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Miner Whipsawed by Farcical Permitting Decision

Source: Adrian Day

February 14, 2022 ( Newswire) Adrian Day of Global Analyst looks at the mostly favorable developments at some of the companies on his list, but also at the farce playing out in Mexico.

Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) (FSM.NY, 3.24) reported that the Mexican environmental agency SEMARNAT, which last month renewed the company's mining license on its San Jose project only weeks after earlier denying the extension, now says the extension is only for two years. The agency, is a ludicrous explanation, says the earlier notice granting a 12-year extension contained a typographical error. Given that the term of 12 years is referred to repeatedly in the document belies that it was a typo and that only two was intended. Fortuna has initiated legal proceedings in the Mexican federal court.

Mexico's mining reputation at risk

It seems to me that the anti-mining activist who heads SEMARNAT does not want to grant an extension to Fortuna but has no legal basis for denying it; it seems that they first bent to political pressure in granting the delayed renewal, and then to anti-mining NGO pressure in the denial. The issue will have to be settled in the courts. Perhaps SEMARNAT just wants to be able to say to its anti-mining activist chums, "hey, we tried." In the meantime, this Mickey Mouse behavior makes Mexico a laughing stock for mining, and companies - local as well as foreign (Fresnillo and partner MAG Silver were notified of a permit delay in their project) - will be wary of committing funds. Investors too will think twice about investing in the country. I was thinking of calling this a Mexican standoff, but not only was that too easy, it would also have been not quite accurate, for Mexico has a lot more to lose with this stupidity than any single company.

Meanwhile, construction at Fortuna's new Séguéla mine in Cȏte d'Ivoire is proceeding on schedule towards a first gold pour in mid-2023. Fortuna, undervalued and with growth ahead of it, is a buy.

Orogen makes progress on two fronts

Orogen Royalties Inc. (OGN:TSX.V) (OGN, To., 0.48) announced it had retained a CEO for the Ball Creek spinout, anticipated for mid-year. Brian Massy has 15 years' experience with major mining companies, including as vice president for investor relations for BHP. Ball Creek is a gold-copper porphyry project in the famed Golden Triangle district of British Columbia; Orogen will retain an equity interest in the new company and a royalty on the project.

Separately, the company has concluded two more agreements on properties, a sale in British Columbia and an option in Nevada, continuing a string of such agreements whereby it receives some cash and shares, and, importantly, retains a royalty, while selling the project.

With over C$8 million in the bank and awaiting its first royalty check on Ermitaño, Orogen is a buy on any weakness.

Vista collects more cash, but focus on mine study and transaction

Vista Gold Corp. (VGZ:NYSE.MKT; VGZ:TSX) (VGZ.NY, 0.6814) received $2.5 million for cancellation of the remaining 50% of the royalty on the Awak Mas deposit in Indonesia. This completes the monetization of another of Vista's non-core assets. Though positive, it does not fundamentally change the near-term outlook for the company that has cash from a $13.5 million equity raise last July. The market awaits the completion of the feasibility study on its Mt. Todd project and expected discussions with potential joint-venture partners. The stock is trading at an enormous discount to the value of the property. Buy.

Merger and dividend at two majors

Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) (AEM.NY, 48.20) said its merger with Kirkland Lake should be completed this coming week after expected Australian government approvals. The combined company will retain the name Agnico Eagle and its stock symbol. Buy.

Franco-Nevada Corp. (FNV:TSX; FNV:NYSE) (FNV.NY, 133.97) raised its quarterly dividend by 2 cents to C$0.32 cents a share, for a forward yield of just under 1%, about 50 basis points lower than peers. Hold.

BEST BUYS now, in addition to those discussed above, include Osisko Gold Royalties Ltd. (OR:TSX; OR:NYSE) (OR.NY, 11.07), Pan American Silver Corp. (PAAS:TSX; PAAS:NASDAQ) (PAAS, Nasdaq, 21.32), Midland Exploration Inc. (MD:TSX.V) (MD, To., 0.495), and Lara Exploration Ltd. (LRA:TSX.V) (LRA, To., 0.485–0.53).

Originally published on Feb. 6, 2022.

Adrian Day, London-born and a graduate of the London School of Economics, is editor of Adrian Day's Global Analyst. His latest book is "Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks."


1) Adrian Day: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: Franco-Nevada, Fortuna Silver, Orogen Royalties, Midland Exploration, Vista Gold, and Lara Exploration. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management, which is unaffiliated with Adrian Day's newsletter, hold shares of the following companies mentioned in this article: All. I determined which companies would be included in this article based on my research and understanding of the sector.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.

4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Osisko Gold Royalties, Franco-Nevada, Pan American Silver, Fortuna Silver, Orogen, Agnico Eagles, Midland Explorations, Vista Gold, and Lara Exploration, companies mentioned in this article.

Adrian Day's Disclosures: Adrian Day's Global Analyst is distributed by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. Publisher: Adrian Day. Owner: Investment Consultants International Ltd. Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM. Views herein are the editor's opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. ©2021. Adrian Day's Global Analyst. Information and advice herein are intended purely for the subscriber's own account. Under no circumstances may any part of a Global Analyst e-mail be copied or distributed without prior written permission of the editor. Given the nature of this service, we will pursue any violations aggressively.

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