IDM Mining (TSXV: IDM) On Production Track – Mike Swanson (03/19/2017)

IDM Mining just announced some huge news this month.

It’s a junior mining stock that I actually bought last year in a private placement and own right now.

Take a look at the chart.


I got a circle on the chart at the time of the private placement that I bought.

That’s the first circle you see from back in 2016.

You can see that IDM went up with the gold stock sector and came down with it at the end of 2016.

Like the rest of the gold mining stocks it is now consolidating.

And that’s where the second circle comes in.

The stock is trading between 17 cents and 14 cents and when it goes through 17 I believe it will then go up to its next resistance zone of last summer.

I expect we’ll see gold stocks breakout one by one of consolidation zones like this to begin the second leg of a big new bull market for them that began last year.

After the first big left of a big bull market you typically see a sharp pullback and then a consolidation phase.

Now what is the news IDM Mining announced?

IDM Mining owns the 17,125 hectare Red Mountain Project located in northwestern B.C., 15km northeast of the town of Stewart and in Nisga’a traditional territory.

Discovered in 1989, the property was explored extensively until 1996 by Lac Minerals Ltd. and Royal Oak Mines Inc., with 466 diamond drill holes and over 2,000 meters of underground development completed, along with extensive engineering and environmental baseline work. Additional studies were completed over the past 12 years by Seabridge, North American Metals Corp. and Banks Island Gold Ltd.

An economic preliminary assessment study finds that this project can be put into production to do the following:

Preliminary Economic Assessment

Base case economics utilize a gold price of US$1,250 per ounce and silver price of US$15 per ounce and an exchange rate of C$1.00 equals US$0.80.

The pre-tax base case economics indicate a Net Present Value (NPV) of $133.1 million at a 5% discount rate with an Internal Rate of Return (IRR) of 42.4% and a 1.9 year payback of initial capital.

The after-tax base case economics indicate a NPV of $86.6 million at a 5% discount rate with an IRR of 32.3% and a 2.0 year payback of initial capital.

Due to the wide nature of the mineralized zones, the majority of the deposit is amenable to bulk underground longhole mining methods. The project utilizes a year round design processing rate of 1,000 tonnes per day (tpd) and underground mining rate of 1,500 tpd for 8 months per year.

Average life of mine head grade is 7.0 g/t Au and 21.5 g/t Ag

Life of project direct operating cost is estimated at US$441 per ounce of gold recovered. Net of the silver by-product, costs drop to US$418 per ounce.

Initial capital costs are estimated at US$89.0 million, CAD$111.2 million, which includes a 10% contingency.

The economic model assumes base case gold recovery rates ranging from 90.1% to 88.0% for gold and 84.6% to 76.0% for silver, depending on the mineralized zone.

Average annual payable production has increased by 25% over the 2014 PEA to 70,000 ounces of gold and 194,000 ounces of silver.

Mine life is estimated at 5 years with a 15 to 18 month pre-production period.

Opportunity to reduce project capital costs include sourcing used mining and processing equipment and possible sharing of infrastructure costs for the road and powerline with an established independent power producer looking to develop a run-of-river hydroelectric project adjacent to the proposed mill site location.

Opportunity to increase potentially mineable ounces through the conversion of additional inferred resource by way of infill drilling, as recommended by JDS, and through immediately proximal exploration efforts.

What is more IDM Mining has some heavy investors in the company and this project.

Just a few weeks ago Osisko Gold Royalties invested $15 million in a private placement with IDM!

Osisko has now taken a 19.95% stake in IDM!

And this money is going to be used to put the Red Mountain project into production.

You can read the details of the full press release on Osisko’s investment here.

You also can find out more about IDM Mining at its website www.idmmining.com.

At the time of this post I own a position in IDM Mining. I mentioned the private placement in the private Power Investor group when I found it and got into it. My updated holdings disclosure is here.

If this is the first time you have come to this website then you need to get on my action update list by going here.

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IDM Mining (TSXV: IDM) Just Announced Huge News – Mike Swanson (01/24/2017)

IDM Mining just announced some huge news.

It’s a junior mining stock that I actually bought last year in a private placement and own right now.

Take a look at the chart.


I got a circle on the chart at the time of the private placement that I bought.

You can see that IDM went up with the gold stock sector and came down with.

Like the rest of the gold mining stocks it is now consolidating.

I expect we’ll see gold stocks breakout one by one of consolidation zones like this to begin the second leg of a big new bull market for them that began last year.

After the first big left of a big bull market you typically see a sharp pullback and then a consolidation phase.

Now what is the news IDM Mining announced?

Well to quote from it’s press release:

IDM Mining Ltd. (TSX VENTURE:IDM) (“IDM” or the “Company”) is pleased to announce the results of an updated resource estimate for the Red Mountain Gold Project (“Red Mountain” or the “Project”), located in northwestern British Columbia near the town of Stewart, BC. The updated resource includes the results from additional drilling completed by IDM during 2016 which expanded mineralization along strike to the north, south, and down-dip, as well as additionally upgrading previous inferred resources. This estimate has yielded a 32% increase in contained Measured & Indicated (“M&I”) gold ounces, and an increase in average grade from 8.36 g/t to 8.75 g/t Au. The resource estimate is authored by Dr. Gilles Arseneau, P.Geo and Andrew Hamilton, P.Geo with input from IDM’s technical team.

The 2017 updated resource estimate at a 3.0 g/t Au cut-off represents an increase from the 2016 estimate by 142,200 oz Au and 275,900 oz Ag in the M&I categories. Resources in the Inferred category decreased by 42,700 oz Au and 48,200 oz Ag.

Rob McLeod, President and CEO, stated “Our 2016 drilling program was successful in expanding mineralization in all of the major mineralized zones, as well as demonstrating excellent continuity of wide zones of high-grade gold mineralization. Future underground drilling from the production-sized decline will continue to step-out in all directions, including targeting the northern extension of the mineralized trend, which can be traced a further 800 meters to the north of the current resources.”

“This updated resource model will now be handed over to our Feasibility Study team to be incorporated into a revised and expanded mine design,” said Michael McPhie, Executive Chairman of IDM Mining. “What is important to recognize about this revised and expanded resource update is it was made possible through a modest resource expansion drilling program during 2016.”

You can read the full details of this press release by going here.

My holdings disclosure for IDM Mining is here. I mentioned the private placement in the private Power Investor group when I found it and got into it.

If this is the first time you have come to this website then you need to get on my action update list by going here.

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Why We Have a Strong Buy on IDM Mining (TSXV: IDM)

idm mining red cloud project

(A photo of the Red Mountain Project being developed by IDM Mining)

For the past few years I have been writing and saying that one day gold would go into a new bull market and go up more than anyone can imagine. I invested early in the cycle and it’s tough to invest early before a bull market really starts. When you get in too early you are going to get some losses, but when things turns the gains off of the bottom are incredible.

A big problem is that when a bull market begins few people believe that it is happening and the longer the bear market was that preceded the new bull market the fewer and fewer people are out there that can believe that the new bull market is real when it comes.

So what you get at the beginning are really only smart money insiders buying while the masses remain asleep and the financial media ignores what is going on.

Over the past few months I have been banging the drum on the new gold bull market. I released a course called the Total Gold Trading Program to help people get involved in it using ETF’s in my model rebalancing system and with individual stocks.

Last month in my June issue of this newsletter I showed how George Soros had made massive bets on gold and mining stocks in the first quarter of this year. The media put out stories saying that he is a giant short seller betting on a stock market crash due to the fact that he also bought giant put positions that represented 10% of his portfolio. Due to the billions of money he has these positions may represent the single biggest put option position owned by a single individual.

The fact of the matter though is that this did not really represent a giant bet to profit from a stock market crash. What Soros really did is hedge his long positions by buying the puts. He simply protected himself from a potential stock market drop, which is a very wise thing to do with the state of the financial markets right now.

In reality what Soros is betting on is rising gold prices and a bull market in mining stocks. He is now one of the biggest shareholders in Barrick gold after putting several hundred million dollars into the stock in the first few months of the year. He also put close to 10% of his money into GLD call options. It’s a massive bet on gold that makes the guys on CNBC’s “Fast Money” look like small fries. A lot of people hate Soros because of his politics, but no one can deny that few people are as successful in the markets as he is.

If Soros was really trying to profit from a stock market crash he would have sold a lot of his long positions. Instead he merely hedged them. People who just went off what stories in the financial media said about Soros would have no real understanding of what he was really doing.

I fear that CNBC and much of the financial media simply does not want people to get into gold or understand the power of gold. Many reporters and journalists are simply biased against it, because they have a belief that if the gold price chart goes up that it must be bad for the stock market and they do not want to consider that anything could go wrong with the stock market.

So on Monday morning last week when the market was gapping down before the open I turned on CNBC and heard Jim Cramer say that he rather own Cisco than gold. I laughed at that, because no matter what Cisco or the stock market does gold is in a bull market now and the gains that have come and are only going to grow in mining stocks are going to be massive.

This year people in the stock market are making no money while gold and gold mining stocks are going up and up. This is where the money is to be made!

HUI gold bugs index

People are starting to catch on to this fact. Yes there have been lots of gold bears out there that kept calling for crashes or pullbacks as gold went higher this year and many people listened to them, because they saw so many failed rallies during the bear market years of the past. Some said that the $1,200 level for gold could never be broken and then it was. And then they said $1,300 could not be breached and then it was. And now today instead of resistance the $1,300 an ounce level for gold is support and gold stocks are going up and up in a stairway to heaven type of market rally. Such rallies typically last 12 months and sometimes even longer and they convert doubters into bulls. And so now people are starting to believe in gold again. Most bull markets typically last from 3 to 5 years so I think we are still very early in the bull cycle for gold, silver, and mining stocks. And yes silver just went through $19.00 a few days ago. It’s all happening.

What I am doing is holding core positions in two ETF’s related to gold and mining stocks in my various accounts and then buying some individual mining stock positions around them that I think can go up more than the ETF’s will.

Now I’m not really interested in buying the big cap mining stocks such as Newmont Mining or Goldcorp and so forth, because I already own them in the ETF’s. What I’m looking to do is buy a basket of small cap junior mining and exploration stocks. I own three right now and am looking to buy a dozen more or so and hopefully hold the bulk of the shares for the next few years.

Small cap mining stocks are very speculative, but the right ones in bull markets go up much more than the big cap stocks do. These are stocks that can go from pennies to one dollar over a few years.

What happens is that these exploration companies raise money through selling shares and use that money to buy the rights to mine properties and then drill on them to see if they can find minable deposits. If they strike gold they then raise more money to mine the gold or get into a partnership deal with a larger company to do it with or simply get bought out by a major producer.

The majors need to buy such companies to keep their production going. The other kind of small cap mining company is a company that buys a property that can be put into production and raises the money to put that mine into production. These type of stocks become incredible growth stories and often perform the best in a metals bull market. In fact this is how stocks such as Yamana gold actually got started. Some of my best investments have been in these type of stocks.

You can buy these stocks right on the open market and you can find some opportunities to invest directly in the companies in unbrokered private placements. These have the benefit of coming with warrants attached to them as a bonus, which work as long-term stock options.

These are the type of investments I am looking to make in mining stocks and did with IDM Mining in April. I own 140,000 shares of it that I bought for 9 cents a share with a warrant attached to it. I passed the idea on to members of my private Power Investor group so I think it very likely that a few of them bought it too and that others simply bought the stock directly through their broker on the stock market like you normally would do, because the drawback to a private placement like this in Canada is that you have a four month trading restriction on the shares. So I own shares that I cannot sell until the end of August. After that I can if I decide to do so. Anyone though who bought this stock back in April has experienced a very fun ride up as it has doubled since then. It was trading at 11 cents at the end of that month and closed at 22 cents on Friday, but I believe more gains are to come. This is just what is happening with many mining stocks now.

The thing is we are very early in the bull cycle in terms of time and many small cap mining stocks are still at very low valuations. In bull markets the pure exploration stocks tend to have market caps in the $25-$30 million range and it is easy to find many with market caps below $5 million now. Which are the good ones and which are not takes some studying to do and it is my belief that the emerging junior miners will reach market caps much bigger than the $25-30 million range as this bull market plays out.

When it comes to small cap mining stocks there are three critical things to look for. You need a good property and a management team that has had a record of successful past ventures. And you also need the stock to get start to get some attention. That shows up in volume, price activity, and signs of investor interest. Word needs to get out and spread.

idm price chart

IDM Mining owns a 100% interest in the Red Mountain Gold project which is in northwest British Colombia. It has conducted a NI 43-101 study that estimates low cost under $600 an ounce gold mining production is possible on this project. The projection is that 55,500 ounces of gold per year can be mined on this property at an operating cost of less than $550 an ounce and 170,000 ounces of silver with a mine life of five years. Exploration activities have shown a measured and indicated resource of 441,500 ounces of gold. However the company is poised to carry out more exploration activity to boost resources estimates and the value of the property. It also has purchased claim to an entire portfolio of exploration properties in the Yukon as you can see here on the next page.

Red Mountain Gold Project

The company is in the permitting and final feasibility process to mine at the Red Mount Gold project and looks to have that complete this year with a final decision on whether to commence the mining construction to be made early in 2017.

It is worth noting that the President and CEO of the company is Rob McLeod, who has become a bit of a legend in the mining world for being involved in some big deals during the last bull cycle. He founded and was VP of Exploration for Underworld, which got bought out by Kinross for $140 million after its exploration activities found a $1.4 million ounce gold deposit on the White gold deposit in the Yukon. He knows something about that area. He was also VP and CEO of Full Metal Minerals for a period of time.

There is a whole team of people on the board of directors and others involved with it so I am not going to go through all of them. But I want to point out one that got my attention and that is Shobana Thaya who is handling investor relations and marketing for IDM Mining. She is the principal for Vertex Strategies, which has helped spread investor awareness for companies such as Carpathian Gold and Premier Gold Mines, which is trading with a market cap of over $700 million dollars with multiple mine development projects. Vertex signed a contract last month to provide services to IDM Mining for up to a year.

Today IDM Mining is trading with a market cap of roughly $46 million when you factor in the trading price and total shares issued and outstanding. One thing to think about with mining stocks is how much rising gold prices can impact the bottom line. If you take IDM Mining the estimates for an operating cost of $516 per ounce of gold and $455 an ounce if you include the silver by-product.

Let’s just take the $516 figure. If gold is trading at $1,200 an ounce that makes for a profit of $684 an ounce. If gold is trading at $1,330 an ounce the profit is now $814 an ounce. That’s a 19% increase on a 10.8% increase in the price of gold. This is why you are seeing gold stocks rise so much faster than the price of gold itself and why I expect to see even bigger price jumps to come in many small cap mining and exploration stocks.

IDM Mining trades as IDM on the Canadian TSXV exchange. One last note many commodities are turning up with gold and silver. Copper is busting out of a stage one base. Coffee just did it last week t0o. Some commodities though like wheat are lagging. We are still early in the commodity bull cycle. Gold and silver tend to lead the way in a commodity bull cycle and then other commodities one by one follow into new bull markets. This does not all happen at once and oil and energy tend to go into new bull markets last. I am interested in one day investing in energy stocks, but I think that time will be well into the future. Mining stocks are going to remain the superior trade in my view.

I own a position in IDM Mining at the time of publication of this post. To read my full holdings and disclosure statement for IDM Mining and this website go here. – Mike Swanson

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