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Kirkland Lake On Its Way To Becoming “The Premier Mining Company In The World”

Excerpted from Jay Tayor’s MiningStocks.com

Kirkland Lake Gold is by far the best up-and coming gold miner I am aware of. And Novo Resources CEO Dr. Quinton Hennigh, who knows Kirkland’s Chairman Eric Sprott as well as anyone in the mining industry, told me Eric won’t be satisfied until he makes Kirkland the preeminent gold mining company in the world. I think Sprott can actually achieve that goal, in part because like another successful executive named Rob McEwen who launched Goldcorp into its status as one of the largest gold mining companies in the world, Eric understands the product he produces and sells. Like McEwen, Eric understands that gold is money, which was a refrain Rob was constantly reminding his shareholders of when he was at the Goldcorp helm. If anything, as a strong supporter of the Gold Anti Trust Action Committee, Sprott understands gold even better than McEwen does. Whether or not that is true, Sprott is thinking very big and he is entering into various strategic investments that have the potential to launch Kirkland into the gold mining company big leagues in fairly short order from its current very profitable earnings base.

Kirkland Lake Gold

In 2017 Kirkland earned $132.4 million, or $0.64 per share, and its operating cash flow totaled $309.8 million on production of 596,405 ounces of gold. At the end of Q1 2018 the company earned another $53.8 million and increased its cash on its balance sheet to $275.3 million. Production is currently coming from three mines in Ontario and one in Australia. But the aggressive big picture acquisition and strategic investment strategy of Eric Sprott since he took the helm at Kirkland combined with strong operating performance of Kirkland is really the story.

The first bold move was to acquire Newmarket Gold in 2016 that brought the phenomenal Foster Mine in Australia. But under the radar are a couple of other moves Eric has made that I think can catapult this company to another level. Of course, subscribers to this letter are well aware that both Eric Sprott and Kirkland have invested a lot of money into Novo Resources. This past week, Novo’s shares rallied on the news that Kirkland acquired another 4 million shares of Novo. Previously it purchased 14 million shares for $56 million. Upon closing of its recent purchase, it will reportedly own 29,830,268 or roughly 18.86% of Novo.

Clearly, Eric Sprott, who has used Quinton Hennigh as a geological consultant, has considerable confidence and belief that Dr. Hennigh may well be into a Witwatersrand-like discovery. Bulk sample assays from Comet Well are expected to be reported by the end of this month. Stay tuned!

But Novo isn’t the only strategic project Sprott and Kirkland have in their sights. Both Sprott and Kirkland have made very sizeable investments in Bonterra, which is developing the Gladiator Gold Project in Quebec’s Urban-Barry Camp and they will soon be coming out with a high-grade underground gold resource that will be massively larger than the initial gold resource. Thinking strategically, Sprott and Kirkland also have made a sizeable investment in Metanor Resources, which is a very strategic decision for two reasons. First and most significant, Metanor’s operating mill is the only operating mill in the Urban-Barry Camp, which gives it a huge competitive advantage. In addition, Metanor is enjoying some very significant exploration success, as explained in my recommendation of Metanor in this issue.

See how these pieces might come together? In his quest to put together the premier gold mining company in the world, Sprott is thinking big and he is thinking strategically and he is shaping share structures in a way to merge some elephant-sized companies into something even more interesting.

 

Emigrate While You Still Can

4 thoughts on "Kirkland Lake On Its Way To Becoming “The Premier Mining Company In The World”"

  1. Being a “small guy” Novo shareholder almost from the gitgo (and sitting on a sizeable unrealized profit) I have seen heavy warrant issuance to the likes of Sprott at obscenely low prices. Still more than 31.000.000 Warrants outstanding at $ 0.66, 0.85, 0.9, 1.25. See http://www.novoresources.com/investors/overview/

    While I understand that to develop the big story of Novo big money is needed, I cant help but feel f***ed by a bunch of late-comers who by means of their insider-status are in the position to grab large swathes of the potential wealth Novo stands for.

    In the last years I came to believe that in the mining investment world, the real big money is made through the financing of largely de-risked but cash-stropped stories at extortion-rate low prices. This – more than being savvy investors – is how Sprott, Rule et al make their money.

    They are actually pawn brokers operating in the mining world.

  2. I have a sizable portion of my entire retirement funds invested in KL and Novo. It better do well, or my retirement years will be tragic.

    1. I own both, and quite high on their long term prospects, but never overweight funds into any PM miner investment. Spread the wealth around. Buy some physical silver. Buy small amounts of some things that are heavily beaten down with a lot more upside if indeed PMs go into a serious bull market. Tahoe has a lot of upside with their 500,000 oz gold production profile if they get the Escobal world class silver mine back in Guatamala. (medium risk/high reward.) IAG looks like a can’t miss low-risk long term play if you have a long timeframe. I think First Majestic at $6-7 is bargain. First Mining Gold is a good long term call option on gold at less than 1/3rd NAV. I’m a little bit into this Rye Patch/Alio gold merger as a high risk/high reward situation. I like Sandstorm and Osisko Royalties as good long term low risk royalty/streaming plays. Don’t get me wrong I like Kirkland and think Novo could turn into a world call discovery, but they are both up 300% in the last year and it would be prudent to pick some other plays. Leagold is cheap with a lot of upside and top notch mgmt and insider backing. Just trying to help, I’m an idiot and not licensed to give advice so take everything I say with a grain of turd.

      1. Crushed it on KL. FM is still at $7 and silver at $15 a year later. I have a big investment in First Mining Gold and Leagold. Doing well on Alamos. I really have high hopes for Silvercorp; just bought more today.

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