries of Trudeau’s anti-resource agenda and economic illiteracy…“Of course (of course, it’s so obvious!) we can only create a better stronger economy for everyone (whose everyone?) if we are fighting climate change at the same time,” said Trudeau (what exactly are we “fighting”, how are we fighting it and why are we doing things opposite to our largest trading partner?)…“We know that, Canadians know that (of course we do!!) – we just haven’t reached that point of consensus…about the best way to do it”…meanwhile, Trudeau and other failed politicians were cutting a deal under pressure with the radical Wet’suwet’en “hereditary chiefs” last weekend in Smithers, the same group that “feathered” and shamed 4 female hereditary chiefs (stripping them of their titles) for their pro-pipeline positions…isn’t Trudeau also supposed to be a “feminist”?…Trudeau should have travelled to Smithers to learn something, not Toronto…the proposed “hereditary chiefs” deal, which still has a lot of moving parts, is going to blow up in his face…

5. The Dow has erased a 350-point decline near the open and is now up more than 200 points as of 7:00 am Pacific following the announcement of the half point Fed rate cut…in Toronto, the TSX is up 196 points, thanks to higher Gold and Oil prices, while the Venture has jumped 11 points to 524…some recent top performers who got dragged down during last week’s market panic are bouncing back strongly…surprise Gold news from Canada Cobalt (CCW, TSX-V) yesterday helped the stock recover from last week’s broader market chaos that drove CCW down to its rising 200-day moving average (SMA) Friday…CCW jumped 8.5 cents to close at 48.5 cents to begin the new week and is pushing higher again this morning…Matt Halliday, VP Exploration, says the geological processes at Castle are “more dynamic” than previously recognized, lending support to the idea that the exceptionally high-grade Silver discovery at Castle East – immediately adjacent to 3 past producers (~70 million ounces) – may host a large deposit or series of deposits in the Miller Lake basin where the diabase appears to thicken…a “major update” on Castle East is expected soon, Halliday says…Fiore Gold (F, TSX-V), a producer in Nevada, and Quebec explorers QMX Gold (QMX, TSX-V), Azimut Exploration (AZM, TSX-V) and Amex Exploration (AMX, TSX-V) were all oversold last week and should be strong performers this month…Yamana Gold (YRI, TSX; AUY, NYSE) is looking highly attractive after last week’s nearly 30% haircut…

6. Marathon Gold (MOZ, TSX), one of our favorite advanced Gold plays, has cut 15.2 g/t Au over 3 m, along with other initial encouraging results, from its 2020 drill program within the 6-km-long under-explored Sprite Corridor at its Valentine Gold Project in central Newfoundland…the results announced this morning represent fire assay data from the first 8 drill holes of a planned 32,000-m drill program at Sprite, located between the Marathon and Leprechaun deposits…the 8 drill holes cover a 200-m-long strike length of quartz-tourmaline-pyrite-Gold (QTP-Au) veining extending to the northeast, and confirm the emergence of a developing Main zone-type sequence of mineralization in an important new area now named the Berry zone…Matt Manson, President and CEO, commented, “These first drill results from our 2020 exploration drill program have confirmed the presence of Main zone-style mineralization in the Sprite corridor of a type characteristic of the nearby large-scale Leprechaun and Marathon deposits”…MOZ is up 4 pennies at $1.35 through the first 30 minutes of trading…the stock sold off last week exactly to its rising 300-day SMA in the $1.20’s…

7.  China’s Purchasing Managing Index – a measure of purchasing sentiment amongst manufacturers – fell to its lowest level on record for the month of February, dropping from 50.0 in January to just 35.7, a range that indicates the Chinese economy is heading towards a contraction…for comparison’s sake, at the start of the global financial crisis in November 2008, Chinese PMI had dropped to 38.8…the PMI is a particularly important gauge of future economic activity because it surveys business executives across various industries who weigh in on indicators like inventory orders, employment, production levels and supplier deliveries…much of the global supply chain is linked to China, given that it is the world’s largest manufacturing hub…some analysts, however, remained optimistic despite the record-low PMI data…“China continues to ramp up policy easing and other support, which will help growth rebound into the second quarter,” wrote UBS Global Wealth Management’s chief investment officer Mark Haefele in a note… “While new clusters outside China are a concern, the domestic situation appears to be normalizing”…

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