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Small Arbitrage Transaction in some Mining Stocks

Quick portfolio update for the Irregulars

By Travis Johnson, Stock Gumshoe, February 2, 2017

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More to come for the Irregulars tomorrow as I finish up my Annual Review, but since I did a little buying and selling today this is just a quick note to let the Irregulars know that I’ve made a small purchase of shares in Luna Gold (LGC.TO in Canada, LGCUF) following their decision to merge with JDL Gold (JDL.V, LWLCF) to create a new company called Trek Mining (likely symbol TREK.V, OTC symbol might remain LWLCF which came from JDL’s predecessor Lowell Copper, we’ll see).

JDL Gold has come up a couple times in this space, mostly because Marin Katusa has pitched it and participated in the fundraising that put JDL Gold together last Fall — it is the combination of several companies (Lowell Copper, Gold Mountain Mining, and Anthem United) that I didn’t find urgently exciting or “strategic” in combination with each other: a gold mill in Ecuador with some exploration properties, copper exploration properties in Chile, and a past-producing gold mine in Canada… but it did have decent funding and scale for a very small junior exploration company, and very highly regarded leadership, particularly Chairman David Lowell, who is famous for finding some elephant copper deposits, along with investor Lukas Lundin and the publicity-driving Marin Katusa/Doug Casey/Rick Rule fund.

Luna Gold you may also remember, because its Aurizona mine was for a while Sandstorm Gold’s (SAND) biggest revenue producer — that mine ran into trouble with flooding and shut down during the fall in gold prices and has yet to be restarted, but they do have a plan in place to rebuild the mine and expand the underground mine, with the costs putting it in position to likely produce cash flow of at least $30 million a year before financing costs (assuming gold stays above $1,000 an ounce, and that their all-in cost estimate of $708/oz is still rational), and it is almost “shovel ready” and could be producing as soon as the end of 2018 if they get things going quickly. It also has both a decent level of expected production (150,000 ounces a year) and room for exploration to expand the project beyond the current anticipated 6 and a half year mine life.

So that makes it a pretty decent match for JDL — a project that, unlike their others, is very far along and ...

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