How A Resource Nationalism Cult Will Affect
May 17, 2021
This article will combine two different subjects into one piece because in the real world they are intertwined. First is a discussion of Canada’s newest gold production story with three major assets in Nevada at its core. That would be i-80 Gold (IAU-T) formed as a spinoff of their Nevada projects from the Equinox gold takeover of Premier Gold Mines recently. Equinox retains a 30% shareholder position in i-80.
After the spinoff, i-80 purchased from Waterton Global the Getchell Gold Mine for $50 million in cash and shares. Waterton now controls about 7% of the shares. i-80 is a 40% owner of the operating South Auturo mine with 60% and control owned by Nevada Gold Mines. Nevada Gold Mines is the joint venture between Barrick and Newmont to operate their Nevada assets.
i-80 is especially strong in management being led by CEO Ewan Downie who brought with him important members of his team from Premier. Downie was the winner of the 2003 Prospector of the Year from PDAC among a slew of other professional awards in his career. i-80 snatched Matt Gili from Nevada Copper where he was CEO. Matt Gili will be President and COO of i-80. Gili was previously COO of the massive Oyu Tolgoi Mine in Mongolia for Rio Tinto.
Currently the only gold is from the tiny South Arturo mine with only production of 23,000 ounces of gold in 2020 for i-80’s 40%. Expansion of a Phase 3 program at South Arturo will increase i-80’s ounces to 50,000 by 2026. The high grade Getchell Mine will see 22,000 meters of drilling in 2021. A PEA is expected in Q2 of 2021 for Getchell with underground and open pit mining to begin in 2024 and production estimated at near 175,000 ounces of gold by 2027. The third major asset for i-80 is the high grade McCoy-Cove gold mine with historic production of about 2.6 million ounces of gold and 100 million ounces of silver between 1987 and 2003. It is one of the highest-grade gold properties in Nevada with a 43-101 resource of 1.8 million ounces of gold at 10.9 g/t.
The strength of i-80 is not just having a lot of gold in Nevada and being already in partnership with NGM. It is largely in the brains of Ewan Downie. He’s done this twice before. He picks up some interesting projects, advances them as far as he can and sells them at a much higher price to a bigger company. I can predict exactly what he will do because he is so used to doing it. And he has assembled a rather first class management team.
But there is another and perhaps more important reason for investors to consider picking up shares in i-80. All of the company’s projects are in the number 1 rated mining jurisdiction in the world as judged by the Fraser Institute. As a result of the economic disruption caused by governments around the world in their reaction to a bad year for the flu, Resource Nationalism is popping up in Central America and South America and parts of Africa like pimples on the face of a fifteen-year-old.
Since the US has kept the ability to print away their debt as a result of owning the crown as the World’s Reserve Currency, everyone else thinks printing is a great idea. Alas, the world is running short of both ink and trees.
So when countries such as Chile and the Dominican Republic and Peru see the price of commodities going higher, rather than celebrating their good fortune, they begin to demand more and more of the pie. In Chile, the world’s largest copper producing country, a bill is in front of their congress to expand the royalty on copper to 75% in 2024 if copper is higher than $4.50 a pound. Since copper has been as high as $4.82 in the last week, the bill has an excellent chance of passing. It also will make Chile one of the worst countries in the world for a junior to do business.
Resource Nationalism has been an issue in the past, no one wants to explore in Nigeria or Zimbabwe or Afghanistan but it is going far wider and casting a net over major mining jurisdictions at present. And I am content to predict it will only get worse. Countries go through periods of utter insanity and if Dogecon is worth $89 billion and NFTs of farts worth $85, there is no current limit to stupidity.
So in the past you needed to think about where we stand in the mining cycle and how much demand will change for a commodity and what are the chances of the CFO going to jail for fraud, now we must focus on just how dangerous is the government of the country I am considering investing in to the financial future of mining companies.
In summation, i-80 has great management in a safe jurisdiction and some nice projects. They have about $80 million in cash; a reasonable exploration program planned and gold might come in handy very soon. Best of all, they are not in the DR or Peru or Chile or Tanzania.
i-80 is an advertiser and as such that makes me biased. Do your own due diligence. I share neither your profits nor your losses.
i-80 Gold Corp
IAU-V $2.52 (May 14, 2021)
IAUCF-OTCQX 185 million shares
i-80 Gold website