There are a multitude of reasons to support mining companies’ favorable investment prospects over the next decade.
Fiat devaluation
Firstly, the devaluation of fiat currencies due to quantitative easing has placed short-term savers in a precarious position. This cohort will likely lose purchasing power due to inflation over the long term if they don’t move their cash farther out onto the risk curve.
While physical metals, such as gold and silver, can stand in as non-fiat cash holdings and add capital appreciation, mineral explorers with demonstrated economical resources offer the potential for outsized returns in the riskiest part of a portfolio, while retaining the value preservation properties of their commodities of choice. Commodities remain on a tear since the beginning of the pandemic, with YoY prices declines representing a wealth of avenues toward value plays.
Paragons of industry
Secondly, mining companies create and preserve value because they support century-spanning industrial use-cases with diminishing and therefore increasingly expensive commodity supplies. Copper and lithium, for example, are required at double-digit multiples above existing supply over the next generation to meet EV demand alone. Compare this to the slim odds of a new consumer product, perhaps related to food or technology, whose market demand must be generated from scratch to ensure its brand lasts as a going concern.
Volatility
Finally, the constant presence of volatility in an investor’s life requires a mitigation plan in line with financial goals, risk tolerance and time horizon. While most opt for cash or short-term bonds to populate this stability-centric sleeve in their portfolio due to their instant liquidity, especially during an emergency, allocations to commodities and mining companies open investors up to benefit from market scarcity or new discoveries with price support from the going rates for the materials in question.
While the Bank of Canada sees the possibility of a recession sometime next year, which may depress equities and spook invested cash onto the sidelines, an allocation to mining companies can act as a buffer to excessive fear and help you hold on through the market’s peaks and throughs.
TMH readers embodied this thesis over the past week as they concentrated around three mining companies with positive news flow:
Avrupa Minerals (TSXV:AVU) approved for exploration in Finland
Tukes, Finland’s mineral exploration licensing authority, approved the company’s applications to explore its Kangasjärvi and Kolima properties.
Kolima has three appeals which must be reviewed before an exploration license can be granted.
The company sees several compelling targets at Kangasjärvi near historic mine workings, as well as numerous under-tested targets around the license area. A first-pass drilling program is planned for June.
CEO Paul Kuhn spoke with Coreena Robertson about the news.
The approval follows an option agreement for the company’s Slivova Gold Project in Kosovo.
Avrupa Minerals (TSXV:AVU) is up by over 60 per cent year to date.
Green River Gold (CSE:CCR) records anomalous high gold, cobalt, lead and zinc XRF readings at the Quesnel Nickel Project
Drill hole WK-23-01 on the 100-per-cent owned Quesnel Nickel Project in British Columbia showed a strong serpentinized alteration zone from 47.4 meters to 50.8 meters.
The alteration zone is interpreted to contain disseminated sulphides with pyrite, sphalerite, galena and highly magnetic pyrrhotite. The XRF scanning on the sulphides returned high gold, zinc, lead, and cobalt anomalies. Core samples have been sent for assay.
The company believes the drill hole is near a potential local source of gold, silver, lead and zinc filled by hydrothermal fluids.
CEO Perry Little spoke with Shoran Devi about the news.
The findings follow a recent financing and a doubling of the company’s land holdings in B.C.’s Cariboo Mining District.
Green River Gold (CSE:CCR) has lost over 21 per cent year to date.
Surge Battery Metals (TSXV:NILI) update on Nevada North Lithium project
CEO Greg Reimer spoke with Shoran Devi about Surge’s upcoming exploration plans.
He also commented on Nevada’s status as the number one global spot for mining friendly jurisdictions, according to the Fraser Institute, and how this benefits Surge and the Nevada North Lithium project.
The favorable future outlook for the company follows encouraging metallurgical test results to better understand Nevada North Lithium’s lithium-bearing clays.
Surge Battery Metals (TSXV:NILI) has added almost 6.5 per cent year to date.
This is sponsored content issued on behalf of Avrupa Minerals, Green River Gold and Surge Battery Metals, please see full disclaimer here.
