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Kenorland Minerals Closes C$5.2M Strategic Investment By Sumitomo; Regnault Results Expected Soon

Source: The Critical Investor   11/12/2021

It seems drilling at Regnault is going well for Kenorland Minerals, as JV Partner Sumitomo recently…

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This article was originally published by Streetwise Reports

Source: The Critical Investor   11/12/2021

It seems drilling at Regnault is going well for Kenorland Minerals, as JV Partner Sumitomo recently completed a C$5.2M strategic investment, something you don’t see very often. As the summer program is now several months underway, the first results are expected in a few weeks. The Critical Investor discusses this and exploration at other projects with CEO Zach Flood.

It seems Kenorland Minerals Ltd. (KLD:TSX.V; 3WQO:FSE) is doing very well at the summer drill program currently underway at their flagship Regnault project, as JV partner Sumitomo Metal Mining Canada was happy to do a strategic investment of no less than C$5.2M in Kenorland equity. This is not something you see very often, and I will discuss with CEO Zach Flood the potential meaning behind this move.

After a generally successful winter program, with most holes hitting mineralization at Regnault, Kenorland is looking to follow up on the already found R1 and R2 structures at Regnault with the aforementioned 18,000m summer drill program, which commenced in July of this year. The company is also busy with other exploration programs at many more projects, either fully owned, optioned or JV-ed, making this one of the busiest exploration juniors I know.

Drilling at Regnault target, Frotet project, Quebec

Notwithstanding all activities, the share price action doesn’t exactly reflect the myriad of opportunities for good exploration results, as can be seen here:

Share price 1 year period; Source: tmxmoney.com

As the June results at Regnault weren’t as stellar as the batch before (which included the impressive 5.72m @ 90.56 g/t Au (incl. 3.89m at 132.57 g/t Au) intercept), gold corrected and general sentiment dropped off, the Kenorland share price dropped off like most precious metals juniors, and started side ranging in the C$0.70-0.80 range. Most of the pre-IPO financing has been done at C$0.70, before lots of drilling and other exploration was completed, so Sumitomo acknowledged the increased value proposition, and was happy to fork out the substantial cash a nice premium of 33%.     

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

Sumitomo acquired 5,2M shares at a price of C$1.00 per share for gross proceeds of $5,2M, resulting in a position of 10.1% of the company’s outstanding shares. The proceeds from the financing will be used 80% ($4,2M) for exploration expenditures on the company’s properties and 20% ($1M) for general and administrative expenses of the company. As is common with 10% positions, Sumitomo will have the right to appoint a director, subject to certain conditions described by an investor rights agreement. They have already chosen Eiichi Fukuda, who is a trained geologist and President of Sumitomo since 2016, and also a director of Teck Resources, so not a lightweight in my view. Several other terms are included as well, as for a period of two years, Sumitomo has also agreed not to:

  • commence a take-over bid;
  • acquire  the company’s shares, or direct or indirect rights to acquire any of the company’s shares;
  • make, or in any way participate in any solicitation of proxies to vote the company’s shares;
  • make any public announcement with respect to, or submit a proposal for, or offer of (with or without conditions) any business combination, amalgamation or merger or similar transaction involving the company.

I like the fact there were no warrants attached, and as mentioned the investment was done at a substantial premium, but I wondered why Sumitomo had to be excluded from any type of take over attempt or further expanding their position for the next two years. CEO Flood stated that this actually is a fairly common provision in this type of transaction. I wasn’t aware of this, usually I see provisions like lock-up periods, pro rata participation in future financings, backstop rights, right to first offer on other types of financings, etcetc, but I’m never too old to learn, and there certainly is a lot to learn in this industry.

With this fresh cash, Kenorland has C$9M in the treasury, which will be sufficient to fund the upcoming drill program at Regnault/Frotet. As a reminder, Kenorland only has to fund 20% of exploration at this project, as JV partner Sumitomo pays for the other 80% of expenditures. This leaves Kenorland management with options to spend more cash on exploration at other flagship projects Healy (earning in for a 70% interest from Newmont) and Tanacross (100% owned), but also pipeline projects like Chebistuan (optioned to Newmont) and Chicobi (optioned to Sumitomo). Kenorland also optioned out their South Uchi Project to Barrick Gold on September 20, 2021, the third major it is doing business with.

Looking in hindsight, this could be seen as the first foray of Barrick into acquiring exploration assets in the Red Lake District of Nortwestern Ontario. More recently, Barrick also signed agreements with Red Lake Gold and Dixie Gold, two juniors which hold prospective land positions around potentially one of the largest gold discoveries of the last decade, the Dixie project owned by Great Bear Resources. Many analysts view these actions as an attempt by Barrick to buy Dixie, and consolidate all prospective land around it. We will have to see how this pans out, for now investors don’t see this as a mere coincidence, and caused the Great Bear share price to rise to levels not seen since the summer of last year.

In order to earn the first 70%, Barrick would have to spend C$3M on exploration in the first three years, and another C$3M in the three years after, and produce a NI43-101 compliant resource of at least 1Moz Au, after which a 70/30 JV will be formed. Barrick can earn an additional 10% in the project by funding a FS within 4 years, but Kenorland could also elect to go for a 2-3% NSR instead so they don’t have to contribute anything anymore. I found it interesting to read about the lithium pegmatite potential, and I wondered, as Barrick usually has no focus on lithium, who would be exploring this. CEO Flood answered that this indeed is not in the interest of Barrick.

As Kenorland put out a nice news release in September of this year, summarizing their exploration activities, it provided a useful overview of their busy year so far:

  • Frotet Project, Quebec (Joint Venture with Sumitomo Metal Mining): 18,000m diamond drill program
  • Healy Project, Alaska (Optioned from Newmont Corporation): 5,000m maiden diamond drill program
  • Tanacross Project, Alaska (100% owned): soil geochemistry, UAV magnetic, and IP surveys
  • Chicobi Project, Quebec (Optioned to Sumitomo Metal Mining): Geophysics (UAV magnetics, IP, EM)
  • Hunter Project, Quebec (100% owned): Property-wide airborne VTEM geophysical survey
  • Chebistuan Project, Quebec (Optioned to Newmont Corporation): Phase 2 soil geochemistry survey
  • South Uchi Project, Ontario (100% owned): LIDAR survey and regional till sampling (planned for fall)

As VP Exploration Francis McDonald describes, no less than C$17M will be spent on exploration this year, with C$11M funded through partners, generating over C$2M in operator management fees and cash payments. CEO Flood has stated a clear vision on how he wants Kenorland to operate:

“Our mission at Kenorland has always been to maximize shareholder return through exploration success. We take a long-term approach with multiple grassroots projects being advanced through the pipeline at all times.  Some of our projects are sole funded, some are farmed out, while other assets are sold entirely for equity and royalty interests, depending on how a project fits within our risk profile.  We believe that scale, creativity and flexibility are fundamental to building value and optionality within an exploration portfolio. Any of these projects may result in a significant discovery, as we have already witnessed at Frotet through the grassroots discovery of Regnault last year. With interest in over 1 million acres of ground, all which has seen various stages of systematic exploration and being actively explored, we are confident that our efforts will return significant gains to our shareholders.”

I like it how Flood treats exploration as a business in an extremely professional fashion. Everything, from projects to partners to financial backers to staff to exploration strategy, oozes the highest quality, and can easily serve as a blueprint for many other explorers. As the saying goes, only 1 in a 1,000 exploration projects turns into a mine, but one thing that Flood seems to be very good at is the methodological and concise narrowing down of this huge number, vastly increasing his odds for success. 

In the meantime, Kenorland also sold their Fox River property to Superior Nickel (private) for shares and a 2% NSR, and optioned out their Rupert lithium project to Li-FT Power (private), for C$200k in cash, 2% NSR, and 10% shares in Li-FT Power. For this last transaction, Kenorland will be the operator for the first 2 years.

The Rupert project is actually pretty interesting, as it is on strike with the world class Whabouchi lithium-pegmatite deposit (53.6Mt @ 1.45%Li2O), owned by one of my former sponsoring companies, Nemaska Lithium, which had to seek creditor protection in 2019, on a toxic combination of unexpected capex overruns in updated economic studies during construction, and lower lithium product prices because of temporary oversupplies just lasting long enough, preventing last resort financings from succeeding. In case you wondered what happened to them, in the end Nemaska was taken privately by a syndicate of Investissement Quebec, Pallinghurst Group and Orion Mine Finance, wiping out all existing shareholders unfortunately. Nowadays it is looking to start construction again, as it secured a plot of land at an industrial park in Becancour, Quebec earlier this year, in order to build a new chemical conversion facility. So far for the rocky story of one of the once best lithium juniors around, proving that investing in junior miners can be risky at every stage with every metal.

Kenorland Minerals is far from such scenarios fortunately. When the company can expose the same type and size of pegmatite dykes, the 2% royalty could be worth some serious money, as lithium product prices are at all time highs with no end in sight, as shortages seem to increase without lots of new production coming online soon. The company has completed a regional till sampling program, and CEO Flood had this to say about the results, and potential follow up exploration plans for Rupert: “We have not received the complete results of Rupert yet, so any follow up plans will be contemplated after this.”

Regarding asset deals, the company also disclosed on July 8, 2021 that it had sold the Fox River nickel property to Superior Nickel, a private company, for 2.66M shares of Superior, and a 2% net smelter return royalty. Kenorland also vended out the Napoleon project to another private company, J2, for equity and a 2% NSR.

The September 8, 2021 news release also contained an extensive update on all exploration projects. I discussed this with CEO Flood to get some additional color on proceedings.

“Frotet Project, Quebec (80/20 Joint Venture with Sumitomo Metal Mining Canada Ltd.): The Company has completed 9,889 meters of diamond drilling from the recently announced program consisting of up to 18,000 meters (see press release date July 14, 2021) allocated for infill and step-out drilling along the R1 and R2 gold-bearing structures as well as follow-up on additional zones of mineralization within the Regnault trend. In addition to drilling at Regnault, till and soil geochemical surveys as well as prospecting campaigns were completed on several regional areas of interest within the Frotet Project. This work has yielded a number of robust geochemical anomalies which warrant follow-up exploration including detailed geophysics in preparation for drill targeting.  Drill testing of these regional target areas is tentatively planned for Q1 2022.”

As over half the drilling has been completed, it can only be a matter of time before a large batch of drill results can be expected, in line with earlier announcements. According to Flood, the drill program wrapped up two weeks ago, and results for ¾ of the drilling have been recieved now that the SMM transaction has been completed (we asked lab to hold off on sending us any results during the negotiations for financing). The assays are being QAQC’d and if any QAQC issues we will need to re-run, if not, we may see assays in the next 2 to 3 weeks.

I also wondered if the company will publish geophysical/geochemical maps, indicating targets. Flood stated: “Geophysics was good at guiding us initally however now that we have more control on the vein structures we are using more geology than geophysics to guide our exploration.”  Furthermore, I wondered what the distribution of drilling was regarding infill and step-out drilling: around half of the program was ‘infill’ and 25% step-outs, and another 25% targeting discovery of new veins.

I also asked Flood if he already had sufficient data to create a geological model for Regnault, and if the Troilus-like disseminated bulk-tonnage lower grade mineralization still is a concept they are investigating, besides the high-grade veins. He answered that they have now began modelling the system, including the various vein structures, and this work should be completed over the winter. There is broadly disseminated lower grade mineralization in the system and this will also be taken into account during geologic modelling. 

After Regnault we move over to the second flagship project, the Healy project in Alaska, optioned from Newmont. A total of 4,821m has been drilled out of over 5,000m planned, and according to Flood they should be recieving all of the results toward the end of November or early December. Then they will need to QAQC the data. If there are no QAQC issues (re-runs), it is possible to see results toward the end of December, however more likely they will see results in January. The labs have been longer waits than expected.

Kenorland also completed IP and magnetotellurics (MT) surveys, and results will be announced along with the drilling, as they are an important guide for Kenorland’s interpretation of structure, mineralization, and alteration.

Healy Project; proposed drilling/sampling results

Tanacross is the third most important project, located in Alaska and fully owned. Extensive soil sampling program has been done, a 5km IP and MT survey was completed, and an airborne magnetics survey was flown over several targets. The assays are expected back toward the end of this month. Analysis, interpretation and targeting will likely take Tanacross to the new year for reporting.

As several of the surveys were delayed, previously announced drilling has been put on hold, and the assigned budget was reallocated for additional drilling at Healy. According to Flood, Tanacross will potentially see drilling next year.

Kenorland also completed a VTEM survey at their Hunter project in Quebec (fully owned), a LiDAR survey and mapping at South Uchi (optioned to Barrick), completed a soil sampling program at Chebistuan in Quebec (optioned to Newmont), and completed a sonic drill-for-till geochemical program at their Chicobi project, also in Quebec. A map with the sampling results for Chebistuan looks like this:

The company systematically screened over 170,000h of ground in just over a year, which is impressive, and collected no less than 2,121 soil samples and 225 till samples. As a result, the focus will be on the Deux Orignaux AOI target zone, where most anomalies were found. The company just wrapped up prospecting and a magnetic survey, and radiometrics and induced polarization (IP) will take place in January, in preparation for drill targeting. After asking Flood if he wouldn’t contemplate using a sonic drill for till program here like he did at Chicobi, as there is likely also glacial till, he answered that there is exposed till at surface here so there’s no need for sonic: Although, he conceded, it would be a better method, albeit 10x more expensive, especially with no road network like they have at Chicobi.

The exploration at the Chicobi project generated the following results, visualized on this map:

CEO Flood was happy with these results, as it isn’t easy to sample under a cover of overburden:

“We’re very excited to announce the results from our extraordinary efforts to effectively explore in what we consider the frontier of the Abitibi. The clay belt presents a unique challenge to exploration which can only be overcome by applying methods such as ‘drill-for-till’ sampling, which has been effective at detecting mineral systems in other deep glacial cover environments.”

This type of exploration doesn’t only look very advanced and interesting to a non-geologist like me, but also extremely difficult to find the mineralized source of the samples, as the company is dealing with several layers of overburden/glacial till, all capable of moving gold particles from the underlying bedrock source over quite a distance by for example ancient glaciers or other erosion events, maybe each even moving gold particles in different directions. On top of this, the sampling grades looked extremely low to me (35 ppb Au is 0.035g/t Au), so it looked like a needle in a haystack to me. I asked CEO Flood if he could explain the significance of these results to me, and if it was less far fetched than I thought. He answered that the results might look uninteresting at first sight, but 35ppb+ was a similar anomaly to what we initially found at Frotet/Regnault. Glacial till is much more diluted than a typical soil sample which is residual from weathering of bedrock.

Very interesting indeed, and it shows why it is important to keep asking the uninformed questions, there could be so many layers of information to a subject.

The company is still working diligently at Chicobi, as detailed geophysical surveys are being planned now for November, including drone magnetics, IP and electromagnetics (EM). Diamond drilling for Chicobi is scheduled for Q1, 2022.

Finally, the company holds a significant equity position in Kingfisher Metals (KFR:TSXV) to the tune of 4%, and a 2% NSR on their Goldrange and Thibert projects. Kingfisher has completed a 5,000m drill program at Goldrange, which tested a large gold-in-soil anomaly. Results from the labs are expected back within the next few weeks.

Sampling at Goldrange (Source: Kingfisher Metals)

Conclusion

Of course, you never know, but since Sumitomo showed strong confidence in Kenorland by completing a C$5.2M strategic investment, it seems the ongoing follow up drill program at Regnault might prove to be successful, as such investments aren’t made lightly by a JV partner. Drill results are expected in the next 2 to 3 weeks, and I’m curious if Kenorland can deliver the same type of results again as they did in May of this year, confirming a spectacular discovery. In the meantime, the company is conducting exploration programs at several other projects, and some are providing results soon as well, so I expect multiple chances for Kenorland to re-rate to more appropriate share price levels instead of pre-IPO levels, since the amount of successful exploration only increased the value of their asset base, metal prices including gold are rising, and general mining sentiment seems to be turning for the better.   

I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter at www.criticalinvestor.eu, in order to get an email notice of my new articles soon after they are published.

The Critical Investor is a newsletter and comprehensive junior mining platform, providing analysis, blog and newsfeed and all sorts of information about junior mining. The editor is an avid and critical junior mining stock investor from The Netherlands, with an MSc background in construction/project management. Number cruncher at project economics, looking for high-quality companies, mostly growth/turnaround/catalyst-driven to avoid too much dependence/influence of long-term commodity pricing/market sentiments, and often looking for long-term deep value. Getting burned in the past himself at junior mining investments by following overly positive sources that more often than not avoided to mention (hidden) risks or critical flaws, The Critical Investor learned his lesson well, and goes a few steps further ever since, providing a fresh, more in-depth, and critical vision on things, hence the name.

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The author is not a registered investment advisor, and currently has a long position in this stock. Kenorland Minerals is a sponsoring company. All facts are to be checked by the reader. For more information go to www.kenorlandminerals.com and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.

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( Companies Mentioned: KLD:TSX.V; 3WQO:FSE,
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Best Mining Penny Stocks to Buy Right Now? 3 To Look at This Month

Will these mining stocks make your watchlist? When discussing mining penny stocks,…
The post Best Mining Penny Stocks to Buy Right Now? 3 To Look at…

Will these mining stocks make your watchlist?

When discussing mining penny stocks, it is difficult not to highlight how well they have performed over the last year and a half. It all started with the pandemic, which pushed precious commodities like gold and silver to new highs. As a result, more types of mining equities began to perform better. There are far more of these assets than many investors think.

Many people think of gold and silver stocks when they think about mining assets. In reality, there are numerous different types of mining stocks. Companies in this category include those that look for copper, steel, uranium, lithium, lead, and other minerals. Bitcoin mining stocks, for example, can be considered for this type of asset.

What should you look for when investing in mining penny stocks, you may be wondering? There are a few critical actions that may be taken to ensure that the moment is perfect to invest in a company. The first and most obvious step is to read the news from across the world. Consider how the pandemic affected and continues to affect the mining industry. Sector news is also critical; for example, shortages and growing demand are useful pieces of information to have. Let’s look at three mining stocks performing well in December 2021.

Top Mining Stocks To Watch

Denison Mines Corp. (NYSE: DNN)

Denison Mines Corp. is a mining penny stock that just gained 2% on December 2nd. This is a mining business that is engaged in uranium development. The development business owns a 95 percent share in the Wheeler uranium project, which is located in the Athabasca Basin of northern Saskatchewan. This is a mining stock that has previously gotten a lot of attention on this site due to its consistent upward market momentum.

The corporation announced the adoption of an Indigenous Peoples Policy, or IPP, on December 2nd. The Board of Directors endorsed this, which indicates the company’s acknowledgment of the critical role of Canadian business in reconciling with Indigenous peoples in the country. This is consistent with Denison’s pledge to take action to advance reconciliation. This was critical for the corporation because it operates in several areas across Canada that are on Indigenous peoples’ traditional territory.

President and CEO of Denison, David Cates said, “I believe Industry has an important role to play in acknowledging, and building awareness of, the history of Indigenous people in Canada and the critical importance of pursuing the objectives of reconciliation. As such, the adoption of an Indigenous Peoples Policy is a notable step in our Company’s journey to bring reconciliation to the forefront of what we do and how we do it.” DNN stock has increased in value during the last six months. Will DNN stock be added to your watchlist as a result of its recent advancements?

IAMGOLD Corporation (NYSE: IAG)

IAMGOLD Corporation is a gold mining company that has seen its stock price rise in the previous 30 days. This firm looks for, develops, and manages land for the sale of gold in a variety of countries. IAMGOLD is a global company with operations in North America, South America, and West Africa. These territories are home to the Westwood mine, the Boto gold project, and a slew of other ventures.

IAMGOLD released their third-quarter results for 2021 on November 3rd. The firm released its third-quarter results for 2021 on November 3rd. IAMGOLD generated $121.6 million in mine-site free cash flow, while adjusted EBTIDA was $265.7 million. During the same time period, IAMGOLD reported a total net loss of $20.1 million, or $0.04 per share. Despite certain flaws in its financial results, IAMGOLD has had several moments of strong performance this year.

CEO and President of IAMGOLD, Gordon Stothart said, “The third quarter of 2021 saw improvement in our operating performance supported by the continued strong results at Essakane. Rosebel performed in line with the revised plan. Construction activities at Côté continue to proceed well, reaching 36% project completion at quarter-end.” Is IAG on your list of mining penny stocks to watch right now?

New Gold Inc. (NYSE: NGD)

We’ve previously identified New Gold Inc. as a mining penny stock with a lot of momentum on multiple occasions. This firm develops and manages a number of mineral properties throughout North America. The Rainy River gold-silver mine, which it controls 100 percent of, is one of its most important assets. The Rainy River mine is located in the Canadian province of Ontario. In addition, the corporation owns a 100% stake in the New Afton gold-copper mine. This mine is in the Canadian province of British Columbia.

On October 13th, the company revealed its third-quarter operational results. New Gold produced a total of 105,628 gold equivalent ounces throughout this time. Rainy River and New Afton mines yielded 60,785 and 44,843 gold equivalent ounces, respectively. Due to fewer tons milled, its gold equivalent production dropped in the third quarter.

President and CEO of New Gold, Renaud Adams said, “We remain on track to deliver on our updated guidance, and we continue to make progress towards securing the Company’s future growth at both assets. Our liquidity position improved for a third consecutive quarter, and I continue to expect meaningful free cash flow generation from our operations in the near-term” Amid these new developments, will NGD be on your mining penny stock watchlist?

Top Mining Penny Stocks To Buy?

Penny stocks are infamous for being extremely volatile and unpredictable. As a result, it is suggested that you concentrate on studying and investing carefully. No one knows what will happen to mining stocks in the market as long as inflation fears persist. As we approach 2022, only time will tell what happens to mining penny stocks. For the time being, which companies will you add to your watchlist?

The post Best Mining Penny Stocks to Buy Right Now? 3 To Look at This Month appeared first on Gold Stocks to Buy, Picks, News and Information | GoldStocks.com.








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7 Stocks to Buy If the Government Shuts Down in February 2022

Since Wall Street’s opening bell sounded on the day after Thanksgiving, clouds of uncertainty have hung over U.S. markets. Reports of what would soon…

Since Wall Street’s opening bell sounded on the day after Thanksgiving, clouds of uncertainty have hung over U.S. markets. Reports of what would soon be dubbed the omicron variant were quick to send shock waves across certain sectors. And since then, more news has risen from Capitol Hill that has proved unsettling for investors. Bipartisan bickering has led to increasing discussion of a government shutdown.

Fortunately, Democratic lawmakers managed to avert the shutdown just before a key Dec. 3 deadline, securing funding through February 2022. This represents only a temporary solution to a larger problem, though, leaving investors with pressing questions. What could a government shutdown mean for markets?

If you’re wondering what stocks to buy as the next funding, you’re not alone.
While we don’t know for sure what the immediate future will look like, if it does include a government shutdown, either partial or complete, it likely won’t be all bad news for investors. On the contrary, there are some industries that stand to benefit. Let’s take a look at some stocks to buy if a shutdown does occur.

  • Procter & Gamble (NYSE:PG)
  • Campbell Soup (NYSE:CPB)
  • Archer-Daniels-Midland (NYSE:ADM)
  • Coca-Cola (NYSE:KO)
  • Colgate-Palmolive (NYSE:CL)
  • Altria Group (NUSE:MO)
  • Newmont (NYSE:NEM)

Stocks to Buy for a Government Shut Down: Procter & Gamble (PG)

Source: Jonathan Weiss / Shutterstock.com

As you can probably tell from the names on this list, the consumer staples sector is likely to benefit the most from a shutdown. No company produces more household items than Procter & Gamble. Its holdings are truly vast, spanning healthcare, home care, and baby and feminine care, to name just a few. And in each area, P&G has secured a significant market share.

Government shutdowns tend to induce strong feelings of uncertainty, compelling consumers to stock up on the items they don’t want to be without if things take a turn for the worst. During the shutdown of 2018, many government agency workers found themselves working without pay or with wages in furlough. They remember that feeling well and if a shutdown comes again, they don’t want to be ill-prepared.

We also know that during periods of uncertainty, nervous Americans tend to over-prepare by over-shopping. The kind of products they need are distributed by large companies, and Procter & Gamble controls many of the country’s most trusted brands.

PG stock has also been touted for its resistance to the inflationary trends that are also affecting consumer habits. If you’re looking for stocks to buy in preparation for a shutdown, there’s no better bet than this consumer staples giant.

Campbell Soup Company (CPB)

a grocery store aisle stocked with cans and cans of Campbell's SoupSource: HeinzTeh / Shutterstock.com

If Americans are going to be stocking up on essentials, they’ll be employing the same practice when it comes to food. And when it comes to stockpiling non-perishable food items, there’s no better bet than Campbell Soup.

The iconic brand is sold everywhere, from big-box markets to dollar stores, and it keeps for months upon months. Additionally, we’re heading into the coldest season and as temperatures drop, the need for warm items such as hearty soups will only mount. InvestorPlace contributor Joel Baglole named CPB as  stock to buy the next time a national event gives Americans apocalyptic anxieties. As he stated, “When people think of stockpiling food supplies, they turn to soup. It’s hearty, comforting, makes for a great lunch, and has a shelf life that can outdo most other canned goods.”

Sales are likely to increase as the company heads into a winter marked by multiple events that could easily have Americans stocking up on food items. CPB stock should definitely be high on your list of stocks to buy for a shutdown, particularly as it’s been struggling lately, creating what could become a lucrative opportunity to buy the dip if such trends continue.

Stocks to Buy for a Government Shutdown: Archer-Daniels-Midland (ADM)

Archer-Daniels-Midland (ADM) logo on sign at office campusSource: Katherine Welles / Shutterstock.com

The company commonly referred to by its initials is known as a staple of food production and distribution. With a reach that extends far beyond that, though, it’s also a leader in the global field of agricultural processing. Throughout years of fairly steady growth, the company has worked to emphasize practices that center around health and sustainability. ADM doesn’t own farms, but it partners with them by supplying innovative technologies to help spur the growth and distribution of agricultural products.

It doesn’t stop with agricultural services, though. The company’s work spans areas including oilseeds and carbohydrate solutions as well as animal nutrition ingredients. Moreover, if it involves food and will be in demand as America faces a daunting economic outlook, ADM will be helping provide it.

It’s worth noting that while many consumers will absolutely be stocking up on items like Campbell soups, their more health-conscious peers will be more focused on the food items provided by companies like Archer-Daniels-Midland. ADM was recently named to a list of consumer staple stocks to buy for reasons even more pronounced today.

Coca-Cola Company (KO)

coca-cola (KO) bottles and cans. coke is a blue-chip stocksSource: Fotazdymak / Shutterstock.com

There’s likely no brand more iconically American than Coca-Cola. Even non-soda drinkers have sampled some product owned by the massive soft drink conglomerate whose holdings are also quite vast, encompassing brands such as Dasani Waters, Honest Tea and Minute Maid Beverages.

If nervous Americans are stocking up on food, they’ll also have to stock up on beverages and there is no beverage company better-known than Coca-Cola. Not all Americans drink the soda for which the company is named, but their beverage of choice is likely made by one of the company’s subsidiaries. With this type of empire, KO is a safe investment as the country prepares for a period of uncertainty.

Even in the face of inflation, KO stock appears to be standing its ground. As it turns out, there is plenty of reason, as the stock is touted for its inflation-proof qualities. As InvestorPlace contributor Alex Sirois noted in a recent list on exactly that topic, “the general thesis is that consumer goods bear the brunt of inflation.” KO stock should definitely should not be counted out of lists of stocks to buy in the face of a government shutdown.

Stocks to Buy for a Government Shutdown: Colgate-Palmolive (CL)

Image of the Colgate-Palmolive logo on a buildingSource: Shutterstock

It isn’t just food and beverages that Americans will be stocking up on if the shutdown proceeds, though. You probably associate the name with products such as toothpaste, but the multi-national corporation under which Colgate operates produces and distributes toothbrushes, mouthwashes, and rinses for both adults and children. It also produces products of general hygiene needs for both humans and animals. For anyone concerned with dental wellness or just general hygiene, Colgate’s products are essential, and they will be of paramount importance in a time of economic uncertainty. If you keep it next to your bathroom sink, Colgate-Palmolive probably made it.

Earlier this year, InvestorPlace contributor Josh Enomoto named CL among recession-resistant stocks to buy for nervous investors. “A recession would have to be pretty darn awful for people to skimp out on the bare necessities,” he noted.

While we’re not facing a recession just yet, it seems a safe assumption that Colgate-Palmolive will be a company that only sees business increases as nervous Americans prepare for the worst. The last government shutdown we saw led to considerable economic instability and plenty of anxiety among consumers. This time around, Americans will want to be prepared and shopping helps the nervous feel better, particularly for the type of essentials that Colgate-Palmolive provides.

Altria Group (MO)

a sign with the Altria (MO) logoSource: Kristi Blokhin / Shutterstock.com

We’ve discussed the essentials quite a bit throughout this list, but we all know that nervous Americans won’t just be buying what’s good for them. They’ll be stocking up on things that help them feel better, such as alcohol and cigarettes. Tobacco companies stand to benefit from an economic period where stress will be high. This giant of its sector owns several of the biggest names in big tobacco including PhilipMorrisUSA. It’s also worth noting that Altria has been exploring expansions into the fast-growing cannabis market. In 2018, it made a strategic investment in Canadian cannabis producer Cronos Group (NASDAQ:CRON) and explored further investments more recently.

As InvestorPlace contributor Chris Lau noted, “Some investors view tobacco as an unattractive investment. But people who smoke still need to buy the company’s products. Plus, Altria has a discount segment that is growing. It is careful not to gouge price-sensitive customers, especially its premium brands.”

Anyone seeking to capitalize on the increase in cigarette sales that the country could see would be well served to consider MO among shutdown stocks to buy.

Stocks to Buy for a Government Shutdown: Newmont (NEM)

Newmont (NEM) logo on a mobile phone screenSource: Piotr Swat/Shutterstock

While this name may seem like an odd choice for a list that primarily includes consumer staples stocks, it’s also worthwhile to consider a worst-case scenario play, examining the type of stock that stands to benefit if a shutdown is prolonged or leads to a worse economic landscape in which fears are amplified significantly.

If we start approaching that type of scenario, we’re likely to see companies with heavy ties to gold mining start to benefit as Americans seek the safest ways to store their money and protect their assets. As the country’s largest gold mining company, Newmont is worth a look if you’re seeking stocks to buy. The company’s mines can be found in the American west, but its mining reach has expanded to countries such as the Dominican Republic, Ghana and Australia.

We recently saw a rally in gold prices following the inflationary trends that came to define the late fall. While prices have fallen since then, fears are now rising for other reasons and if they continue to worsen, gold mining companies will be standing at the ready.

For anyone interested in stocks to buy for a time marked by panic and uncertainty, this could be a good time for a bullish play on gold mining.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Author: Samuel O'Brient

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BMO Resumes Coverage On MAG Silver Following US$46.0 Million Financing

On November 29, MAG Silver (TSX: MAG) closed their US$46 million offering wherein the company issued 2.69 million shares, which
The post BMO Resumes Coverage…

On November 29, MAG Silver (TSX: MAG) closed their US$46 million offering wherein the company issued 2.69 million shares, which included 15,700 shares to MAG insiders at US$17.15 per share. The company stated that they intend to use the proceeds of the offering, “to fund exploration on Juanicipio and its other projects including Deer Trail, and to fund certain sustaining capital requirements at the Juanicipio Project not included in the initial project capital estimates, and for working capital and general corporate purposes.”

MAG Silver currently has 10 analysts covering the stock with an average 12-month price target of C$28.83, or a 39% upside to the current stock price. Out of the 10 analysts, 7 have buy ratings and the other 3 have hold ratings. The street high sits at C$33.82 from Roth Capital while the lowest comes in at C$24.75.

On the 29th, BMO Capital Markets resumed their coverage on MAG Silver, reiterating their C$25 12-month price target and market perform rating. BMO says that this raise will help fund exploration and get Juanicipio across the finish line.

Additionally, it will help keep the companies cash balance strong. The company ended the third quarter with US$31.7 million. With this additional US$40 million on hand, they expect the company to make a $30 million capital contribution to their joint venture sometime in December. That will top the joint venture up to US$68 million in cash and MAG with roughly $34 million in cash, plus the cash flow from the business. They believe that MAG Silver will end out 2021 with US$44 million in cash.

BMO has updated their net asset value but believes the raise has only a modest impact since the increase in shares is roughly 3% with the overallotment, bringing the total shares outstanding to 97.8 million. This brings their NAV assumption to US$10.29 from US$10.19 prior.

Lastly, BMO says that the company is getting close to Juanicipio ramping up. The company noted that the plant is expected to come in on budget and expected to be completed by year-end.

Below you can see BMO’s full year 2022 assumptions.


Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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Author: Justin Young

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